Ever fantasize about ditching the corporate establishment to start your own business? Former Vital Link Business Systems CFO Steve Peterson took that leap last September, when an investor-led management reshuffling left him out of work. After weeks of job-hunting and soul-probing, the veteran of 14 years at big companies like Capital Cities/ABC and News Corp. began to think about jumping off the corporate ladder. "Inventing a job," he says, "almost seemed easier than looking for one."
The process involved leveraging a variety of telecommunications-industry experiences, including data-center management. Within several weeks he recruited two former colleagues and developed a plan for repackaging and reselling sensors made by a local company that he had advised informally for years. The products offered by his new company, SentryTrack, monitor variables like temperature, humidity, and electrical usage at data centers and other environmentally sensitive locations.
Peterson says he is sure he made the right choice. "Being an entrepreneur can be nerve-racking financially, but it's also exhilarating."
Not surprisingly, given high CFO turnover and a tough job market these days, Peterson is in good company. "An increasing number of our clients are looking for alternatives to taking full-time jobs doing the same thing they've always done," says Dave Corbett, founder of New Directions Inc., a Boston-based career-development center for senior executives. In fact, a down economy can be the perfect time to test one's entrepreneurial mettle, says Stephen Spinelli, director of Babson College's Arthur M. Blank Center for Entrepreneurship. "The worst case might be that you deepen your network" in pitching the idea. "And if nothing happens, you go back to the job search."
The Thrill of a Sales Meeting
Of course, the ability to quantify the costs and benefits of a business opportunity gives entrepreneurial CFOs advantages over those who get going merely on hopes and dreams. But some former finance chiefs say their own start-ups offer a welcome chance to round out other skills, since traditional bailiwicks like investor relations and mergers and acquisitions may be irrelevant in a shoestring operation's early stages.
Strategy and product design were the main concerns in the first stages of his venture, says Sanjay Muralidhar, who launched an investment-management software business with his brother last year, after holding major finance posts at Reader's Digest and iVillage. The next tasks were recruitment and "building team spirit," adds Muralidhar, 40, now CEO of the company, Mcube Investment Technologies LLC. With several large financial institutions evaluating the company's software, his job is now "all about sales and marketing," a field that he finds he loves. Finance skills come in handy for budgeting and structuring equity stakes for partners, Muralidhar notes. But "the highs from a good sales meeting" far exceed those from "anything you might do in finance."
Even new ventures rooted in finance offer the chance to develop nonfinance skills. Sar Ramadan, a three-time public-company CFO, left Insightful Corp. in September to start his own international merger-advisory firm, Ramar International — and try his hand at being president. "I wanted to do something that utilizes my international experience and my deal-making skills — all the stuff I've been doing for other people throughout my career," he says. "As a CFO, though, your function is limited to certain aspects of the business, and it's always in an advisory role."
Ramadan is now in the process of setting up offices in Bangkok and Geneva, and formalizing a partnership structure with four co-founders. He says he'll supplement that business by importing art and artifacts to the United States from the far-flung regions he visits. And with no plans to return to a big-company job, he says, "at least one of the two legs will have to sustain me."
Such thinking makes sense, suggests Kristen Lalla, executive vice president and managing director at Dowd Associates, who says that a year or two's absence from the corporate world is about the maximum employers like to see. Being on your own longer "automatically raises the questions: Why are you now coming back to the corporate world? What didn't work?" she says.
No More Unemployment?
While being your own boss allows many freedoms, picking the right business to start can be just as tricky as choosing the right new employer. The best results come from tapping into an unmet demand within a familiar industry, says Babson's Spinelli. Without expertise or industry contacts, there is "less likelihood of success."
That's a lesson Muralidhar learned the hard way before undertaking his latest enterprise. Immediately after leaving iVillage, he made a stab at his dream business: a service that lets sports fans trade options on playoff tickets. The idea quickly failed — in part because of complications involving differing state gambling laws, but also because Muralidhar lacked industry contacts and expertise. "I was a completely unknown quantity to the sports teams, and I probably didn't do a good job of convincing them that I could pull it off," he explains.
His current attempt, Mcube, has been an easier sell, he says, largely due to his decision to start the venture with his brother, Arun, an asset-management expert who has written books on the topic. "My brother's personal contacts have been a big part of getting appointments with potential customers," the former finance executive says. "And if we just sign up a good part of his Rolodex, that will give us enough revenues to grow for a couple of years."
So is starting a venture the right move for you? Spinelli, who advises 50 to 100 would-be entrepreneurs a year, says a first test might be to ask how much you worry about money. "If you find you can't get your mind away from the resource requirements, even before you start the opportunity, it might be a sign that it's not right for you," he says. "The entrepreneurial mind is one that focuses first on opportunity."
Then, vet your idea with as many experts as possible. "That helps build the opportunity," says Spinelli, and while people may not immediately cotton to a new idea, "if you bring it to a half-dozen industry experts who you're trying to recruit and they all say, 'No thank you,' that might tell you something." Finally, be ready to pull the plug after a year if you're not hitting the milestones you've set. "The closer to a year you get, the closer to a job you should be," Spinelli says.
As for Steve Peterson, with one customer having installed SentryTrack's product in the company's first month, and more bids expected, he is glimpsing what he hopes will be both professional and personal happiness. "If we are able to develop this business and create success," he says, "it is our hope that we won't have to worry about unemployment again."
How to Succeed in Business...By Really Trying
- Make sure you're familiar with the industry and territories you're entering — or find partners who are.
- Get your family on board with the idea; it will affect them, too.
- Assume that you will spend more time at work, and that results will take twice as long as you expect.
- Learn to love selling.
- Be ready to pull the plug if you haven't made any progress after a year.