Should I Quit My Job to Start My Own Business?

I am a staunch advocate of following your dreams and achieving your life goals. I feel that everyone should wake up happy and excited to start their day. This is the main reason that I started my coaching business – it energizes and excites me when I help people discover and pursue their passions.

At the same time, I am a staunch believer in not making impulsive decisions that can have a long-term adverse impact on your finances and overall quality of life. This is why I think that the pursuit of our passions should be founded on the principle of wisdom. You need to understand the how, when, where, and why of executing your plan of action before you dive in.

As much as I love doing what I do, I would not be able to do it without the foundation that I built from working a full time job. I worked for many years building my business while remaining employed at a fairly demanding job. There were many times that I thought about quitting my job and starting my own business during my transition phase.

About a year before I left my last full time job I was completely burned out but I kept going because I wanted to set a firm foundation for my business before leaving. I was not in the financial position that I wanted to be in during the early phases of my business start-up. So I stuck with my full time gig until it was the right time for me to leave.

Of course, my situation doesn’t apply to everyone so I never answer this question with a one-size-fits-all answer. Ultimately, it depends on your situation and your career goals. So I always challenge my clients to consider these three questions when they contemplate quitting their job in favor of entrepreneurship:

Are You Financially Prepared?

Generally, I recommend that you have at least 6-12 months worth of living expenses in savings before you voluntarily leave your job. This may sound excessive, but it can be a life-saver especially if you do not have another source of income. No one knows what tomorrow will bring so it is better to be prepared than to be sorry later.

Think about some of the individuals who left their jobs to be a full time entrepreneur within a few weeks of COVID-19 being declared a pandemic. A few of them probably made impulsive decisions to leave their jobs and had little savings in the bank to carry them through a few months. They were fired up and ready to give their business their all and out of nowhere the entire globe was forced into an economic shutdown.

So, what does that look like for them now? Number one, because they voluntarily separated from their employer they can’t access unemployment benefits right now. Number two, they also don’t have access to employer-sponsored healthcare benefits. This means that they may have to delay or forgo treatment if they experience health concerns.

Number three, unless their business provides essential products or services they probably won’t make many sales right now. Because consumers tend to primarily buy only essentials in a down economy a number of businesses that provide non-essential goods and services are suffering right now.

Therefore, more than likely these individuals have unnecessarily fallen on difficult economic times due to poor preparation. And believe it or not, I actually know someone who is in the exact situation at present. This is why I strongly advocate for financial preparedness when starting a business endeavor.

Even in an up economy, the average business owner typically has more expenses than revenue in the first year of their business opening. For some, this may be the case for the first two to five years. This means that you may not be making a profit while your business gets off the ground. Therefore, you need a financial cushion to keep you afloat during these times.

Do You Have an Economically Viable Business Strategy?

Is your business tried and true? By this, I mean have you tested the market and seen if your business is profitable for you? Generally this requires that you start building your business while working a full or part time job. That way you will have a better understanding of how much you can anticipate making from your business once you transition into it full time.

Taking a tiered approach to full time business ownership also helps you make less costly mistakes. You can take your time to see what works well for your business operations and what doesn’t while you still have a viable income scream. You can easily write off losses and lessen your tax liability while not breaking the bank if you strategically plan your transition.

Do You Have a Backup Financial Plan?

If you plan to leave your job, do you have have another viable means of income to sustain you through the transition? This could include income from other income earners within your household, alimony or child support payments, pensions, annuities, royalties, investments, lottery winnings, etc. This source of income can be in addition to or a replacement for the earnings from your employment.

It is very important to have a steady scream of income flowing while you start your business, if at all possible. Having a backup financial plan will help ease tension and anxiety from business losses or slow growth. It can also be an extra source of business capital in times of need. So think about how you plan to live as you grow your business before you leave your job.

Summary

After you have taken time to diligently consider the impact of leaving your job in favor of starting a business, you should strategically plan your course of action. You should never make an impulsive decision by simply quitting your job in the heat of frustration or excitement. No matter how tired you are of your employer or how burn outed you may be, impulsivity is rarely the best plan of action when it comes to financial matters.

Even if you decide that quitting right away is the best option for you at least follow proper protocol. Tender your resignation according to your employer’s guidelines and be diplomatic throughout the resignation process. You never know if you will need your job again in the future or if you will meet up with your former supervisor, colleagues, or customers in a different capacity.

Also, try to wait for the most opportune time to leave even if you are ready to walk out the door right away. For instance, if you work in education generally the best time to leave is in between terms or during the summer break period. This gives your employer enough time to replace you and you aren’t leaving your customers in a difficult situation. After all, your customers from your current employment may be your business customers one day. So you should always try to resign in a graceful manner.

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31 thoughts on “Should I Quit My Job to Start My Own Business?

    1. Yes, this was very important to me personally in my career as an educator. It was a very difficult decision but it was also very necessary.

  1. The main thing that I get here is finance. You must have a preparation in this regard before deciding to quit your job.

    1. Absolutely. If you don’t have the proper finances you can easily find yourself in serious trouble. The key is proper planning.

  2. This post is very informative. I personally believed before that business is just a hard risk to take, I would just stick to my job, but I’m wrong. Making a decision and some realizations take time.

    1. Being an entrepreneur is definitely a risky endeavor. It takes time and patience to build your business. This is why a plan of action is very necessary.

  3. Thank you for sharing this guide. I had realize a lot from it.

  4. Wow, this post is a life saver. One should never make an impulsive decision by simply quitting his or her job in the heat of frustration or excitement. I am sure this pandemic alone has thought so many a lesson.

  5. I am so !much in love with this article for its clear and productive contents. Working yourself with decision aren’t that easy.

  6. I love your post. You have well highlighted how to quite and start your business. I had no idea when leaving my full time job. I would recommend as you said. Have a 6-12 months savings. It is very important.

  7. This is actually I am considering to do because my job is getting very toxic. With this, I can always manage my own time and less stress.

  8. Thanks for the very sound advice. It’s good practice to have a financial cushion before leaving a full time job.

  9. Many people dive head first into a new business. How I wish they could read this article.

  10. The 6 month rule is one that I always advice people to follow. You should always have saving enough to sustain you for 6 months in case of any eventuality.

    1. So true. This is necessary for everyday life even if you have a 9-5. We never know what will happen.

  11. That first question is of uttermost importance – ‘Are you financially prepared?’ Unfortunately it’s also where most entrepreneurs fail.

  12. The decision to leave your job for a business is not an easy one to make. There are so many things to consider and I’m glad you cover all of them 🙂

  13. I like that you point out the importance of leaving your job in a good way so as to maintain good relationship with your former employer. One never knows when they’ll need them again.

    1. So true. We never know what the future holds. And you ultimately don’t want to burn bridges in life anyway.

  14. Once decided of something, It’s always best to think deeper- how it will affect you and people around you. Before this pandemic, I was thinking to quit my job and now that I’m staying at home waiting for work to resume I realized It’s hard to go on with everyday without salary.

    1. Sadly, many people are in this situation right now. It is not a pleasant position to be in but all the best to you.

  15. I have to admit that I have made the mistake of quitting my job too early before. It was a good learning experience though.

  16. Starting a business is a hell of an uphill task. I wouldn’t recommend it unless one absolutely knows what they are getting into.

  17. The importance of an Economically Viable Business Strategy cannot be overstated. It could actually make or break any new business venture.

  18. A decision as huge as this needs a lot of pondering on. In my opinion it’s better to not quit.

  19. Sometimes taking a risk is worth it. However, when it comes to starting a business, the risks should be mitigated as much as possible as a mistake could spell financial doom.

  20. Making decisions is always hard especially if you are not the only one that will be affected. As a family man, I always put into consideration my family if such things come into my mind.

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