When you’ve decided to start your own business, it’s tempting to quit your job so you can give your new business all of your attention. But at first, you might need the income of your job to make ends meet. Here are five things to consider before turning in your resignation.
There are a number of considerations to think about before you start any business, one of which is how you will make ends meet while building your clientele. It doesn’t matter what kind of business you are starting, there is always an initial start-up phase where you will be scrounging for every penny as you develop your track record. This aspect of running a business is not unique among service or product businesses.
5 Things to Consider Before You Quit Your Job
Unless you are independently wealthy, there is a good chance that you are working because you have to. In that case, it would be foolhardy to quit your job until you are sure you have another source of income to replace your weekly paycheck. However, there may be certain circumstances under which you should quit your job before kicking off your business.
Do you have a sizeable savings account? – If you have saved up enough money to live on for a few months while starting your new business, then you can get by without collecting pay stubs. But how much is enough savings? It is generally recommended that you have at least enough to live on for six months. If you’re single, that’s not going to be as much as if you are married with two Children. Take your entire living situation into consideration and ask yourself how much you need to live on from month to month, then multiply that by 6, or 9 is even better, and if you have that much money in the bank, feel free to quit your job and start your business.
You have ready-to-go clients waiting for you – If you already have ready-to-pay clients wanting to do business with you, then quitting your job might be an option. But ideally, the total billing for all of your clients should exceed your current income by enough money to at least cover your costs for lost benefits, extra self-employment or payroll taxes, and the costs for operating your business. If you can manage, however, the best scenario would be to wait until those potential clients become sign contracts or become steady, regular customers.
You have investors – anyone who makes a significant investment in your business is likely to expect you to give the business your full attention. about the only exception might be close family members. If you have outside investors (people who are not close friends or family members) their idea of “full-time” could be 80-90+ hours a week.
Is your job a full-time job or a part-time job? – If you are working part-time and starting a business on the side, ask yourself how much time you realistically need to run the business. If you can get it off the ground working part-time while you continue to work your part-time job, then you should wait to quit your job when your income from the business is twice what you are making on your job.
Keeping your job will create a legal or an ethical dilemma – If starting your business will put you in competition with your employer, or interfer with your ability and availability to work for your employer, starting a business while you keep your current job may be inadvisable, or impossible. In this case, moonlighting could get your fired and/or sued.
Ultimately, you must decide whether it is more important to spend your time building the business or being a good employee. In most cases, you should wait to quit your job until you are making enough money from the business to sustain your lifestyle. In some rare situations, you could be fortunate enough to quit your job and work on the business full-time. ask your family and friends if they can help. You’ll often find that the answer to this question is in your own back yard.