5 Tips For Managing The Transition From Employment To Self-Employment

Deciding to quit your job and transition from employment to self-employment is not an easy decision to make. This article covers actions you can take to help manage this transition, so it actually happens.

According to Gallup, a research-based, global performance-management consulting company, 87% of employees worldwide are not engaged in their jobs. For this reason alone, it’s not suprising that most people have a burning desire to start their own business.

Starting a business offers self-fulfillment, freedom and an uncapped growth trajectory that calls to people who are not well placed in a rigid corporate environment. But at the same time, starting a business is perceived to be a risky activity. The thought of not having a stable income for a prolonged period and the fear of failure keeps people in their comfort zones. They remain stuck, disengaged in a job they don’t enjoy, playing with the idea of starting a business, but not taking meaningful action to make it happen.

At Mum’s Garage, we provide support and development opportunities for people who are in this situation. Here are five tips we recommend to help you transition from employment to self employment:

  1. Learn more about yourself so you can make better decisions

If you are feeling stuck in a job or industry that is unfulfilling, it might be because you don’t know enough about yourself to make a well considered decision about the type of work you’d like to pursue. It’s quite likely that you’re in the your current position because you’ve followed a prescribed pathway set by your parents or your education to date.

Taking action to understand what you’re fundamentally good at, what drives you, and what you’d ultimately like to achieve, will give you more autonomy over your decisions. This will help with refining the scope of what might be a good next move. It also helps to develop a better understanding of problems you’d like to solve and the business you’d like to start.


  1. Learn the process of starting a business

Starting a business is a completely different experience from working in one. The actions and mindset that you need to take to get started, are likely going to be very different from you’ve experience working for someone else. In an established company, there are pre-existing products, systems, processes, roles, deliverables and a culture that determines how you work. When you’re starting a business, you need to create all this from scratch.

It can be hard to know how to get started with this process, when you’ve never done it before. There are a lot of unknowns, which doesn’t help your ability to take action.

By learning the process for key elements of idea and personal development, such as how to communicate your idea effectively, how to validate your idea, how to make decisions about your brand and product, how to set your own routine and manage productivity, you’ll gain confidence and clarity about the actions that you need to take to move forward with your ideas.

  1. Understand and minimise the risks involved

It’s a common belief that entrepreneurs are significant risk takers. And that the way to success is to drop out of University or quit your job and then start working on your business. This might be a good approach for some people, particularly if you’re financially set up and don’t require an income for a significant period of time, but for the average person starting a business, it’s not recommended.

If it’s your first time starting a business, it will likely take you longer than you expect to get to the point where you have a product to sell. There is a lot of figuring out to be done in order to develop a product that is unique and valuable. It’s likely that you won’t have an accurate understanding of how viable your idea is and what’s required to grow the business to profitability until you’ve started to test and validate some of the assumptions you have.

You can start the process of validating your idea, developing your product and learning how to start a business while you are still working, or studying. Once you have a higher degree of certainty that the idea has potential, and more confidence that it’s something you want to pursue, then you can consider quitting your job, or cutting down to part time or contracting work. This will help to minimise your risks and allow you to accurately asses the value of an idea without the stress of relying on it as your sole source of income. Although relying on your business for income is compelling incentive to take action, the financial stress can make it hard to keep a productive state of mind.

“Entrepreneurs who kept their day jobs had 33 percent lower odds of failure than those who quit. If you’re risk averse and have some doubts about the feasibility of your ideas, it’s likely that your business will be built to last. If you’re a freewheeling gambler, your startup is far more fragile. Like the Warby Parker crew, the entrepreneurs whose companies topped Fast Company’s recent most innovative lists typically stayed in their day jobs even after they launched” ― Adam M. Grant, Originals: How Nonconformists Move the World

With some of the people we’ve work with at Mum’s Garage, their jobs are highly time and energy intensive and doesn’t allow capacity for work outside of hours. In this case, depending on the circumstances, they’re often able to switch to contracting which allows them to cut down on hours while keeping the same income level.

  1. Work out your financial position and options for making money

It’s important to be have an accurate picture of current financial position so you can make better decisions about when and how you start your business. Knowing how much money you need to cover outgoings, how long you can live off your current savings, and what your options are for making money along the way, help to reduce some of the uncertainty that might be stoping your from taking action. People are often suprised by how much they can reduce their outgoings, and how many other options there are for them to get work that fits around their business development objectives.

In addition to needing money to live, you’ll also need money to start your business. How much will depend on the business you’re starting and your own capabilities. I recommend contacting someone who has experience building a similar business or product, or doing some research online, to get a realistic idea of how much it’s going to cost to get the business up and running. Look for people who have bootstapped (self funded) their businesses so you have an idea of what doing it on the cheap actually looks like.

Don’t have your head in the sand when it comes to finances. Getting and remaining in control of your money will help you to make sound decisions about starting and growing your business.

  1. Connect with people who have started businesses

This is probably the most important point in this article. When you’re working on building a business and transitioning from employment to self-employment, you’ll be having to consistently make decisions along the way. It’s important that you get support to make these decision from people who are in the position you’re trying to move towards, other entrepreneurs, rather than those who are the positions that you’re trying to move away from, i.e. your colleagues.

It’s hard to comprehend the challenges and rewards of starting a business, without having experienced it. This makes a lot of the advice given by people who have not started their own businesses redundent.

Surrounding yourself with people who are in the position you want to get to will also help you to develop behaviours and a mindset that’s beneficial for developing yourself as an entrepreneur. People assimulate the behaviours of others who they spend most time with. Becoming part of a community of entrepreneurs, either online or offline, will make a remarkable difference to your progress.


Our brains don’t cope well with uncertainty, especially if you’re used to a secure job and an existing career pathway. There is a high degree of uncertainty when you’re starting a new business. Taking actions to reduce some of this will do wonders for helping you to make the transition. Understanding more about yourself and what you want for your life, learning the process of starting a business, understanding and managing the risks involved, having oversight of your financial position, and surrounding yourself with people who have done what you’re trying to do, are tips that are based on the foundational principle that learning a process and taking action to reduce the uncertainties associated with starting a business help to make the process more managable.

At Mum’s Garage, we run a program called ‘Ideas You Can Execute‘. It’s designed to help people with ideas or entrepreneurial aspirations get started along the pathway towards self employment. The program focuses on helping people with what’s been discussed in this article, by taking participants through a process to get more certainty around the direction they’re heading in and the fundamentals of starting a purpose-driven business.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.