If you’re liberated by the idea of quitting your job to start a business, deciding if and when to leave your day job can be a difficult task. Rather than rush into a choice you might later regret, here are some questions you should ask yourself before you hand in your resignation letter.
1. Are you looking to escape your current situation?
If you’re considering leaving your job to start a business, make sure your judgment isn’t clouded by negative emotions surrounding your current job. A desire to escape your current situation isn’t likely a good enough reason to leave your job. So, before you make the jump, think through the opportunity you plan to pursue and leave your job knowing your new venture will bring you pleasure and satisfaction.
2. What’s the state of your finances?
The hope is that your new business venture will be wildly profitable. However, quitting your corporate job to start a business means saying goodbye to the financial security it brings, not to mention other benefits such as medical insurance and regular vacation time. You need to ensure you have enough to live off of until your new business takes off. If you currently have a side business and it’s already generating enough income to cover your mortgage, utility bills, car payments and other essentials, you’re clearly in good shape! If you haven’t started your new business just yet or if your business isn’t providing enough money to cover your cost of living, you’ll need savings that you can tap into until your business generates enough income. Don’t forget to take into account any startup costs for your new business! Given all this, it’s a good idea to save around 12 months’ worth of personal expenses before starting your new business venture.
3. Have you tested your idea?
It can be tempting to quit your existing career before you have your new business up and running. It might not be the best idea to leave your day job so soon. Consider transitioning from employee to entrepreneur by starting your business on the side first. This will allow you to work out some of the kinks before you take that big leap and hand in your resignation letter. However, growing your business on the side can require a significant time commitment. You might have to sacrifice time in the evenings or weekends to get things done.
If you truly can’t start your business on the side before leaving your day job, consider running a focus group, where you’ll select a screened pool of participants who represent your target market. You’ll also compile a list of questions to get people talking about your industry and your idea. It’s likely best to run any focus groups with help from a moderator. If necessary, you could consider following up with a second round to test and refine ideas and concepts that emerged from your initial research.
4. Do you have a sound business plan?
If you’ve considered starting your own business, you likely know that a business plan is crucial to your success. Your business plan doesn’t have to be hundreds of pages. Start with an overall summary of your business idea, then follow that up with details on startup costs, projected revenues, a breakdown of your operational plans, your target audience, and your marketing strategy. Always run your business plan by a few people you trust to get their feedback before widely sharing your new plan.
5. Is your family prepared for your career change?
Is your partner ready for your career change? It’s essential that they understand and support your decision to quit your job and start a business. Your new business may mean that he or she has to carry a greater share of the burden in generating income, childcare or other family obligations. You also should be prepared to handle the pressure of relatives and friends who may not fully understand your decision.
Taking the plunge into entrepreneurship is scary, but it doesn’t have to be. Ready to get started on a financial plan to get your new business up and running? Contact your local Farm Bureau agent.