Questions To Ask Yourself Before you Quit Your Day Job

The Problem: You have an idea but your idea does not have a paycheck yet.

Most entrepreneurs have two options when they decide to take the jump into business ownership.

Option #1: Keep your day job and develop the idea on the side.

Option #2: Quit your day job and develop your idea full time.

Which road should you take? This depends on your particular situation, but let me provide you with some questions to answer to help you make the decision.

Questions to Consider Before You Quit Your Day Job

1. When will your cash flow cover family and business expenses?You need to develop a business plan that provides a realistic projection for when you expect to be cash flow positive and where that cash flow will be directed.
2. How are your personal finances? How much do you have saved? How many months would your savings support the cash needs of your family and business?
3. Can your spouse financially support you? Can your family make sacrifices so your spouse’s salary covers the family’s expenses until your business income begins to replace your old salary?
4. Is your spouse willing to give up time with you? The time you spend building the business after your normal working hours has to come from somewhere. It will likely come from the time you used to spend with your spouse and family.
5. Are you willing to sacrifice? You likely will have to give up your current level of hobbies, tv watching, internet browsing, family gatherings, exercise and more to work on your business.
6. How will your employer react? Some employers are perfectly fine with moonlighting while others are not happy about it. It could depend on how related your new business is to what you currently do for them, but make sure to get a copy of that corporate handbook to investigate the official policy. Even if the handbook clears you, be aware that you are probably an “at-will” employee and they can fire you even if you did not violate the guidelines.
7. What are your real reasons for quitting? If it is to “be your own boss” be warned, you will have a new boss – customers. They can annoy you as much as your current boss. If it is to make more money, that can take longer than you think. A growing business often requires cash flow be put back into the business to help it expand.
8. How is your physical health and that of your family? If you are employed you likely have health insurance through your employer. They probably pay all or some portion of your premium payments regardless of your state of health. If you want to quit your day job, you need to investigate if you can get health insurance (many states allow them to deny you coverage for a host of reasons) and if you can get it, how much will it cost you?
9. What advice can other people give you? Do you know an entrepreneur? Ask them what decision they made and how it impacted their family. What did they see as the positives and negatives?
10. Will no paycheck negatively impact your business This is related to the business plan, but you need to determine what amount of money you need to run your business for at least the first year. If you do not have the money to capitalize these expenditures, will your business suffer? Your paycheck can provide start-up funding.
11. Is your new business suitable for moonlighting? When and how do your customers expect to receive communication? Will you be able to serve them appropriately if you have a day job?

There are benefits to keeping your day job, there are benefits to not keeping your day job. Your answers to the questions above can help you determine what strategy is right for your family.