Make sure you're ready for entrepreneurship before leaving behind a steady income.
Starting a business is a risky move, and quitting a stable job to do so is even more dicey. But if you have an idea burning within you, and an entrepreneurial spirit that wants to see the light of day, you can find the courage to take the chance.
However, it's crucial that you're ready to embark on this journey before you decide to leave behind security and a steady income. Dinesh Kumavat of the Business.com community asked: "When should I quit my job to focus on an online business startup?" We interviewed entrepreneurial experts and outlined five steps to quitting your day job and pursuing your entrepreneurial dream.
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 fully commit.
"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 still 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 and CEO of Woof Signs, who left her tech sales job 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."
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 to support your endeavor 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 you have at 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, CEO 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.
3. Craft a business plan
Don't go into your new business blind. If you want any chance of your idea taking off, you must have a business plan intact.
"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 this short-form business plan should outline your vision, your mission (business purpose), your goals (large and small), your 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."
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 the truth is, 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 of us wait for that perfect 'business plan' or a 'working prototype' before we make the plunge," said Mansi Singhal, CEO of qplum. "However, we underestimate the value of time versus money. Time is incredibly more limited and finite than money. Once gone, it cannot come back. That is why, if you have a solid idea with strong distribution skills, risk-taking ability and a pragmatic way to support your expenses, it is a good enough time to focus on your start-up full-time. You might never get a second chance in your lifetime to do it."