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You have made the decision that you don’t want to stay in your current position in corporate life, despite the salary and the benefits. You also recognise that the transition to the more fulfilling Portfolio Executive workstyle isn’t going to be straightforward. So, to give your future direction the best chance of success, you’ll need to build your runway.
In this post I share my personal experience of transitioning from a corporate role and what I’ve identified as the main things to consider from helping others do the same. These points will help you manage your own transition with greater confidence – and less turbulence.
Why you need a runway
A career change out of a salaried role takes planning. It will require you to either set aside money that will enable you to invest in that future or recognise that you will not be earning as much as you would like to until you have built that future. This is what we call your runway.
The good news is that you have time on your side. You are currently employed and valued by your employer, to a certain extent, and are earning real money. There are things that you can do now to ensure that you have as many resources as possible at your disposal when you step out. You are in control of the ‘when’.
Don’t give up the day job (yet)
You might be planning your exit but now is actually the time to capitalise on your corporate role for a little bit longer. You’ll need to continue to show willing and perform, build relationships, do all the things that you know how to do well. In fact, I would go further and suggest you look at the opportunities that your organisation provides for your own personal development as you prepare to leave.
Let me give you an example. A female senior manager knew that she wanted to step out into her future. Knowing that she would need sales skills for that future, she took advantage of sales training being offered by her organisation. She stepped outside of her comfort zone but as far as her employer was concerned, she was committing more, she was working harder and committing to personal stretch. She was helping to build her runway extending her skills.
Maybe your organisation gives you access to a coach, to industry events or opportunities for you to build your profile within your sector. Maybe you can do more networking. Look at how you can use the resources of your existing employer to develop your new skills and equip you for what you will need when you make your break.
Does your employer offer sabbaticals or extended unpaid leave? You can retain the safety net of a job to go back to while spending some intensive effort on building a different future. I worked with a former colleague, who used a 3 month sabbatical to develop his portfolio proposition and then returned to negotiate an unrestricted exit from his employer just a month later.
Examine your current contract
The next thing that I strongly recommend you do is look at your contract with your employer and reflect on how long you have been working for them. This is for three reasons:
a) Understanding restrictions
Are there restrictions on what you do after you leave your employer that could give you problems for your future working life? You will probably need to look at the company handbook as well as your contract.
b) Understand redundancy options
If you were to be made redundant, what are the statutory terms of redundancy that you could expect? With redundancy you may have various options. For example, one might be to plan your departure by way of a compromise agreement which could give you a tax-free lump sum. You can look for opportunities as you near your departure date that arise from company restructuring and yourself available for voluntary redundancy. You can look for opportunities to move from being full-time to part-time as part of an exit agreement; or to move from being a permanent employee to an independent contractor on a part-time basis as part of your departure. These tactics could significantly enhance your income while you transition to becoming fully independent.
c) Check out your holiday entitlement
It may be that you have accrued a lot of holiday which means you could agree with your employer that you are going to give three months’ notice and then after that you are going to take your holiday pay, unencumbered by your contract. This could be a significant cash sum. Spend time on investigating and exploring your various options?
Examine your financial circumstances
To use our runway analogy, your future plans will need money to get off the ground and stay there. So, you need to do a detailed assessment of your financial essentials and what you can do to reduce your outgoings, access any savings if you need to and thirdly to make use of assets that you own.
Most people are used to spending what they earn. They have got used to a certain amount coming in each month and they might put aside something for pension, mortgage, membership fees, travel costs, cost of supporting family. It may be that they are putting aside additional money into savings, they may be enjoying a £15,000 holiday but actually living a lifestyle where they are pretty much spending almost everything that they earn and indeed sometimes even more than they earn.
Let me give you a few examples.
a) Your mortgage
You may have a repayment mortgage and that will be a combination of interest and repayment. If whilst you are still employed, you were to change that to an interest only mortgage not only could you probably negotiate a better deal on your mortgage but also you could significantly reduce your monthly outgoings because effectively you are suspending payment of your mortgage. Suddenly you are reducing the amount of money you have to pay out every month.
You could go even further and release some of the equity in your property. For example, you have a £500,000 property with £300,000 worth of equity. You decide to move to an interest only mortgage and release £100,000 of equity by increasing the outstanding mortgage from £200,000 to £300,000. Now you have released a £100,000 with which to plan your future. Get professional advice from a mortgage broker which is often free until you commit to a particular deal.
b) Other expenditure
It may be that you are paying additional contributions to your pension, or credit card debt, or maybe that you have some expensive habits like an expensive car. Perhaps you are taking advantage of a company car scheme but if you were to exit that and just claim mileage on a more basic vehicle you could release a useful amount of money every month.
You may also want to look at your whole family expenditure. There are the obvious things like sorting out your utility bills – just a few minutes on a comparison site could save you hundreds of pounds annually. Are there regular expenditures that you make as family that are discretionary and not really necessary? We can build habits into our lifestyles that amount to more expenditure than we might think. For example, the habit of taking the whole family out for Sunday lunch each week where the bar bill is never less than £100 – that is £5000 a year. Is that how you want to be investing in your future?
You could have a very different family experience at home with an extraordinary meal that only cost you £30-£40? What are the other expenses built into your lifestyle that you don’t really need? How many clubs are you a member of? Do you really need to be a member of all of them? Do you believe that you deserve a month’s holiday in the summer and a ski holiday in the winter, and a long weekend break in November? Have you locked yourself into expectations of a lifestyle which are holding you back? Very enjoyable but not necessary.
It’s time to prioritise
So which of these things are discretionary? Which are not necessary and, if you are preparing for the longest possible runway, which of these things are you going to stop now so that your war chest is bigger when you leave?
You’ll need to make sacrifices at the outset and also plan for what could be a bumpy ride. Ask yourself which of those things you are going to be prepared to set aside if you do not make as much income as you hope in your first twelve months after departing your current employer?
Talk things through with those closest to you
It’s equally important to talk these things through in detail with the people that you care about most. Your other half, your children, your family, because these things will have implications for them. They may be 100% behind you and tell you to go for it without minding what happens, or they may not. Going out on your own without the support of people at around you, if they don’t buy into the future that you are building will feel very lonely indeed.
For example, what are the implications for your other half and your children? What are the uncertainties, risks and fears that they are going to be facing when you leave your current life where there is always enough money for everyone to do what they want to do? What will happen when you work from home several days a week? When you have to renegotiate the use of financial resources in your family? You are going to be spending more time with your family than perhaps you have done, week in week out, forever! What are all the implications of that going to be?
Create the time and space to talk through and work out these challenges so that when you step out into your future you have the longest possible runway of support from them. Support that will be vital in enabling you to build the future that you are trying to build together.
I have seen too many families where the main wage earner feels unable to create a fresh, rewarding and enjoyable workstyle because those at home do not buy in to the short term costs and risks for the long term benefits.
Planning for the worst-case scenario
Despite doing all the above there may still be a worst-case scenario. Let us imagine you step out on this journey and two years in it has not worked, for whatever reason, and you are not really generating enough money to pay the mortgage. What are your options then? Do you downsize the house? Do you stop paying your children’s school fees, do you borrow money from your ageing relatives? Or re-mortgage the house? Does your other half have to go and get a bigger, better job?
What are the other options that you have at that stage? Face them now: understand as a family what the milestones are at which you are going to decide that enough is enough and make sure that they are bought in to the implications of what you are doing. There are challenges of a shift in the family dynamics when the main wage-earner stops being the main wage earner, and when the main wage-earner stops being away at work and comes back into the family home.
I hope these points have helped you identify the issues you need to consider. Building your runway to becoming a successful Portfolio Executive starts by preparing yourself while still being employed. As a part of this you should also think in terms of possible redundancy scenarios and be clear about what each might mean. You also need to do a reality check of your current and future finances and engage with the people who are closest to you so that you have their support as you go through this journey.
By preparing your runway for all eventualities you’ll have the greatest possible chance of lift off. If you are currently thinking through what your personal runway involves, you might want some advice and structure from those who have already made a successful transition. Find out more about the Portfolio Executive Growth Academy.
Charles McLachlan is the founder of FuturePerfect and on a mission to transform the future of work and business. The Portfolio Executive programme is a new initiative to help executives build a sustainable and impactful second-half-career. Creating an alternative future takes imagination, design, organisation and many other thinking skills. Charles is happy to lend them to you.