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  • 17 March 2015
  • Barry Moltz

When is the Right Time to Leave Your Day Job?

According to a recent UPS Store survey, starting a small business can be scary. But the moment that an entrepreneur quits their day job and starts full time at their own business is probably the most unsettling moment. Here is how you can be the most prepared to make that jump and increase your chances of success:

Find another person that has experience in your industry or has launched this type of business.

  1. Have a plan. While most business plans never come true, the process of writing one is very important. It will help you figure out who is your target market, the cost of acquiring a customer, your competition and what your expected profit can be. It is critical not only to create a plan A, but backup plans B, C, D, and E. The only constant is change and planning helps when expectations are typically wrong.
  2. Analyze the financial exposure. Many start up entrepreneurs invest too much of their life savings into starting a business and if this attempt fails, they have no fall back plan. Carefully examine the risk and reward equation with your spouse or close friend. Invest no more than 25 percent of your savings in the initial funding of the business. Use the next 35 percent to fund the company’s second stage after some success. Remember that having too much money at the start can be wasteful. The remaining 40 percent of your savings should not be used for the business and needs to be protected from temptation (i.e., transfer control of this money solely to your spouse). Another way to limit personal exposure is to add money from friends and family to mitigate your risk.
  3. Get a mentor. This is the number one success factor for small business owners. Find another person that has experience in your industry or has launched this type of business. Ask for advice as often as they will listen. In addition, look at the support structure around you. What does your spouse or best friend think about you quitting your job to launch a company? They may think the whole thing is crazy, but will they emotionally support you?
  4. Ask why are you quitting? Are you bored in your current job or just hate your boss? Is the dream of making more money the only thing driving you? None of these are really good reasons to start a company. Most entrepreneurs make less income than the job they left for the first two years of the startup. You need to be incredibly passionate about building a business to get you through tough times with little compensation.
  5. Can you slow down? What is the rush to quit and start a company? Can you do both your current job and run the new venture at the same time? Remember that the most effective way to grow a business is incrementally. But, if you are running your company on your employer’s time, then you have to change that habit or leave. Loose lips sink ships. Don’t talk about your company at your day job. You might be asked to leave before you are ready if your current employer views it as a conflict.
  6. Paying customers. How many paying customers (relatives not included) do you have currently? Can they support the business and still pay you a salary to cover personal expenses? How likely are these customers to stay over the next six months? Remember that sales growth is rarely a straight line.

Are you ready to quit your day job? Tell us!

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