3 things I learned by quitting my job in a recession

Last spring, I quit my job to go to work for myself. At the time, it felt a little like jumping off a very tall bridge without any idea where I’d be landing, or whether I’d land at all. As it turns out, I landed somewhere awesome. (My couch, most of the time.) I haven’t had a moment of regrets; to the contrary, I’m pretty deliriously happy.

I feel lucky every single day that this worked, and it’s made me think a lot about the ingredients that were necessary to make that happen. Here’s what I’ve realized:

1. Reputation is everything.

Without meaning to, I had inadvertently spent the years before quitting my job setting up the perfect conditions for making this work:  I did good work, I did a lot of it, I did a lot of stuff for people for free (including this blog), which raised my visibility and got people familiar with my work, and I generally just worked really effing hard. Like, really hard. There were times when I actually found myself out of breath AT MY DESK from how fast I was working. (Yes, I’m weird.)

I didn’t do that with any master plan in mind; it was just fulfilling to me at the time. But as a result, when I wanted to quit my job and work for myself, people actually wanted to hire me. And that’s 100% attributable to the above. If I hadn’t built that reputation, there’s no way I could have pulled this off.

People sometimes ask, “Why should I work really hard and go out of my way for my employer when they don’t show the same loyalty to me?”  This is why: because becoming known as someone who kicks ass at work means that you’ll have people excited to hire you when you need them to be, which will make your life a lot, lot easier in the future. It is a huge favor to yourself.

2. Don’t underestimate the power of savings in helping you make good career decisions.

I wanted to quit my job and work for myself for a lot of reasons. I was able to quit my job and work for myself for this reason: savings.

Having savings lets you act from strength, not desperation. That has huge ramifications for the decisions you’re able to make and, therefore, for your quality of life. It took me many years to learn this.

If you’re not saving, start now. Seriously, go move some money out of your checking account and into your savings account right now and don’t continue reading until you’re done. (And if you don’t have a savings account? Go set one up. Immediately.)

3. The people who say “since the job market is tough, just start your own business” are naive.

I see this advice all the time — “Can’t get a job? Become an entrepreneur.” There’s no question that it works for some people, but it’s far from being universally applicable, and I’ve never been more convinced of that than now that I’ve done it myself. The reality is that you need a specific skill set or brilliant idea that people are willing to pay good money for, as well as either a strong reputation or awesome marketing savvy.  If you have those things, you are lucky. If you don’t, you can work on developing them — but unless/until you have them, taking that plunge is going to be a lot more challenging. (It’s challenging even when you do have those things.)

So it annoys me to see this advice handed out like it’s some easy thing to pull off. It’s just not helpful to the majority of people, and it implies there’s something wrong with them for not being able to do it, which is wrong. That advice is the easy way out for advice-givers, and they should be banned from further advice-giving.

* * *

So there you have it, my three life lessons from all this. Agree/disagree/have something to add?

{ 44 comments… read them below }

  1. BennettPlusTwo

    Good advice! Too many people think they can start a business/live by blogging and they find they really have nothing to contribute.

    Your network becomes almost as important as your reputation! I can’t emphasize enough how important it is to be constantly tending to your network and working on expanding it!

  2. Sarah G

    Awesome advice. I was saving money even right out of college when I was making $6/hr and already paying student loans. I didn’t save much, but I gave myself a small spending allowance each paycheck. I withdrew that amount in cash, and when it ran out, it ran out.
    Having some money in the bank creates a certain freedom — I love how you word it in terms of acting from strength as opposed to desperation. All your other points are astute as well.

  3. Liza

    Awesome! Congratulations on a great year so far! I only hope your hard work continues to bring you more success.

    As usual, what you’ve learned and your advice is spot-on. Thanks for a bit of inspiration today :)

  4. Nate

    Anybody who thinks becoming an entrepreneur is “easy” is sadly mistaken. There’s so much prep work that needs to be done in advance for someone to be a successful entrepreneur.

    Part of the battle is building up skills that force you to walk outside of your comfort zone and become something that you have no experience being (and may not even have a role model to use as a guide).

    Building up reputation is so important. If your friends /coworkers / superiors / subordinates can’t stand behind what you do now, how can you possibly convince strangers of your efficacy?

    1. Jennifer

      Thanks for raising such a great daughter, Alison’s Mother! She writes a fantastic blog and would be great to work for.

    2. class factotum

      Ha! I thought my mom was the only mom who named herself in the comments! My mom goes by “Anonymous Mother.” I think it’s because she is too lazy to delete the “Anonymous” that blogger autofills in the “Name” space.

      And yes, we have our mothers to thank for teaching us many good practices.

  5. Anon y. mouse

    Excellent points. I’d add that a certain amount of business administration skill is necessary to become an entrepreneur. I’m speaking entirely from school learning and working for one startup, so take this advice for what it’s worth.

    Most entrepreneurs are good at whatever services they’re trying to provide. Their skill isn’t in question. However, that doesn’t mean they can market, plan, manage the books, or retain customers, and that is what kills startups.

    I would HIGHLY recommend that anyone who wants to go into business for themselves read up on the subject. If you don’t have a written business plan and financial plan, you’re not ready to start. (If you’re thinking ‘but I’m just doing a little consulting, I don’t need all that’, you probably need it even more.) It’s not glamorous, and it may not be what you imagined doing from your couch, but it is necessary. If you really hate that idea, self-employment probably is not for you. You might be able to partner up with another person (or several) who do have the necessary skills, but even then you have to know enough to avoid getting taken to the cleaners by an unscrupulous partner.

    And best of luck to anyone who’s currently headed in that direction. I may get there… some day. :-)

  6. Candace

    Last year I was working at a job that paid reeeeeally well, with full & basically free benefits, retirement etc. But it was so stressful I was miserable. So I saved my money and quit to go back to school to learn to do what I love. I plan on someday working for myself, but for now I’m in school and every day is a joy (even the bad days are nowhere near a bad day at my old job). Anybody wanting to make a change has to have a damn good plan, some savings, and a lot of faith that it will work out.

  7. Cheryl

    I work for the collections department of the IRS and the other hugely important fact for those who are self employed is to read up on your tax obligations or find someone to do it for you. But still read up and ask questions because you still are ultimately responsible if your hired help makes a mistake.
    You generally must pay self-employment tax (SE tax) as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves. If you are contracting yourself out and working on a 1099, then you are required to make quarterly estimated tax payments. Estimated tax is the method used to pay Social Security and Medicare taxes and income tax, because you do not have an employer withholding these taxes for you. If on the other hand you have a business like Allison does here and you own the business solely; then you might be a sole proprietor instead. A sole proprietor is someone who owns an unincorporated business by himself or herself. Usually a sole proprietor files a 1040, Schedule C, Schedule SE…if you have employees as well as being a sole proprietor, then you are also required to file 941’s each quarter there is an employee on the payroll and a 940 for the unemployment taxes. And lets not forget the deposits that must be made for your portion of the employee’s trust fund taxes. A trust fund tax is money withheld from an employee’s wages (income tax, social security, and Medicare taxes) by an employer and held in trust until paid to the Treasury.
    When beginning a business, you must decide what form of business entity to establish. Your form of business determines which income tax return form you have to file. The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC) is a relatively new business structure allowed by state statute.
    What I call the Small Business Bible is Publication 15, and Publication 334 will help with Schedule C or for folks you are just contracting themselves out for a 1099, read Publication 505. Read until you understand and ask lots and lots of questions as the better informed you are to your tax obligations, the more successful you will be in your ventures.

    1. class factotum

      Cheryl, I am sadly aware of SE taxes and how much they, plus the married filing joint income taxes, take out of my meager SE pay.

      Where do I get information about how to have a SE 401k and show it on my taxes? I would rather shelter that income, thank you very much. I’m sure our government needs that money, but I’d rather buy shoes.

      1. Cheryl

        If you are self-employed, you may be eligible for a special type of retirement plan. Keogh plans are retirement plans intended for self-employed individuals and employees of unincorporated businesses.

        You can contribute up to 100 percent of your income to a Keogh plan, up to an annual maximum of $49,000 in 2009 (up from $46,000 in 2008). As with other plans, Keogh plans let your investment earnings grow tax-deferred until you withdraw them, and there are tax penalties for early withdrawal.

        1. Ask a Manager Post author

          My understanding is that Keogh plans can’t be used if you’re just working as an independent contractor. They’re only available to self-employed people who own their own business with articles of incorporation, etc. But you have other options, like a SEP-IRA, to which you can contribute up to 25% of your annual earnings and which has big tax benefits.

          But I’m very much NOT a financial expert, so verify this stuff for yourself!

          1. class factotum

            Thank you both! Most of the time, I am very happy that my husband is an engineer who can fix almost anything, but sometimes a CPA husband would be nice.

          2. Suzanne Lucas

            class factotum–ha, ha, I win. My husband is in marketing (talk about useless around the house skills), but I have a mother who is a nurse (hello, free medical advice!), a brother who is a lawyer, and a brother-in-law who is a CPA. And, my sister-in-law’s boyfriend is a carpenter, which doesn’t help us now, but when we were putting our last house on the market to move oversees, it sure was handy. (And yes, we paid him.)

          3. class factotum

            Suzanne, but do you have an uncle who makes the best venison bratwurst in the world? Someday, when my husband is no longer friends with this guy “Steve,” I will write about how my husband and I had a long argument about whether we would feed Steve and his family my uncle’s brats (which we stock up on once a year when we go to N. WI). I claimed Steve was NOT brat-worthy, as he had advised my husband not to marry me.

            The subsequent events, in which Steve, on day 2 of their visit here (Day 1 was Brat Day), informed my husband as he was putting the steak on the grill, that his kids would not eat steak nor anything else we had planned for supper – a supper we had described to Steve and Mrs Steve in great detail more than 24 hours ago – and asked if we had any “kid-friendly” food (we have food – eat it or not is my position), validated my position that we never should have wasted the Good Brats on them.

          4. Suzanne Lucas

            Class Factotum–

            No venison bratwurst making relatives, but I live in Switzerland where I can just go to the store and buy any number of fabulous wursts.

            And I agree, Steve was not brat worthy.

            And I had to post this twice because I added wrong on the spam protection. I’m so embarrassed, but I will say it’s 4:45 a.m. and I’m up because I can’t sleep because I have a big German test today. Oy.

          5. Cheryl

            You are correct Alison, I should have clarified that in my response. Keogh Plans cannot be used for “self-employed” individuals who work in the capacity of an independent contractor.

  8. Anonymous

    Ass kicker? Are we a little full of ourself? This sounds more like inner pep talk than career advice

    1. BB

      I should add: Alison’s one of those ‘top performers’ you’ve heard of, and yes, she’s really that good at what she does.

    2. class factotum

      When you have people who are not really looking for a job read your blog just because they like how you write, then yes, you get to claim to be an ass kicker.

      1. Ask a Manager Post author

        Well, thank you :) I agree with the person who said this complaint misses the point. The point is not “I am awesome”; the point is that working hard and doing a good job is absolutely crucial if you ever want to take this path. And I’m so grateful that I had laid that groundwork for myself, because it gave me this option that I wouldn’t have otherwise had — and I’d like to see other people factor that in to their own thinking!

        1. Ask a Manager Post author

          Oh, and I have to point out that I didn’t call myself an ass-kicker :) I said, in advice to others, that you should become known as someone who kicks ass, because it will pay off for you.

          If you’re going to parse my words, I will parse them right back! I kick ass at parsing.

  9. Marc

    Very helpful article and great incites. I am working on a business plan right now to apply my expertise in a new way. I think the one important skill that has been left out in being an entrepreneur is salesmanship. I have my expertise and have earned a reputation for it but I’m going to need clients. Just saying “Hey I’ve got this great service or product for you” is not enough. Sales is a process of prospecting for business, managing relationships, identifying needs and providing solutions. Administrative skills are not my forte and I’m going to need to do some studying up on that before I hang out my shingle.

    I’d like to hear what other people think are important areas that need addressing in starting a new small business.

  10. Mike C.

    I’m thrilled to see the recognition that not everyone can or should be an entrepreneur. I hear it over and over and over again within the community and it drives me up the wall! Not everyone can do it, and having an economy consisting of one person businesses doesn’t make much sense.

    To add to your savings advice –

    1. Consider a credit union as their not-for-profit status allows for lower fees, higher savings account rates and possible rebates at the end of the year.

    2. Automatic withdrawals – either from your checking account or directly from your paycheck. That way you can be lazy and you can’t spend money that was never there in the first place, right? Start with your savings account, then move on to a 401(k) or other investment vehicle.

  11. Ann

    Excellent advise! I love your first point because I’m a believer of working hard to get ahead. Sometimes it may feel like you are the only one that is doing anything while your co-workers are sitting around doing nothing but who cares – keep working hard and it will pay off for your self-esteem and people do and will notice.

    I also agree with point three – making a business for yourself is HARD! And whatever you do, don’t think you can become a restaurateur – unless you have worked in the restaurant business and know what you are doing.

  12. Lauren

    Great advice! I don’t plan on striking out on my own for quite a while (I’m still in grad school) but it’s nice to know there are things I can do now so that I’m prepared when I’m ready to open my own business.

  13. Anon

    I’m interested to know if you get offended when you’re stereotyped as a bitch for being demanding.

    1. Ask a Manager Post author

      There’s no point in being offended. I wrote a while ago that if I have to choose between being seen as either the bitch who gets things done or the pushover who doesn’t, I’ll take “bitch who gets things done” any day.

      1. CK

        I totally agree! It’s just an unfortunate fact that 99.9% of the time, women will be seen as “the bitch”. I’ve actually seen it go a little too far in some women executives, in that they receive feedback to be more compassionate and not so “cold”. Can’t please everyone!

  14. SME

    I’d for sure second the point made by a poster above about taking a business class, or making sure you somehow acquire the business skills to start your own business. Creating your own business often has more to do with all those aggregate business skills – marketing, sales, etc., than with the product itself. My avocation puts me in contact with a lot of creatives who make their living with their creative endeavors, and time and again I see amazingly talented people fail because they don’t have any business sense, while very average people soar because they are ferocious business people. Granted, that’s in the creative arena, where there are pretty sharply delineated skill sets, but I think the lesson applies across the board – having an awesome skill set may get you hired, but it doesn’t mean you can create your own business if you don’t couple that skill set with business sense.

    Congratulations on your success, Alison! Clearly, you’ve got all the skills you need, in all the arenas you need. This was a great post!

  15. Tracy Brisson

    I love this post! I did the same thing last year- quit my job and start my own business. Completely agree with all of your advice. The last thing I would add is that even though your friends and family (moms included) love you, if they are traditional 9-5ers, they won’t always “get it” so start surrounding yourself with other entrepreneurial types on and offline. It’s important to bond with people who understand exactly what you’re feeling so you can weather the highs and lows.

  16. Suzanne Boswell

    It always fills me with joy when I see people whose opinion I respect point to the importance of savings. I’m an american college student living in Canada, where I can’t work due to my student status. I live on $1000 a month – not a lot in Montreal! – and I still manage to save about $250 every month. It’s tough, but hearing advice like this reminds me of why I do it – so that when I get out of college, I can make decisions from a place of security, not of fear.

  17. Wild and Crazy Guy

    This will probably be taken down — but my Dad always told me “Never have a wife, girlfriend, and note at the bank all three months overdue….”

    Your advice on savings is wise — because, if you’re desperate, or appear to be so, your employer can take advantage of you because you have no recourse than to kowtow to what he wants.

    One time an employer underestimated my personal financial situation. He wrote a bad performance review. He denied me my annual increase. He put me on probation.

    Within six working days I found another position – better responsibilities , more room for growth, a 30% increase in salary, fully paid benefits, etc.

    My current employer then attempted to throw money at me in a futile attempt to get me to stay. W*E*I*R*D.

    The moral is — if you’re a manager, and you want to treat your employees in such a manner, be careful, because you might end up shooting yourself in the foot if you don’t know the total situation.

    And if you’re an employee, don’t ever set yourself to be in the position where you have no leverage. You may have to live more modestly, but overall, you have to be in control of your own career.

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  20. Amina

    Excellent advice! I agree on the savings part. If I had that properly squared away, I’d have left my crappy sitch several months ago and started my own firm or retrained in another area. Now, I’m planning things better for the next position.

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