8 transition income strategies to help you leave your full time job

Hello, welcome to the Business of Executive Coaching podcast. I'm Ellie Scarfe and I'm a senior executive coach and now coach and mentor to other executive coaches. And I've got over 17 years experience running my own coaching businesses. I work with coaches who focus on executive and leadership coaching and who want to work pretty specifically with corporate clients. So if this is you, listen in to the podcast as I share practical tips from my experience tailored to the reality of growing an executive coaching business today. So today's episode is all about income sources as you transition from being fully employed to running your own business. So if you are in the process of figuring out how and when you're going to start your coaching business, or if you are in a relatively new coaching business or a coaching business where you feel like cash is tight, there are some ideas in here for all of you. So I want to say first, first of all very clearly that this is not financial advice. I am not qualified as a financial advisor of any description. These are all just options for you to consider and to discuss with your accountant or advisor as you make the leap from corporate to coach. Okay, so disclaimers completed. You get it. Don't take financial advice from me. I'm going to still give you some real ideas. So let me paint the picture a little bit more. So you are currently in a full time role. You may be doing some coaching as part of your role as a leader or in the organization, or you might not, right? You might have that burning desire to do more coaching because you have discovered the magic of coaching. Your organization may or may not know about your aspirations. So they might be really happy for you to talk about coaching on LinkedIn. Or they might be absolutely shutting it down and say, no, that's not something you can do under this banner. In any event, if this is you starting your own business, may be something that is starting to feel like an inevitability. I always talk about it as something like once you get the bug, it's like something is just tapping you on the shoulder and you just can't really ignore it. It's not going away. So it might feel like an inevitability, but you don't necessarily know how you're going to make it happen. And that may be because you never envisaged yourself business, right? Or it may be that you have a really hard time figuring out how you're going to manage the financial transition in when it is really a risk, right? With making a big leap, there are no guarantees. And so figuring out how to Juggle that financially, particularly if you are the primary breadwinner in your family, that can be pretty stressful. And so these ideas are for you. Obviously, my first piece of advice is to work with someone like me, hopefully me, sooner rather than later, so that we can help you manage the transition and the ramp up of business with the ramp down of employment. But in any event, whether or not you are interested in working with me in any way, shape or form, I want to share a few strategies and a few ideas that you can think about to support your transition. So the first strategy that I often talk to my clients who are still in full time employment about is what I call the gradual ramp down. And this is about taking again, de risking the transition in a slow and intentional way. So this is a strategy for you if you don't feel like you want to pull the pin immediately. If you don't have that, like, oh my God, I got to get out of here today, or at least this month if you feel like, no, this is a transition that I want to do over, you know, maybe it's months, maybe, maybe even years, years. And so the gradual ramp down is really about gradually having more and more time available that you can dedicate to your business. Which sounds obvious, right? But in some organizations the option of part time work is really impossible. And so, you know, there's a, there's a couple of different strategies we can talk about in that regards. I would say the other benefit of this gradual ramp down is that, well, obviously it gives you time to be able to gradually build up your business, but it also lets you experience what it's like to have less guaranteed income in a slow and you know, predictable not, not too scary way, right? So the first stage in the gradual ramp down. And of course all of this depends on what your organization is willing to agree to. But the first stage is, and you may have heard of this, a nine day fortnight. Now the nine day fortnight is not a part time strategy, right? So a nine day fortnight is where you technically work all of the hours agreed in your employment contract, but you compress them into nine days, which means that there is one day, a fortnight that you have available to dedicate to your business. Now this one is often an easier sell in an organization than a formal part time structure. And that is because you're actually not really changing much to your employment. So you are still doing the same amount of hours, your salary remains the same, your KPIs remain the same. All of that is the same. The Only thing is there is one day a week where you are not going to be present at work. So you have one day, basically one day off, a fortnight. And so for those of you who may have flexi time or anything like that, this will be, you know, something you recognize. But for those of you who don't, organizations are I think becoming more open to strategies like this. But again it will totally depend on your organization. But that would be my first port of call. So rather than asking for a part time, part time strategy, this allows you to give it a go without having any reduction in your salary and it allows them to gradually start thinking about flexibility because also the goal is we go into the nine day fortnight, you deliver, right? You deliver the heck out of your regular work and it really makes no difference. So they can start to see, oh yeah, actually we can handle this and it doesn't make any difference. The next step in this gradual wrapdown is moving to a four day week. And this is the point at which you will start to notice a reduction in salary because this is a formal part time agreement, right, where you will be absolutely not working those days. That'll be a reduction in hours, it'll be in your contract. And so it's a, it's a reduction for you, but it's, but it's only 20%, right? So, so we're talking about a 20% reduction in hours. And for the organization it's often an easier, easier sell than say a three day week because four day weeks doesn't involve having to hire someone else. Often you can sell it as. Actually I think I can get everything done in this same amount of time or there may be a few tasks that we need to allocate differently or something like that. But it is a, it's not a hugely, it's the, I guess the most palatable part time option that, that we can think of. And then of course once you settle in, once you do a great job of that, then this, the question is, and you by the way are getting these, this a full day every week to work on your business. The next step is moving to a three day week. And I think this is a fairly critical juncture is going from either full time or four days a week to three days a week because we're in real part time territory now. And that means having two full days a week to dedicate to your business or you know, or something else. I'm hoping your business because that's what we're talking about and it involves your employer Agreeing and coming on board and saying yes, we want you even if we can only have you part time. So that's, this is the point at which a lot of organizations will either say no, that doesn't work for us, or yes, we can, we can give it a go now. It will help. If you've been doing this on a ladder and the four day work week has worked really well and you have a strategy of how you see a three day week playing out, the more valuable they are, you are, the more likely you are to get the go ahead with this strategy. And then from there you know, you can make the call. Whether that's like, okay, well now let's look at a two day week and from a two day week really that's your last rung on the gradual ramp down ladder before you jump off into full time. But by that point you usually you've ramped up your business, you have become used to less income coming in on that predictable cycle and hopefully there, there is income being generated in, in your business or at least a significant pipeline being developed. So that is my first strategy for you, the gradual ramp down. The second strategy is the, I'm going to call it the quasi employment strategy. And in this strategy you remain engaged with the organization, but you do it on a consulting or a contracting basis. And so in that strategy what is happening is that you are separating yourself from your employer or the employing entity, but you remain very engaged with often the same or similar tasks, KPIs, all of the above. But there is a very different feeling to doing the work when you do it as a separate entity, as a contractor or a consultant rather than as an employee. And so I always think of it when you go via this strategy is that you are now running your own business and this is your client, right? This is your client. And so you then have a lot more freedom in terms of your choice of what work you take on, what work you don't and how you, how you think about yourself. I think is the big thing because we, we are starting to think of ourselves as, as business owners at this point. Now of course, more risk, right? As we go through that, there's less certainty, there's more risk, which is that there is less obligation. When we are contractors or consultants, our contract, our consulting agreement can generally be cancelled a lot easier. So it needs to be that we're doing something that, that is very valuable. The third strategy, which is really the next step on from this is that the employer that you are leaving becomes your flagship client. In your coaching business. And generally it will be some sort of a hybrid of coaching and consulting or workshop facilitation or training. But you and, and where I see this work really well is if there is a program that you have been running internally and then you agree to take them on as a client, but you're doing that externally. Slightly different to the quasi employment strategy that I mentioned before in that the work that you do fits into the bucket of work that you would still be doing in this new business that you're starting. But you. So it may be a pivot, it may be that you're really narrowing on part of what you used to do, or it may be that you're just selling coaching, leadership, facilitation, strategy, whatever it is, as a new service to that client because of the great relationships and great connection that, that you have in there. Now, many of you will not have this opportunity because, you know, you might be leaving this organization because it's a bit toxic or because you don't want to be in that environment anymore. So, you know, I do, I realize that a lot of these options may not be open to you if you are in that position. So you really to think about which of these options is, is realistic for you if you are in that bucket. The fourth strategy I want to share. I don't know, maybe this is, maybe this is a little bit optimistic, but I see this more than you might think, which is that if things aren't going well or there is a sense that, you know, the, the organization is having a hard time and that is playing out in your area, you feel like there's a little less security, you may choose to put your hand up for a voluntary redundancy. Now so many risks with this. This is not my recommendation. I do not recommend you do that because once you, once you do this, the, the clock is generally ticking on both sides. Because if you put your hand up for a voluntary redundancy, you know, voluntary severance, I guess you might call that in some parts of the world, what you have done is flagged that you are not entirely committed to, to the role. And so what it can mean is that if redundancies do come, you're probably at the top of the slate, which is potentially what you're after. But it can also mean that you are offered less opportunities. If you do stick around, there may be other consequences, you know, worst case scenario in, in unethical businesses that you get targeted with performance management, things like that. So I think that this is something to keep in mind, but very careful. And you know, if you are in HR or learning and development, you probably understand the strategy and how you would and wouldn't use it. But if you're not sure how it will be received, do not, do not use this one. The fifth thing is to be strategic about when you choose to leave. And by that I mean timing your, your leaving with bonus payments. So many people have significant bonuses, golden handcuffs, things like that. And so what I would say is that sometimes if you can use those bonus payments or stock allocations or stock vestings in a strategic way, you can find that this may fund a, you know, a transition into your business. So you do need to be mindful when you choose to leave an organization about when the bonus cycles are, when share, share allocation, stock allocation schedules are so that you, you don't miss out on those or you know, get an artificially low rating because they know you're leaving anyway. So just be really mindful of all of those sorts of things as you choose to leave. The sixth strategy is that you can quit and walk away and take a part time job, right? To keep the lights on. And so, and this is, this is a common strategy. It may be a part time job that is related to your full time role or to coaching, or to coaching business. That is always an option that you have and it may or may not be very easy or difficult to, to get that sort of part time job. The part time job could be an associate type arrangement. So you might commit a day or two days a week to working with a different type of associate coach. Generally I don't think you get that sort of arrangement when it comes to coaching work. But potentially with some of the outsourcing providers you, you may get that sort of arrangement available but it may be that you are just acting as your previous type of work on a part time basis in a different organization. So that is something that you can consider and you need to consider how realistic that is, whether the market has those roles, whether the industry does accept part time in those areas. I know some regions in the world, part time is really just not a thing. So you need to think about whether that is viable. The seventh strategy is really more of a financial strategy which is that you leverage your savings so you create a savings buffer. You use a keep the lights on strategy and that usually means that you have a like a bare bones budget that you're going to work towards for a period of time, whether, depending on your, your capacity I guess to, to work within that. And it may Be that you have a savings buffer for 3, 6, 9, 12 months that will keep the lights on and then any income that you generate can start to offset that. So you've got a period of time where, where you can, can function and you may have sort of these go, no go checkpoints along the way, right? So you may say at six months it's like, okay, well do I at the six month point, do I now have a pipeline of opportunities that I can see at the nine month point we might say do I have some paying clients? And is my pipeline more developed? And do I feel like, you know, this is a, this is a viable, viable business and at each point having some criteria where you'll say no, this is time to now look for work or yes, this is, this is the business I want and I see it and I see that it can be successful. And then finally my eighth strategy, again, I'm just going to reiterate, this is not financial advice, but this is perhaps for those who have been in business a little bit longer and can maybe can see it, right? You can see it, you can taste it, you can, you know that the opportunities are there and it's going to come through, but you just don't know if you can hold on. Is to consider whether a business loan or personal loan, a line of credit, if you have the discipline to use it correctly, can allow you to even out those, those roller coaster months just to, to get you through. Now look, I'm, I'm super hesitant to even share that one. But if we think about most businesses, very few businesses actually get to full fruition without some sort of investment in them. And that investment may include things like investing in your, your knowledge, your education. So that's your, your certification as a coach. It may be investing in your business. So things like the corporate to coach accelerator so to getting, get that advice that will allow you to ramp up much faster and more strategically. And so you know, an investment may be like that seed cash, right? To allow you to, to do what you're going to do and give yourself the time to invest in growing those clients. And so it may be that a loan is something that will, that will allow you to do that if you don't have that savings buffer. Now of course you need to be aware like what if it doesn't work? What are you going to do if you don't, if you don't manage to get to the point where you, you want to be out financially, how will you pay that debt back? You know, are you able to get a job quickly. And how, how will you do that? And many people will get loans that, that just sit there, right? You don't actually. Or lines of credit is, is better potentially, but you don't actually use it. It's only when you know certain criteria come through and you know it helps you to bridge a. Bridge a hard time when you know that there are opportunities coming through. So that is something you could also consider. But again, look, it would, I would hate for you to get into debt without being very intentional about that. So please do consider that this is not financial advice and you should talk to your own advisors before you do that. So in reality, once you get to the point of planning leaving your role, what you are going to find, and I see this time and time again is that various things will line up, will happen to make it sooner than you think. Right. And so that could be that. And I see this so many times I'm talking to people who are considering their business and then suddenly there is a redundancy or suddenly there is a restructure. Suddenly there is a, you know, something pops up that makes staying untenable. And it happens constantly. And so I wonder if when we're really ready to start our businesses, perhaps we subconsciously architect some situations that support us making the leap or encourage us to do that. Sometimes good and sometimes bad. And I guess the question is how can you be ready for these scenarios? How can you have a great strategy so that you are not simply reactive when these things happen? How can you best prepare so that you're in charge of the decision and the shift rather than being very financially reactive and being fearful about what that entails and coming from that place as you start your business. So if you are in this bucket, the yes, I'd really want to start a business, but how am I going to do it? Space Then I want to talk to you. Please head to the show notes or elliscarf.com bookacall and we will have a chat. Now there is no obligation in these calls, of course I want you to join me and the amazing community we have with a lot of people in similar positions inside the corporate to coach accelerator. But I really just want to help you talk through your options and there is no pressure involved. So head to the Show Notes book in your call and I really look forward to talking to you soon.