Turning the tables: you worked for them, and now you want them to "work" for you. Find out what you need to know to land your former employer as your startup's first client

Entrepreneur, Dec, 2004 by Laura Koss-Feder

Starting a business has been your goal for the past year, and now it's time to make this dream a reality. You've researched your market and the viability of your product or service; you even have some startup capital and savings put away until you can turn a profit. You're also leaving your company on excellent terms after years of being a dedicated, conscientious worker. In fact, your skills in your new venture will still be useful to your employer. So it's natural to want to bring your employer along as that all-important first client to get you off and running.

But approaching your boss and persuading top brass to approve such an arrangement requires finesse and careful planning on your part. You have to show how contracting with you will save the company time and money, and why you will do a better job of completing certain tasks compared to how they're currently being handled. It'll take more than just a quick conversation and a firm handshake to strike such a deal.

Timing Is Everything

For Kathy Carrier, 46-year-old president and CEO of Briljent LLC, a Fort Wayne, Indiana, company that does technical writing and training, it took a 30-page written proposal and a 90-minute presentation in front of eight top executives to persuade her former employer to become her first client in a new venture back in 1998. Carrier, who was director of training for a large financial services company and had been there for 15 years, was tired of the corporate life. She had been looking for a business to buy, but nothing seemed to be the right fit. At the same time, her company had a restructuring that resulted in all but six of the 52 people she oversaw in her department being let go.

"They didn't need someone at my level to manage what would barely be a staff anymore," Carrier says. "I suggested they eliminate my job, give me a year of severance, and outsource training to me in my new business. I knew the needs of my former company and this type of work inside and out."

Carrier gave her employer 90 days' notice. She also checked with her employer's legal division to make sure there would be no potential conflict or competition issues. From her days in the training arena, Carrier knew what to charge. Instead of the usual daily fee of $1,000 to $1,500, she enticed her former employer even more by charging a bargain price of just $750. Her former employer even paid her fee in advance to help with cash flow issues during the early days of her business. The relationship got Carrier's venture off to a good start; today, her company has 32 employees and annual sales of more than $2 million.

As with Carrier, timing is everything when approaching your employer about becoming a client. Often, a company will be more open to this kind of arrangement when it's laying off employees. New consulting firms, in particular, lend themselves to this type of work arrangement. In fact, up to 50 percent of such ventures are launched with a former employer already onboard as an initial client, says Michael Stull, director of the Inland Empire Center for Entrepreneurship in the College of Business and Public Administration at California State University, San Bernardino.

"If you're planning to start a business anyway, and you see that your job may be eliminated, this is a perfect time to approach your boss with such a proposal," says Gene Fairbrother, lead business consultant for the National Association for the Self-Employed and also president of Dallas-based MBA Consulting Inc., which advises entrepreneurs. "Make the case that giving you a department to run is cheaper than having it done in-house [because] you don't have to be paid benefits."

Building Relationships

Showing her former employer that it could save money--and get an immediate ROI--helped Jennifer Carnie, 33, land her first client. Carnie, co-founder of Customer Systems Inc., a 3-year-old Scottsdale, Arizona, computer consulting firm, had worked in sales for a software company for five years. She left on good terms and went to work for another organization that eventually folded. Unemployed, she and her partner, Mike Hoffler--also a former employee of both companies--decided to start their own business. They approached the original software company they had both worked for, which had begun laying off employees. After a month of discussions, Customer Systems became a vendor. Today, Carnie and Hoffler, 48, still handle about three to four projects per year for the software business.

ONE STEP BEYOND: When Nancy Smith found she had gone as far as she could in her former job, it was a logical next step to go into business on her own--and take her former employer along as a client.

"The timing was right for all of us--they needed to farm out projects, and we really needed the work," says Carnie, whose business projects more than $2 million in sales for 2004 and has 15 employees.

If your employer isn't in layoff mode, you may need to make your case a bit stronger as to why now's the time to outsource a certain function to you. Approach your immediate boss about 30 to 60 days in advance of when you intend to leave.