Question: I have a photography business that I’m starting up but don’t know at what point I should make the full leap from my day job to this startup. Is there a certain amount of income I should reserve before I make the transition?
Well yes, that is the question, isn’t it? Life would be so simple if there were only a pat answer to this question. Take your monthly income and compare that to your savings, or something like that. But of course it doesn’t work.
This is a good place for a reminder about the business plan and business planning. The business plan isn’t something you do just because somebody told you to; it’s about reducing uncertainty and making your way carefully.
Review your estimates: sales, costs, expenses and, most important, cash flow. No dreaming at this point. Do your numbers well. Be conservative.
Here are some things to consider and factors that might help:
- Take a step back from your finances and look at your life. Can you afford to fail? Be honest with yourself. Are you going to lose a relationship? Never bet something you can’t afford to lose. The answer here should be very different for an unattached single person with some savings than for an attached person in a relationship who has people depending on him or her. That’s just a fact of life.
- Use your imagination. Throw yourself forward six or 12 months and imagine how you’ll feel if things don’t work out. Would that be a complete disaster? Can you live with it? Now do the same and imagine how you’ll feel if you don’t jump into the water. You didn’t risk anything, you didn’t do it, and now the window of opportunity has passed. How much will you regret?
- Take your business plan and cut the sales in half. What happens? Can you survive? What kind of conditions would cause that disappointing result.
For the record, I jumped off a good job when I was 35 years old, married with four kids, and mine was the only income for the family. It worked out, but it was scary. I don’t think what I did was the smart thing to do. I wouldn’t recommend it to anybody, but we did survive.
Additional thoughts. I posted Don’t bet the house on this blog a couple of months ago, and more recently, I linked to an excellent post by Pamela Slim on Escape From Cubicle Nation. She gives a very thorough list of recommendations on this point.
Think it through. Feel it through. And good luck.
This entry was posted on Thursday, January 24th, 2008 at 5:14 pm and is filed under startup advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.4 Responses to “When Do I Quit my Job to Start my Business?”
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January 25th, 2008 at 7:36 pm
It is important to be objective and cold analyzing the pros, cons, and all the facts when the time comes to decide what course of action and direction to take. Simulating an extreme scenario can be helpful: What would happen if you cut the sales completely for 6 to 12 months instead? Ouch! – Javier.
January 26th, 2008 at 6:29 pm
I started a business but, since I’ve been at work most of the time, it hasn’t picked up due to situations. My income is scarce but I know if I take the time off work or just let it go I’ll be OK.
January 27th, 2008 at 2:55 pm
Timing is key. You can have an amazing idea or business plan but you or your customers may not be ready. Personal finances can hinder your “Leap of Faith” or if you are trying to introduce your new product or service to your customers they not be entirely sold into your idea and you have to let it cultivate into your market.
A suggestion is to incubate your business venture while working currently at your 8-5 job. Without completely risking your finances you will have to work two jobs to crutch your business to success. Basicially, you are testing the water out and running your business at a small scale until it cultivates into a cash cow. Once you are forced to quit your 8-5 job to devote your 100% attention to build your business and to services your clients/customers that is the time to say adios to your 8-5 job.
This concept is not new but you’re building your wings on the way down and you have the ability to control the speed and direction. You can protect yourself without putting the business in jeopardy of any forseeable failures you may be able to avoid. Keep in mind that you will still have to take some level of risks. Seize the opportunity when the timing is right and act on it!
January 27th, 2008 at 7:41 pm
“Review your estimates: sales, costs, expenses and, most important, cash flow. No dreaming at this point. Do your numbers well. Be conservative.”
That was absolutely some of the best advice I’ve heard in a long time. For years I’ve always thought in that exact manner but not too excessively. If you begin to believe that your venture isn’t going to be profitable, beginner investors will most likely scare themselves out doing business at all. No matter how many calculations you do, it’s always a risk. Great advice!
Dwayne Lattimore