Quitting a steady job to start a business can feel like you’re about to jump from a cliff.
It’s a challenging task as you’re not sure whether the new business will thrive or turn out to be the biggest mistake of your life.
But here’s the good news, if done well, quitting your day job can also present great opportunities.
Consider all the things you miss out on because you’re working a 9-to-5 job. You don’t get to spend time with your family as much as you’d like.
You don’t have job security.
You’re always working for someone else’s goals and not your own.
You get very few opportunities to advance your career among others.
If you’ll have your own business, you’ll enjoy these perks and so much more.
In this post, we’ll guide you on how to quit your day job and start a business.
Step #1: Learn about Business Development
Considering that this is your very first business, you’ll need to invest a great deal of time learning about business development. Study books, watch tutorials and consult individuals who’ve launched new businesses and became successful.
One of the main reasons why some businesses don’t succeed is because their founders didn’t do enough research.
So it’s important that you build a good foundation by acquiring as much knowledge as you can about your new venture.
Go to meetups, attend conferences and look for a network of entrepreneurs that you can learn from.
Here are some of the steps involved in business development:
#1 Coming up with an idea– start by developing a simple idea for a product or business. You can base it on your current profession or a gap that you’ve identified in the market.
#2 Conducting market research– this is the most vital step as it determines the potential of your idea.
To do thorough research, gather as much information from web searches, journals, federal and state agencies, local library and industry associations. You can use this list of 25 free market research tools to help you on your way.
The goal of this research is to gain a general sense of the audience you’ll target with your product/service and what will be your pricing.
This is the point at which you decide whether your business idea is worth pursuing or whether it needs a little tweaking.
Once you’re through with market research, the next step involves creating a business plan.
This is simply a document that outlines how your business will grow from being a simple idea to a finished product or service.
You can use this tool to create a business plan for free
Step #2 Find How You Can Impact The World
Developing an idea for your business is the most challenging part of launching a new venture. So an easy way to go about this is to develop a business idea that can help resolve a problem.
It doesn’t matter whether you’re solving a problem that you’ve encountered or one that other individuals face.
If you think about it critically, every business exists to provide a solution to people’s problems.
Pharmaceutical companies exist to solve health problems. Restaurants exist to solve hunger issues. Real estate companies exist to solve housing problems.
Thus, all you need to do is identify a problem that requires a solution and this might be the perfect business opportunity.
Sounds simple, right?
To do this, continue living your life normally but be more attentive. If you encounter any problem, inconvenience or challenge, write it down.
You can also ask your friends if they’ve experienced any issues. I’m sure a majority will be happy to share! Within a couple of days, you’ll have a list of problems that you can transform into business ideas.
To narrow down your options, use these criteria:
- Does the problem pique your interest? For instance, is it something you’re passionate about?
- Can you come up with a feasible solution to the issue and one that doesn’t already exist?
- If you were to encounter this issue in life, would you be willing to pay to get it fixed?
- Is this a problem that affects a number of people or organizations?
Once you’ve identified an idea that meets these conditions, use this tool called the “Validation Board” to test your idea and see if it actually solves a need or a problem.
Here’s how to use it:
Step #3: Start It As a Side Hustle
If you’re tired of being an employee, you may decide to dive headfirst and start a business by quitting your day job.
But in our opinion,
It’s easier to try your new business as a side hustle first. This will allow you to grow your self-employed income while still enjoying the safety and security of your current job.
That said, expanding your side hustle to the point that it starts yielding profits with a limited amount of time is not going to be easy.
It will require hard-hearted prioritization, a mindset shift when it comes to the things you value most in life and the willingness to be creative.
I understand that not everyone may be willing to commit to another gig while still maintaining a full-time job.
If you’re reluctant to take this hybrid path then consider this- a good number of successful entrepreneurs used this approach.
A study published in the Academy of Management Journal shows that individuals who keep their day jobs while launching their businesses have a higher likelihood of succeeding than their risk-taking counterparts.
Often, individuals who quit their day jobs and go all-in with their new ventures are seeking short-term gratification. Not only is this incredibly risky but it’s also unwise.
If you want your new business to last for the long-haul, the key is to build it slowly and steadily.
Step #4: Save Enough Money
Unless you want to end up living in your parents’ basement once you quit your job, it’s important to have a financial backup plan.
Ideally, you should save enough money to sustain you for at least 12 months. With such a financial reserve, you will have financial comfort when you decide to call it quits and venture out on your own.
To calculate exactly how much money you should save, you’ll need to do a bit of math.
Calculate or estimate your monthly budget. Next, multiply that figure by 12.
If you’re not certain of how much money you spend on a monthly basis, use this calculator by NerdWallet.
Don’t forget to incorporate other financial items like your monthly loan repayments and health insurance- given that your employer won’t be paying for that anymore.
Let’s say, you spend $2,500 each month. This means that before you quit your job, you should have saved at least $30,000.
If you have kids or are taking care of another individual like an elderly parent, you’ll need to save even more.
Perhaps, you’ve had the desire to quit your current job for months or even years.
Still, it’s vital that you plan adequately and have financial resources before taking the leap. Consider doing these 4 things to be financially prepared:
- Know the specific amount of money you require to sustain your life – track your spending behavior and determine how much money you use every day/month.
- Have an emergency fund – without a steady flow of income, it can be challenging to take care of any unexpected expenses that arise. To prepare adequately, ensure you create a separate account that’s reserved for emergencies only.
- Cut back on your spending by getting rid of non-essential expenses – this is the moment where your commitment to start a business will reveal itself. Are you ready to give up comforts for a long-term goal? For instance, you can stop enrolling for a gym membership and start exercising for free. Similarly, you don’t always have to get a full facial makeup each time you’re going out with friends.
- Take care of long-term payments – if you’re planning to leave your job at some point in the future, then don’t take up any long-term loans. If you have any current loans that you’re repaying, it’s wise to also finish pending payments.
Step #5: Add Other Streams of Passive Income
Along with saving money and setting up an emergency fund, another thing you should do is look for passive sources of income.
Once you quit your job, you’ll have plenty of time on your hands.
More importantly though, you won’t have any source of income other than the money your new business generates and your savings.
Keep in mind that it might be a while before your new business generates any revenue, leave alone profits.
So to keep up with your lifestyle, consider investing in passive income-generating projects.
The concept behind passive income is that you can still earn money without being present physically.
A common and effective source of passive income is real estate. This is actually a highly profitable venture and there are so many different ways to invest in real estate.
- Flipping houses
- Owning rental homes
- Becoming a house hacker
- Owning vacation rentals
- Purchasing and renting out apartment complexes
Real estate isn’t the only area you can invest in.
If you have a knack for writing, you can try blogging or writing books.
Or else use our 6 strategies guide to create a steady passive income or learn how to start teaching online classes that can generate you passive income over the years.
Another way of generating income is by investing in traditional equities. This involves putting your money into financial securities like stocks, bonds, and mutual funds.
Just take note that this investment approach requires a bit of patience on your part. The reason for this is that it might take a long time before the market conditions are favorable enough for you to dispose of your issues/bonds and earn profits.
Step #6: Know When To Quit Your Job
Chances are, if you’re wondering when is the best time to quit your job, then you’ve already made up your mind to skedaddle out of there.
So it’s all about timing your exit perfectly.
Here is how you know when is the ideal time too quit your day job:
#1 You lack time to scale your side business
If you have a full-time job and devote very little time to your side hustle, this might be the perfect time to quit the day gig and go all in.
Maybe, the only reason your side hustle isn’t generating enough revenue and profits is because you’re not giving it the attention it deserves.
In this case, letting go of your current gig is the only way to ensure you’re devoting enough time to your new business. In return, you’ll be able to earn a living from your new business.
#2 You’ve saved enough money
As we mentioned earlier, you should have a financial backup plan before quitting your day job. So once you’ve saved enough money to sustain yourself, the only thing left is to quit and commit full time to your new business.
Step #7 Going Through Business
When you start a business, there’s no doubt that you’re going to encounter obstacles along the way.
How you tackle these challenges is the one thing that will set you apart and help your business succeed.
While some entrepreneurs allow problems to beat them, others take them head-on and find ways to work around them.
Here are a couple of tips to help you handle obstacles that you’re likely to experience:
- Get ample support – don’t be scared to ask for help from friends and family
- Have a willingness to abandon what doesn’t work– don’t be hell-bent on using strategies that are not yielding positive results
- Assess your progress and your teams regularly
- Have emotional resilience
So you’ve made up your mind to quit your day job and start a business.
Well, you have an array of opportunities waiting for you.
But before you take the leap, there are a couple of things you should put in place.
For starters, familiarize yourself with business development. Learn as much as you can about your new venture.
Secondly, start it as a side hustle and save enough money.
You’ll need financial resources to not only fund your business operations but to also sustain you once you quit your job. Thus, it’s a good idea to look for passive income streams.
Finally, know when to quit and put measures in place to deal with unexpected problems you might have.