You're all pumped because you've got a great idea for a business but now you don't know which move to make next. (If you are still not sure what to sell, check out our article Want to start a business but not sure what to sell). Should you quit your job so that you have more time to work on your business or should you try and grow your business on the side? This is one of the biggest questions most entrepreneurs face when starting out. And really, there is one simple way to answer this:
Can you survive for 4 months without an income?
You need to be very realistic here. You can't expect to start generating an income, let alone a profit, straight away. How long this will take is different for every industry and dependent on a number of factors. However, to save yourself a lot of anxiety and stress, have at least 4 months worth of living expenses saved before you quit your job. Even after you start generating a profit it will still take time before you are earning the same income as your previous salary or wage. According to Chron, most entrepreneurs won't see this until their second year in business. So if you go all in, be prepared to start lean and look at options for bootstrapping your business.
If your answer is no, you can't survive without bringing in an income for 4 months, you have two options: 1) Reduce your expenses, or 2) Start a business on the side. And you don't have to choose one or the other, implementing both would be ideal!
1. Reduce your expenses
You really want to be working on your business full-time and you have some money saved but it's not enough to last you 4 months. Duh! it may seem obvious but so many people don't consider this as an option, you are going to have to make some sacrifices and reduce your living expenses. Consider moving in to a shared house, cut out all your unnecessary expenses, start running outside instead of going to the gym, cook instead of eating out, there are a ton of ways to reduce your living expenses. And if you're really keen you could also consider moving to a different country, such as Thailand or Costa Rica, where the cost of living is cheaper. Not only will reducing your expenses save you money that can now be invested in your business but it will usually result in simplifying your life, not to mention the people you meet and priceless experiences you gain from living abroad! And the less stress and worries you have in your life, the more time and effort you can put into your business.
2. Start a business on the side
The option I would recommend is to start your business on the side first. All of the steps in our article first steps to starting a business can be done whilst still working a full-time job. Having a steady income will take a lot of the pressure off and give you time to plan out your business strategy and confirm that this is what you really want to do before you go all in. If you are running a service business, use this time to test out working with different clients. Having a steady income will allow you to seek out clients that you want to work with rather than taking on any clients just to make ends meet. It will give you the freedom to turn down jobs that aren't in line with your style, that don't build on your reputation or that drain you and focus on the clients and the work you love. I must note here that I don't recommend working on your side business during company time or using company resources as this could get you fired or sued!
Any money you make from your side business should be invested back into the business. Use it to promote your business further or hire a virtual assistant so you can service additional customers. Once your side business is generating a steady income of roughly 75% of your salary, it is a good time to quit your job and devote more time to growing your already established business.
The path to building a business is different for everyone. Some businesses take off instantly while others take years. At the end of the day you set out to start a business you would love. Be realistic and plan properly so that you can love it and enjoy the process along the way.
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