These days, we are increasingly tempted to venture out, stop working for the man, and start working for ourselves. How do you know when it's the right time to do so?
There are a few questions you need to consider:
1. Am I leaving my job to start a business that I know will make money? Or to start a business that I love?
Hopefully it's both. Nothing is more difficult or more rewarding as running your own small business. But, you better love it. Because if it's just something that you think is going to be profitable, but don't love, you'll hate it. And if you hate it, your business will show it.
There's nothing wrong with wanting to make a profit and seeing an opportunity. But it would be tough for a vegan to open a successful McDonald's, because their heart would not likely be in it.
2. What am I selling? What makes me different from the rest of the people/companies in my field?
This is part of a branding strategy that will be addressed at a later date, but this is a good question to wrestle with. By the way, the answer is not talent.
3. What's my absolute worst case scenario and escape plan?
Let's be honest... small business is not for everyone, and there is a chance your business will fail. Be prepared. Don't sit around and watch your business go down the tubes, but be prepared for that scenario. What's your breaking point? At what point do you say, this is no longer worth it, and close shop? But in efforts to keep this positive, I would ask this first "Can I adapt my business out of the slump?"
This leads to probably the most important of the "when to leave" debate:
4. Do I have my finances in order and an Emergency Fund?
If you don't, you're not ready to venture out on your own. This is probably one of if not THE biggest reason small businesses fail. Nothing to fall back on.
Short and Sweet:
I recommend that you keep your business and personal life separate in every way. You should think of it differently, feel differently when you talk about it, etc. BUT, when debating on when you are ready to get started... you better have your personal finances in order, or you are not ready to start a business.
Namely, in this scenario, you should have at LEAST a 6 months emergency fund sitting in a money market account. Something that you do not touch unless you have absolutely no other option. And upon rebounding, every dollar goes into filling it back up.
Side Note: The 6 Month Emergency Fund:
Take your personal budget (yes, you should have a budget - if you don't try this budget courtesy of Dave Ramsey), strip down the luxuries like cable, eating out, etc., then multiply it by 6. Or take whatever number you base your monthly budget on, and mulitply it by 4. Then save up that much money and put it away. This is not your newest-latest-greatest-computer fund. This is your only-if-there-is-nothing-else fund.
Let's say your there.
You have your personal finances in order, a 6-month emergency fund, a passion for the business you want to get into, and an exit strategy. What's next?
Is it possible you start building that business while you maintain the income of your current employer? To start doing some freelance design at night, on the weekends, etc. to build your client-base? If so, can you build it to a certain point, sock enough money away to live for 3 months without income (in addition to your emergency fund), while you start building a loyal, consistent client-base? Can I bust my butt for a few months, testing the waters, while maintaining my current income to get started?
No one can ultimately tell you, yes it's time to go. It's a leap of faith, but should NOT be a blind one. Prepare yourself, prepare your finances, build a cushion for yourself, a solid foundation... then close your eyes and jump. You'll be years ahead of most current small business owners.
