Unless you’ve inherited a big chunk of change, few entrepreneurs can get their business off the ground without working a “real” job to sustain themselves during that process. There’s a very good chance you’re in this same boat if you’re looking to set out on your own. Which means at some point you have to decide when you can quit that “real job” to focus entirely on your own business.
We’ve all fantasized about standing up, yelling “I quit!” and walking out on job. Maybe with a few overturned desks and smashed monitors strewn behind us. Seeing as you’re an entrepreneur and not necessarily someone who enjoys working in a regular office environment, you may be tempted to take a variation on this approach. Don’t. No matter how satisfying it feels to tell a bunch of jerks that they’re jerks, you likely won’t feel quite so negative about your old office after you’ve been away for a while. Burning bridges is rarely a good idea. Your boss could become a future customer or better yet investor!
Keep working as long as you can. The more established your business is when you leave, the more confident you can be about making the leap.
But when should you quit?
Quit When You Can Support Yourself for Two Years
This isn’t about being overly careful. This is about ensuring your business has the breathing room to succeed. If you’re struggling to pay your mortgage three months after you’ve left your job, then you’ll be too distracted dealing with that to focus on your business. What’s the point of leaving your job for that?
Maybe you have a spouse who pulls in enough money to cover the difference as your business gets going. Maybe you have a side hustle you can work on part time to earn extra cash. Maybe you saved up a lot of money just for this purpose.
Whatever the case may be, make note of your monthly living and business expenses then subtract whatever your business is bringing in. Can you make up the difference? If not, would you be happy cutting down on some personal expenses to make it so you can?
Quit When You Have a Grasp On Taxes
Depending on how much money you’re making from your business, you may not have noticed just how big a chunk of profits can be vacuumed up by taxes. Expenses while getting the business going may be offsetting some or all of these taxes. The potential refund from your regular job may be balancing against your business profits so you don’t have to pay anything.
If you’re making just enough to get by, it’s a terrible surprise come April to suddenly find you owe the government thousands of dollars you do not have. Just how much you’ll owe is going to depend on profits, deductions, expenses and numerous other things best left for a tax professional to hash out. Regardless, you still need to be prepared to pay.
Plan to put back 15 to 20 percent of your business profits every single month. This could be more than you need or it could be less, but it’s a solid starting point to ensure you aren’t blindsided by a tax bill.
Quit When You Have a Plan for Dealing with Loneliness
Assuming you feel financially confident enough to leave your job, working on your own can be quite lonely. Even if you get tired of seeing the same people at work every day, you’ve likely made friends and had good conversations. You’ll start to feel the loss of that a month or two after you leave.
If you have a partner and/or kids they certainly help, but you’ll probably want human interaction besides family and customers. Otherwise, the isolation may start to wear on you. How can you deal with it?
Plan at least a monthly lunch with friends from your old office. This will ensure you don’t lose those friendships.
Work outside of your house or business once a week if possible. Go to a coffee shop. A park. The library. So long as you can see, hear, and interact with other people, it’s a good spot.
Keep active in the community. Play on a softball team. Volunteer with a non-profit organization. Join a board gaming group. Attend religious services.
Not only will you feel energized by being out with other people, you might even meet some new customers. And that’ll bring you one step closer to running a self-sufficient business.