When CEO and founder of Askthemneycoach.com, Lynnette Khalfani-Cox, was laid off in 2003 after ten years with the Dow Jones media company, downsizing had begun to hit many outlets in the early days of online news. She had two choices: take another job with a large company or turn the layoff into the opportunity to start the business she had dreamed of. “I was a Wall Street Journal reporter for CNBC with Dow Jones from 1994 to 2003. I was laid off in one of the early waves of downsizing in journalism when advertising was down and companies could no longer afford high-salaried positions,” Cox told theGrio about this period in her life. “I was quickly offered a position at CNN but turned it down thinking one corporate downsizing was enough for me.”
Cox came to terms with her job loss after a few days and, with some advice from a friend, decided it was time to set out on the path of becoming her own boss. “I never felt like the fate of my life was tied to a corporate entity,” she said. Cox knew the value of her skillset and that she wanted to continue her career as a media professional – independent of corporate America. Her first book, Invest in Success, initiated Cox’s new career path, which now includes freelance writing and lucrative speaking engagements, and consulting as a media and personal finance expert.
Ten years and ten books later Cox knows how to navigate the minefield of a down economy. That’s why we chose her to kick off our summer series profiling black entrepreneurs who have experienced tremendous success in small business. The black business owners we have chosen for the series have the insight and information to guide those who have been laid off, or want to be economically self-empowered, during what Cox calls the “Great Recession.” Cox believes one of the most important lessons that can come out of a layoff is learning to no longer tie your future to an unstable job market. You can break free if you take the leap, and start your own venture. What stops people from taking this risk?
“Most people fear going into business,” Cox said of this common barrier. “They believe it’s speculative, too risky, that corporate jobs are stable, and come with benefits, and a 401(k). That that type of financial security cannot be replicated as a small business is just starting out. If you’re leaving a job get over the fact that you’re leaving a stable job. There are no stable jobs. It’s speculative to tie your future to something that can lay you off at will.”
http://www.youtube.com/watch?v=hQKBQ7EBtVQ
As part of her small business ventures, Cox now leads financial literacy workshops and her related site Askthemoneycoach.com, a successful blog that offers free advice on how to strengthen your financial life. Her story is an inspirational tale of how African-Americans – really all Americans – can use an economic downturn as an impetus to earn money without relying on a boss. Cox has laid out a few simple tips that can help you start a business to create more economic stability and independence.
First, have three to six months of cash on hand to get you through the first few months of starting your business. Cox insists that you must have the financial wherewithal to sustain yourself from launch to profit. If you don’t have cash on hand that shouldn’t stop you. You may have to find a part time job or some other means of keeping you afloat for the first few months – but start working on your business now. Soon enough, you’ll make it through those first eight months, which is typically the roughest period of starting a new business.
Keep in mind — Cox says people often think that if they have a large presence on social media, a large number of Facebook or Twitter followers, for example, that this will help them through the first few months of business. She explains that your online image has to align with your new brand in order to be used a tool to promote your business. “If your online presence is contrary to your brand, your online community can’t help you.”
Second, know where you want to take your business and how you’re going to get there. Create a plan, treat it like a countdown, think ahead and make sure everything you do is going to get you where you want to go. Take essential steps first, such as registering and trademarking your business. Having things in order administratively will allow you to focus on selling your product or service. Without a plan, Cox says, you can run ragged. “Passion and enthusiasm are great but you have to strategize,” she explained.
Three, if you are selling a product ask yourself who you are selling to. It’s helpful to build a call list and talk to vendors before you attempt your first sale or secure your first client. Also, try to build relationships with entities that buy in bulk. Landing a larger account so you can sell your product in bulk is much easier than trying to sell one-on-one to the consumer in a down economy.
Four, looking for financing during an economic recovery can be difficult for large, established companies. When banks aren’t lending to established businesses with a proven track record, hoping a bank will fund your new business is unrealistic. Cox suggests turning to peer-to-peer lenders. These are lenders or communities of people that come together to fund a project. Prosper.com and Lendingclub.com are two online resources that Cox says are trusted in this arena. “If you’re struggling get creative and figure out what you need, develop partnerships with other businesses or do an apprenticeship,” Cox said.
Lastly, if you are concerned about leaving corporate America — fearing that you’ll be leaving behind health care benefits or an established 401(k) — Cox told theGrio that there are plenty of resources that allow you to create your own benefits package that is just as good as what your employer offers. Worried about your 401(k)? Once you start your business, you can create a solo 401(k) for entrepreneurs. Solo 401(k)s often have higher contribution limits and allow greater freedom with what you can do with your money. You can also purchase your own disability insurance. Purchasing a supplemental life insurance policy can be done for as little as $30 a month. Cox recommends that your supplemental life insurance have a payout of at least five to ten times your annual income.
Following these five steps before you start your business tremendously increases the odds that you will have a successful and lasting company. Simple strategies and basic organization will help you avoid the costly mistakes that cause most small businesses to fail.
Gaining your independence from an unpredictable job market brings more than just the possibility of financial success. Cox says the most important thing she learned from her lay off was the value of the freedom she gained when she became her own boss. “It’s freedom, not money,” Cox says about the best benefit of owning her small business, “although I make a good living and I’m happy with that.”
Another benefit? The potential to earn as much as you are truly worth. “You’re capped when you work for someone else,” Cox related about the potential of capitalizing on your talents. “Your employer has a limit to the value they’ll place on you. Working for yourself provides you with more choices and options.”
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