Leaving the corporate nest - corporate executives as self-employed; includes related articles

Nation's Business, March, 1987 by Harry Bacas

Leaving The Corporate Nest

Dallen Peterson says his move from a corporate executive position to a business of his own "was like going from renting a house to owning your own home--all of a sudden you see the dandelions in the front yard.'

Peterson's Omaha company, one of the many small businesses started each year by fugitives from corporate life, is now a big success. But Peterson admits he had to pull a lot of dandelions before the front yard turned a nice, profitable green.

His experience mirrors that of thousands of salaried Americans who decide the time has come for them to leave the corporate nest and try running businesses of their own. The majority find that while it takes long hours and hard work to achieve success, the financial and psychological rewards make it all worthwhile.

Although the Small Business Administration says that more than 50,000 of the 120,000 small businesses started each year do not succeed, experts say most of the failed enterprises were illadvised. Would-be entrepreneurs who assess their situations realistically and plan their moves with care greatly improve their chances. (See "Five Steps To Independence,' page 21.)

What makes so many people leave the security of the corporate nest to try their own wings? Gary Blake, whose consulting firm advises would-be entrepreneurs, says that among the principal reasons are "dissatisfaction with their present prospects, a need for independence, autonomy and growth, and a feeling they would be willing to make sacrifices to build a business they could enjoy and which would reward them directly.' Blake is director of The Communication Workshop, New York, which conducts seminars to help employees make the leap from salaried jobs to entrepreneurship.

James Challenger, president of Challenger, Gray & Christmas, Inc., a Chicago-based human resources consulting firm, offers his clients advice that any employee contemplating the entrepreneurial life might well consider.

"When we get people who want to enter business,' Challenger says, "we counsel them to go into a field they know--not necessarily the same product, but a field based on the same functional expertise. Then we get them to talk to people in that field to learn what running the business will require. People will have to do for themselves all the things they take for granted in a corporation, from marketing research to picking up the paper clips.'

And they confront firsthand the full spectrum of problems that were most likely spread out among many well-staffed divisions in the companies they left behind. Among them: maintaining adequate cash flow, recruiting and motivating employees, cost containment, government regulation, development of strategies to outrun the competition and dealing with such surprises as the liability-insurance crisis.

Not everyone is cut out to go into business, says Gary Blake. "People who have no stomach for risk-taking or believe they couldn't live without a pay-check shouldn't do it,' he says. (See "A Pre-Flight Checklist,' page 18.) "Nor should people who have a low tolerance for rejection.

"On the other hand,' Blake continues, "a good prospect will have some sense for marketing and promotion and the ability to see the entire business process. Most of all, it takes perseverance.'

Dallen Peterson knows about perseverance. After leaving his job as division manager for a national food company, he had to go into business twice to find lasting success. He started a snack foods company, drawing on his experience in a corporate job, but had to sell it at a loss when the industry ran into problems.

Despite the setback, Peterson rejected offers to return to corporate life. "I had had a taste of running my own business,' he explains. "I liked that feeling of "I did it on my own.'' So he started another business in a brand-new field, professional home cleaning, and his Merry Maids company is now the biggest of its kind, with franchise operations in 42 states.

And, he points out, more than half of his 400 franchisees are former corporate employees who wanted to get into businesses of their own.

The story of Peterson's conversion from executive to entrepreneur is one of the many case histories that illustrate what others might expect if they leave the familiar world of their 9-to-5 salaried jobs for the uncertainties and risks of their own businesses. Some others whose experiences offer insights on what might be expected in that transition:

Bob Phipps, a California native who left a mine-engineering job in Bismarck, N.D., to grow bean and alfalfa sprouts in San Antonio, Tex. He advises prospective refugees from the corporate world to first work for someone in the same line they are planning on entering. "Make your mistakes on their money,' Phipps says.

Pat Thompson, who quit her salaried job as a broker for television properties to form her own company in Denver and now has eight brokers working for her in arranging sales of cable and broadcast operations. The transition was "a long, hard struggle,' she recalls, but "the feeling of accomplishment' that resulted made it all worthwhile.