Is it Time to Quit Your Full-Time Job to Start Your Own Business?

quit job start own business

Swedish law requires that companies permit employees to take leaves of absence with relatively few exceptions. If you’re on your way toward starting a new businesses, this is certainly a low-risk way to test the waters. Unfortunately, the U.S. has no such laws. Still, you should take note of important research study results from 1994 to 2008, which tracked entrepreneurs. It revealed that 33 percent of participants within any industry and age group were less likely to fail in businesses that they started while remaining employed.

Granted, you can’t indefinitely live in a black hole between full-time employment and your own new business venture. But, you can make good use of an in-between time to learn all that you can by checking out some of the countless books and web pages on this subject. For now, here’s an overview that can help you decide when the time is right to venture out on your own.

First, Figure Out if Your Business Will Be a Winner

Can you predict whether the business idea will make money — and continue to make money consistently throughout its entire lifecycle? Before you even start analyzing any numbers, you need to step out of your office and talk to real people who are likely to need your proposed products or services.

By all means, discuss your ideas with trusted friends and family members; but remember that these people have a personal interest in you. Their viewpoints tend to be subjective. You should also try to go where likely customers might hang out, and conduct surveys to obtain honest feedback — including how much they might pay for your offerings. Phrase your questions carefully to avoid placing a positive spin on the idea. You are likely to find that naysayer comments might highlight important issues that you need to overcome to ensure that your business can succeed.

Once you are certain that you will be able to form and grow your customer base, it’s time to start crunching the numbers. Make a brutally-honest list of the costs, including the money you need to spend to open the doors and the costs of monthly operations (including the full costs of compensating any employees that you’ll need).

Compare all of these numbers with a low-ball estimated of your expected month-to-month revenues. How long will it take to start making profits based on the price you can charge customers for your goods or services? If no one will pay what you need to charge and you cannot cut down costs, then even the best ideas won’t be winners.

Assess Your Personal Financial Situation

Do you know how long you can afford to live without an income? This is not the time to estimate; you need as many hard numbers as possible to ensure that you can afford housing expenses — and want to keep eating — particularly if you plan to use personal funds to start and run your startup business. Here’s a list that will help you start thinking about your unique personal expenses:

  • How much money do you have? Look at bank accounts, liquid investments, and even the money that your relatives want to donate. While it’s preferable to keep your hands off of retirement account funds, they might be available in a pinch, as long as you fully understand the potential costs of taking funds from traditional IRAs and the 401K fund that your current employer may offer.
  • Do you know your living expenses? Housing and food cost money, but you also need to consider all insurance costs (including health insurance, which your employer will no longer provide), auto repairs, and health or other emergencies.
  • How much money will you contribute to your business? You can’t afford to put every penny you have into your business, but you’re likely to invest some of it. If you do this, can you still afford to live?
  • Do you have investors lined up? You have numerous options for gaining outside funding for your business. The money you can obtain from these sources can help keep more personal money in the bank

Once you know these numbers, along with your anticipated business expenses and a realistic expectation of how long it will take to turn a profit, you’ll have a better idea of how long you need to keep your job.

Consider Starting as a Side Business

Taking a sabbatical may not be an option unless you move to Sweden; but as long as you don’t spend 24/7 working your current job, you might consider using evenings and weekends to get your new business off the ground. Or, if you just don’t have enough time due to employer demands, then replacing that job with a part-time job can provide extra income while you pursue your dream business.

Also, keep in mind that planning a partnership can buy extra flexibility. Even if all partners maintain full-time employment for a while, they might deal with different peaks and balances in their jobs. While some are too busy right now, others can keep the new business on track.

Don’t Give Up — Plan for a Future Start Date

Once you decide that you definitely want to start your own business, keep in mind that there’s no such thing as too much planning. There are so many things to think about, such as naming your business, deciding on a business structure, such as a LLC, figuring out a preliminary marketing strategy, and so much more. Isn’t it better to plan the work before you stop collecting a regular paycheck?

Think hard about how long the early tasks will take, and you should have a good idea of when you can realistically cut the cord to dedicate all of your time to your startup. Circle that date on your calendar, and then circle a date that is at least two weeks earlier. This is your intended resignation date. Final tip: handle that resignation with finesse; you never know where your first sales leads will come from!

The Entrepreneurs' Resource

About ChooseWhat

0 of 0 Comments see all

  1. Pingback: January 2020 Small Business Events

Comments are closed.