It feels like just yesterday when I powered down my laptop for the last time to leave my full-time job and launch straight into my first business.
It was 2013, and I’d just graduated from college about a year before. Now, I was quitting my day job and striking out to focus on growing an exciting new business selling custom phone case printers with my best friend. It was a dream come true working for ourselves at the age of 22. Little did we know, in about three months we’d both be nearly broke and moving back in with our parents on opposite sides of the country.
Before quitting our jobs, we worked hard to painstakingly onboard our first few customers in the hours outside of our day jobs, and growth was picking up steadily. We were closing a new sale worth about $5,000 every two weeks, and all signs pointed toward an acceleration in that number. While it wasn’t anywhere near enough to pay us both a living wage and continue reinvesting in the business at the same time, we made the leap trusting that the extra time we’d be putting in would naturally equate to more sales.
And wow, were we wrong. Almost immediately after we quit our day jobs to focus on growing the business, we hit a major downturn in activity with sales leads. We’d been relying solely on Facebook Ads to drive new people to our website, and as soon as that inexplicably stopped performing, we were sitting ducks. We had no other channels in place to bring us new leads.
Fast-forward a few more months and we had to move home to cut costs and try to salvage the business. If you want to avoid this same mistake with your side gig, you need to have an emergency fund in place, a roster of paying customers and a plan for how you’ll continue to grow in the right direction after you quit your day job.
Here are three questions you need to ask yourself before you quit your day job to focus on growing your side business:
1. How much side income is your business already generating?
Whether your side business is freelancing, building the audience for your own blog, creating a podcast, an online course or something else entirely, it needs to bring in paying customers before you can quit your day job. If you haven’t built a predictable flow of new customers for your side business, you’re not ready to jump yet.
Expecting to figure it all out the moment you ax your paycheck isn’t very realistic, and that’s too much stress to place on yourself. After going through the experience of quitting my day job too soon once before, my personal rule is that I now must first validate my idea with paying customers and bring in at least 75 percent of what my full-time job pays me before I even consider quitting.If you haven’t built a predictable flow of new customers for your side business, you’re not ready to jump yet.Click To Tweet
2. How large is your safety net?
You need to have a financial safety net in place before making the leap, even if you’re already generating enough revenue to keep yourself afloat immediately after leaving your full-time job. Do you have enough in nonessential savings that you can afford to fund your lifestyle for at least three to six months if your business doesn’t grow as quickly as anticipated? You might need it.
If you’re heading into your side business without much consistent revenue already coming in, you need to decide right away on the best way to finance your business, depending on your goals and the future you envision for the company. From self-funding with your own savings to taking on credit card debt, getting a small business loan, bringing on investor funding or otherwise, you need to choose a financing option that will give you enough runway to grow your business up to profitability before your cash is depleted (and before you have to move back in with your parents like I did).
3. Do you have the discipline to handle working for yourself?
Seriously—with no office to show up at by 9 a.m. and no boss to help manage your deliverables, do you think you’ll be able to handle the new challenge of keeping yourself on track with growing your business for the future?
Find someone who can hold you accountable to set and regularly check in on meaningful goals that encourage you to keep your business moving in the right direction. This person can be a mentor, fellow entrepreneur or even just a good friend that understands the journey you’re embarking on. Set aside time each week to check in on your goals, set new ones, and you’ll be on the right path.
Keeping these three tips in mind when you strike out to start your own business can help ensure that when you do quit your day job, you’ll be ready for what lies ahead.
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