There are many challenges to starting a business, making entrepreneurship a risky venture. Quitting a stable job to commit to your startup is an even dicier proposition. But if you have an idea burning within you and an entrepreneurial spirit that wants to see the light of day, find the courage to take the chance.
We’ll explore how to transition to full-time entrepreneurship and leave behind your day job the right way.
How to quit your job for a startup
Before plunging headfirst into your startup venture, create a plan and set yourself up for entrepreneurial success.
1. Start a side hustle first.
Gene Caballero, co-founder of GreenPal, which bills itself as “Uber for lawn care,” was a corporate sales coach for Dell when he first founded his company. At the time, he worked from 7 a.m. to 10 p.m., Monday through Friday; 8 a.m. to 5 p.m. on Saturdays; and 10 a.m. to 4 p.m. on Sundays. Although he had limited free time, pursuing his side hustle better prepared him to commit fully.
“The courage to take the leap was not as bad … since I was doing both and was able to see our growth along the way,” said Caballero. “When the numbers made financial sense – able to pay half of my bills – that is when I made the leap. Yes, it was still scary to leave a great job for something that was not guaranteed, but it’s hard to change an industry working part time.”
Having that entrepreneurial experience while working a day job makes the risk less daunting. You still have the safety net of a career, but you also can gauge the potential success of your startup before going all in.
“In most cases, you can likely manage your paying job with a side hustle for some period of time,” added Ally Compeau, founder of Woof Signs, who left her tech sales job to start the company. “Doing this will help you define the initial business model for your own company and do some market research [and] testing to ensure that there is a customer and a need.”
Insuranks found that nearly 93% of Americans have a side hustle. The most common are taking online surveys, selling items online and running a freelance business.
2. Map out your finances.
One of the most concerning risks of quitting a decent-paying job for a budding business idea is running out of money. That’s why you need a financial plan and enough savings and startup funding to support your endeavor and cover overhead costs before making any rash decisions.
“Before leaving your company, you need to ensure that you’re financially ready,” said Compeau. “You’re still going to need … a place to live and [to] put food on the table.”
While it might be tempting to give your two weeks’ notice and start a career that excites you, getting ahead of yourself might ruin any chance of succeeding.
“A lot of people will tell you to quit your day job for your startup simply because you’re passionate about it,” added Deborah Sweeney, founder of MyCorporation.com. “But it’s far more important to be practical and prepared when taking your side hustle full time. You should be financially prepared to make the leap, with a nest egg set aside in savings in case of an emergency.”
Slavik Boyechko, co-owner of video production company Video Dads, advised staying employed until you can pay your bills comfortably for at least one year. “Your first year, you should be focused on business growth, marketing and developing your core product, rather than stressing out about bills,” he said.
To cut business costs as you launch your startup, start a crowdfunding campaign and consider using a co-working space.
3. Craft a business plan.
Don’t go into your new business blind. To give your new venture the best chance of success, you must design and write a business plan that considers how you’ll reach your target audience, gauge the competition, find investors and more.
“The business plan should be detailed, with an understanding of what your business is and does, your target audience, where you are at in your development stages, your competitors, projected profits and losses, and if you will require funding from investors,” said Sweeney. “If you have not already legitimized your company, now is the time to take care of those technical details like incorporating or forming an LLC, registering for trademarks, filing business licenses, and registering for DBAs and EINs.”
However, you don’t have to go overboard and spend all your time writing the plan. You’ll likely better articulate your thoughts in a more concise document.
“Unless you need to raise money from investors, don’t bother with writing a 20-plus-page business plan,” said Stephie Althouse, Ph.D. and CEO of Top-Notch CEO. “Instead, write a short, pragmatic one.”
Althouse said that this short-form business plan should outline your vision, mission (business purpose), business goals (large and small), strategies to achieve them and a 90-day action plan.
4. Network with people in your industry.
In the business world, it’s all about who you know. It doesn’t matter how talented or passionate you are; if you aren’t willing to connect with people in your industry, including customers and other business owners, you won’t have nearly as much success.
“Networking and marketing are key – and they are as important as what you might think of as core skills for your business,” said Althouse. “For example, if you are an engineer and you want to open an engineering firm, of course, you need to be great at engineering. However, you need to be or get good at marketing and client acquisition – or hire someone who is. [Otherwise] your business endeavor will not be successful.”
To create a small business marketing plan, you’ll need to understand your business goals, how to quantify and measure success, and how to implement the strategies that will lead to success.
5. Don’t wait for the “right time.”
There are many risks in entrepreneurship. But if every business owner cowered in the face of uncertainty, the business world would be nonexistent.
“If you’re worried about the risk with going on your own, remember that working a steady job is just as risky,” said Boyechko. “At a moment’s notice, you could lose your job, and there is no guarantee you’ll find a similar position. When you’re working for yourself, even when money is tight, you have the ability to do something about it rather than wait for a new job to come along.”
You might consistently tell yourself you’re not ready yet – that it’s not the “right time.” But it might never feel like the right time to leave a secure job position to start your own business; you can’t let that dissuade you from an opportunity.
Many entrepreneurs wait for the perfect business plan or a working prototype before making the plunge. However, time is incredibly more limited and finite than money. Once gone, you can’t get it back.
If you have a solid idea as well as strong distribution skills, risk-taking ability and a pragmatic way to support your expenses, it may be time to focus on your startup full time. You might never get a second chance.
Mistakes to avoid when quitting your job to start a business
Are you ready to quit your job and become a full-time entrepreneur? Ensure you avoid these common mistakes:
- Not saving enough money ahead of time: If you have a good-paying job and want to be your own boss, save every penny you can. Set aside vacation plans and other discretionary expenses to create a small nest egg to sustain you until your business is profitable. Remember, in addition to losing your regular salary, you will also have to pay for health insurance and possibly other employee benefits.
- Not doing enough market research: To make the leap, you should be reasonably confident of success. The best way to do this is to devote considerable time and effort to market research. Ask yourself the following:
- Is there a need for this product or service?
- Is the market for this growing or shrinking?
- What is the competition like?
- Realistically, how much do I need to spend to successfully launch this business?
- Can I start this business without a loan?
One market research approach is looking for ways your business idea won’t work and being pleasantly surprised if you discover it has a good chance of success.
- Thinking you can hire whatever skills you need: In the beginning, you’ll wear many hats and must have the skills to do a little bit of everything. If you need a specialized skill you don’t have, learn it or get a partner with that skill. You probably won’t have the money to hire everyone you think you’ll need. Many affordable online courses can teach you nearly anything you need to know, and software can help. For example, improve accounting skills with online resources, or use the best accounting software to fill in any accounting knowledge gaps.
- Creating a startup without a supportive network: Because being an entrepreneur is challenging and the stress of business ownership is real, it’s essential to have a network of people who will help and support you. Tap into positivity from your spouse, friends, mentor and business network. Their support can help you practice self-care during stressful times and maintain a positive work-life balance.
- Burning bridges: No matter how excited you are to leave your dead-end job and become your own boss, never make a dramatic exit by telling your boss or co-workers precisely what you think of them and the job. You never know when that company or those individuals will be in a position to help you or your new business venture. Leave on a positive and professional note, and offer to transition or even train the person taking your position.
- Leaving without collecting materials: While you can’t take company property or information without permission, you may be able to take specific materials. This includes copies of your reference letters, recommendations, performance reviews, positive customer reviews and testimonials that mention you by name. You may also be able to bring names and contact information for people with whom you want to stay in touch. (If this includes customers, it can be a legal gray area, so get permission first.)
- Not having the right mindset: If you’ve never been a self-sustaining business owner before, it’s easy to get used to having a steady paycheck, co-workers and a company supporting you. As an entrepreneur, you’ll need to work harder, be more dedicated, put up with loneliness, be willing to put in a lot of work without earning money at first, be flexible in your expectations and strategies, and live with uncertainty.
Jennifer Dublino contributed to the reporting and writing in this article. Some source interviews were conducted for a previous version of this article.