Updated: Jun 25, 2020
This is a question many people ask and even more fantasize about. The day you can walk into your boss’ office and say “I quit” and tell him or her everything you have been wanting to tell them but couldn’t. Telling them how they are a bad leader, bad decision maker and how you could have made a big impact if only given a chance. Does this sound familiar?
Turning a side venture into a profitable business takes time and dedication and it doesn’t happen overnight. No matter the fairy tales you have heard or the dreams you have, in order to make a living as a business owner, you have to have a solid plan, a solid bank account, timing and truly understanding your “why”?
Why do you want to start your own business? Do you want to make more money? If so, corporate executives make more money than most small business owners. You want to do things on your own time? Starting a business means you have less time and you are doing things on your customers time.
Your “why” needs to be mostly rooted emotionally. I want to feel like I have more impact on the people around me. I want to build something that I can pass on to my kids. I want to make my parents proud. This last one is the “why” that drives me in life so you need to find you'r why. Keep asking yourself why until you get to an answer that is emotionally rooted. Then come back to that answer a few days later and challenge yourself to see if you were honest with yourself or not.
Now let’s be real. Just because you have a “why” doesn’t mean you are ready to quit your job and go all in on your side venture. There are other factors involved.
Your Side Venture must be generating revenue
First, your side venture needs to be generating enough revenue so you can start taking as little salary as possible to cover you'r living expenses. Even with a solid and verifiable record of sales behind you, if what you are making on those sales doesn’t cover your monthly expenses, you are not ready to make the jump. Not only do you have to have funds to run the business, you also need an income to pay for the trivial things in life, like food, power, housing and transportation. Your side hustle needs to be able to fund all of this, along with the growth of your business. Best approach is to make sure your side hustle is covering your expenses and you have 6 months’ worth of savings as things will go wrong and you need to be prepared.
As part of your finances, you need to account for yours and if applicable, your family's health insurance. You won’t have a company contributing towards your health insurance so you need to make sure you and your family are covered. Going into debt or a health issue without adequate care can have an adverse impact on your venture.
Revenue forecast trending upwards
The revenue forecast should be going up. You should be able to tell this by your sales pipeline and conversion rates. If your side venture is a B2C product that is not at the revenue stage yet but adoption is growing exponentially, then as part of your fundraising negotiations you need to make sure you guarantee yourself two years of salary to cover yourself in case things don’t go as planned.
Don’t forget about retirement planning. If you were contributing to a 401k, make sure you can continue doing so. If you were putting money into a college plan, make sure you continue to do so. You do not want to put your family under immense financial stress. They are probably already feeling the stress supporting you.
A solid understanding with your family
This one is a biggie – talk it over with your family, especially if they depend on your source of income to live. Listen and don’t get defensive if they react in a way you were not expecting. Let them explain their position which in most cases will be tied to their stability. They need to know that you are making the change, and what to expect in the coming months and years. There will be ups and downs and plenty of times when you wonder what you are doing. Having your family’s support and encouragement can make the difference.
Your timing is critical on when you make the jump. The longer you wait it gets harder as you might go from being single with very little responsibilities to getting married and having kids. Or being married with 1 kid and now you find out you are having twins in 8 months. The important factor about timing is not just being prepared on paper but making sure you are at a place in your life that you are so driven and motivated that you can get passed all the “no’s”, failures and challenges that without a doubt you will face.
Comment below and share what other things should be considered.
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