If you’re an eager entrepreneur who has toyed with the idea of launching a small business, or wondered whether to take your side project full time, deciding if and when to leave your day job can be difficult.
Rather than rushing into a choice you might regret, give the matter the careful consideration it deserves. Here are some big questions you should ask yourself before handing in your resignation.
Are you looking to escape your current situation?
No one wants to struggle to make it through another day, week, or month of work. When considering a new endeavour over a steady job, your judgement shouldn’t be clouded by negative emotions. In truth, a desire to escape your current situation isn’t a good enough reason to quit. It’s better to know the opportunity you plan to pursue will bring you pleasure and satisfaction. If not, you’re likely to end up in the same unhappy spot, only with less security and even more stress.
What’s the state of your finances?
Leaving a steady job means saying goodbye to the financial security it brings, not to mention other benefits such as medical insurance and regular vacation time. If you’ve got a side business on the go and it’s already generating enough income to cover your mortgage, utility bills, car payments, and other essential expenses, you’re clearly in good shape. If not, or you’re starting a new business from scratch, you’ll need a nest egg you can tap into until you’re generating sufficient income to start paying yourself a salary. How much should that be? A conservative estimate is enough to cover 12 months of personal expenses while still being able to afford business start-up costs such as legal fees, equipment purchases, travel and transportation, rent, and so on.
Have you tested your idea?
To succeed as an independent entrepreneur, you’ll need more than just a clever concept. Some serious research is required to ensure your idea is truly original, fills a need, and has the potential to turn a profit. One great way to test whether you’re on the right track is by running a focus group. This requires selecting a screened pool of participants who represent a cross section of the population, or possibly just your target market. Compile a scripted list of probing, open-ended questions to get people talking about your industry and your idea. You’ll also need a competent moderator to run the group and extract usable information from your subjects. Run as many groups as you can to generate a wide range of input. Record each session and review them. If necessary, follow up with a second round to test refined ideas and concepts that emerge from your initial research.
Do you have a detailed business plan?
In order to attract investment and arrange financing, you’ll need to come up with a business plan. It doesn’t have to be too long – a couple of pages should suffice. Start with a brief overall summary of your intended business idea, then follow up with details on start-up costs and projected revenues, a breakdown of your operations plans, your target audience, and information on your marketing strategy. Run it by a few people you trust and get some feedback before sharing it widely.
Is your family ready for your career change?
It’s essential your partner understands and supports your decision, and recognizes he or she may have to carry a greater share of the burdens of generating income, child care, and other familial obligations. On your end, how prepared are you to miss out on meaningful moments such as kids sporting events, school concerts and birthday parties? Be honest with yourself about how external pressures will affect your ability to fund a small business venture, and the amount of time you can dedicate to it.
Finally, can you handle the pressure, intentional or otherwise, of relatives (and friends) who may not fully grasp your decision and constantly ask for updates on your progress? It won’t always be easy for them to accept what you’ve done, or for you to handle their constant queries while you struggle to get your new venture off the ground.
Are you prepared for a change in lifestyle?
Being your own boss might sound great but the reality isn’t always so glamorous. Besides the financial stress and the constant grind, it’s important to consider the other ways your day-to-day existence is likely to change. Leaving the rat race might mean not having to commute, but it may also mean working in an isolated environment where you’re no longer surrounded by a team to socialize with. It also means having the discipline required to stick to tough tasks, even when you’re exhausted and would rather call it a day. Finally, it means having the necessary problem-solving and innovation skills required to tackle those tasks alone, without expert colleagues to lean on.
While there are always going to be stresses along the way, starting a small business should be an exciting and deeply satisfying experience. If you’ve taken the time to answer these questions and still feel strongly about your idea, maybe the time is right for you to resign from your day job and realize your dream. If so, good luck!