10 Questions to Ask Before Quitting Your Job to Start a Business
Giving up the security of a full-time job to start your own business is a risky, often stressful move. "The biggest reason people don't end up quitting is the fear of uncertainty. They don't know what might happen and they don't want to give up the security that they already have," says Sean Ogle, who quit a job in finance to live in Thailand and run a virtual search engine optimization and Web consultancy.
How do you know when the time is right to make the leap? Here are 10 questions to ask before you quit your job.
Are you just miserable in your current job?
Some people who think they want to be entrepreneurs are just unhappy in their current roles, says Pamela Slim, the Mesa, Ariz.-based author of Escape from Cubicle Nation (Penguin, 2010). Developing a thorough business plan can help you avoid any impulsive decisions. "In addition to wanting to quit, you have to have a viable business idea and an effective marketing and operations plan," she says. As you work on your plan, she advises, keep your job and income as long as possible.
Related: Your Business Plan Guide
What will your new day-to-day routine be like?
Instant freedom can be dangerous. Ogle recommends developing a daily schedule to follow, just as you did in your 9-to-5 job. "When you now have all of this free time it gets really easy to say, 'Oh, I'll do that later'," he says. The week after quitting his job, Ogle started going to the gym at the same time he would have arrived at his old office each morning. And after the gym, he worked the same hours that he did for his former employer.
How will you raise money to keep the business going?
Lack of capital is one of the main hurdles to entrepreneurship. Rather than figuring out cash flow as you go along, it's best to come up with realistic projections as part of your business plan before deciding whether you can afford to leave your job. Your business may not be profitable for three to five years, so it's important to be realistic about how you'll support yourself financially, says Sharon Lechter, author of Three Feet From Gold: Turn Your Obstacles Into Opportunities (Sterling Publishing, 2009) and a financial literacy expert in Phoenix. Anticipating your financial needs "allows you to focus your energy on building your new business rather than worrying how you are going to pay the bills," she says.
Have you factored in possible unforeseen costs?
When Jody Dyer launched Blackbird Tees, an apparel company in Richmond, Va., she was surprised by the many expenses her business plan hadn't anticipated. We spent "thousands of dollars experimenting with different fabric styles and inks, messing up screens, destroying shirts, making the wrong color choices," says Dyer, who sells her products on Etsy. "At the time, those errors were financially crippling." Rather than going out of business, Dyer fell back on freelance copywriting gigs to make ends meet. "Supplementing your income through freelance or part-time work can alleviate some of that strain," she says.
Are you willing to take on multiple roles?
Starting a business means you'll be wearing many hats. "One day you are the tech person, one day you are the salesperson, one day you are the cleaning person," says Shobha Tummala, founder of an eponymous chain of beauty salons in New York City. "You can't have an ego." So before leaving your job, you need to decide if you will be happy performing a variety of functions, from marketing to maintenance.
What are your strengths and weaknesses?
As you consider the multiple roles, be honest with yourself about what you're best at and where you need to improve, Tummala advises. Perhaps you need to beef up your programming skills or understanding of finance--or find a partner with a complementary skill set. If you don't have a way to overcome your weaknesses, it may be best to stay in your current role.
Who are your future customers--and competitors?While you may not be able to thoroughly test the market potential for your business concept, you should at least understand who your likely customers are and what kind of competition you would face. If you're not quite sure, consider pursuing your idea part-time, suggests Ellen Rohr, president of Bare Bones Biz, a small-business consultancy in Rogersville, Mo. "You can test your plan and adjust it in a soft launch before you sink too much into an unprofitable venture."
Related: Conducting Market Research
Is your support network on board?
To help ease the transition, you should share your entrepreneurial plans with family members and see if they support the tradeoffs involved in starting a business. Be quite explicit about the risks, Slim says. "When one person goes into business, everyone in the family unit is affected." If your partner and other members of your support network are reluctant to back your idea, you may want to rethink quitting your current job.
Do you have a backup option?
Developing a plan B before going off on your own will help you avoid getting blindsided. Is there something you can do part-time if you need to temporarily bring in money, or will you need to seek new full-time employment and put your plans on hold? To keep your options open, stay in contact with recruiters, previous employers and other networking contacts.
How will you avoid burning bridges?
If you decide to quit, remember that your employer could be helpful to you as you launch your new venture. Rather than resign abruptly, figure out a way to leave in good standing. Give plenty of notice to help your employer handle the transition. And be open about your future entrepreneurial plans, Ogle says. "Usually [companies] will understand it, and even offer to help out however they can." Employers can assist by giving you flexible time off or retaining your services as a consultant.
Related: Can You Afford to Quit Your Day Job?