I clearly remember the day I admitted to myself that I wanted to quit my day job. It was a cold winter morning in Milwaukee, Wisconsin, and I was delivering bread to a grocery store at midnight. The bread slipped off the truck and fell on me. I was lying in the snow with two stacks of bread all over the place. That was the moment I knew.
Even though I was mentally ready to quit, the reality of my situation kept me at that job for two more years. We were $180,000 in debt from a previous business, and I had no clue what kind of business I could or wanted to start. The first go-around wasn’t a pleasant experience. After thinking and talking to wise mentors, I came to the conclusion that I wanted to write for a living.
There are many future entrepreneurs reading this website every day who are planning to quit a day job, or would love to. I want to caution you. If you quit before you’re ready, you risk turning your dream of entrepreneurship into a nightmare. Here are six questions you should have an answer for before you take the leap.
1. Is your emergency fund large enough?
You’ve probably heard or read the story of an entrepreneur who quit with no back up plan and became wildly successful. Those stories are the exception. They’re not what you typically see. The reality is that income from a business can be sporadic some months and non-existent sometimes. You need an emergency fund large enough to cover shortfalls in your business. If you never need it, it will be extra money to invest.
Related: Can You Afford to Quit Your Day Job?
2. Is your business income enough to pay your bills?
I’ve consulted with one too many an entrepreneur who’s in trouble because they quit their day job while their business was still growing. They had a few good months, but the income hadn’t gotten to the level of their day job. Don’t quit your job unless your side business has a proven track record, over many months, of generating enough money to support you and your family.
3. What are your plans for future growth?
Your business plan should include how you will scale and grow. You should have a plan to get new leads and convert those leads to business. Just because you had a good idea and it made a little money doesn’t mean you’re ready to quit your day job. You may never be a Fortune 500 company, but you need a vision for the future.
4. Do you have a backup plan?
I wish things always worked out as planned, but this is life, not a movie. Sometimes businesses fail and for good reason. Not every business that’s started is meant to succeed. Sometimes you have to go through a failure to see the right path. That’s what happened with my first business. My second business of writing, speaking and coaching is my true path and I love what I do.
If your business fails, you need something else to fall back on. Sometimes you may need another day job to hold you over. Not popular advice, but you have to survive and pride doesn’t pay the bills.
5. Who could be hurt if things don’t go as planned?
If you have a family or someone who relies on you, quitting without everything in place can tear your situation apart. Entrepreneurship is great. The freedom it provides me to be there for my family is priceless. If I had quit before I was ready I wouldn’t be writing to you. Think about those who will be impacted by your decision and have a solid plan.
6. Have you conquered any self-limiting beliefs?
Your mindset is an important part of your success in business and life. Successful entrepreneurs are aware of mindset traps and self-limiting beliefs, and do the necessary inner work to overcome them. Leaving the security of a steady paycheck is hard and scary. It will amplify any self-limiting beliefs you have. Address the mindset traps that could derail you as a part of your plan to quit your day job.
Once I answered these questions and got clear about my plan, I was able to take focused action. I self-published two books that have sold more than 100,000 copies. We used the income to pay off all of our debt. I started speaking and generated $22,000 from conferences in 2012. I started coaching. I came to the end of 2012 with a large emergency fund, a business that consistently generated $5,000 a month, and a plan for future growth. Then I felt confident quitting my day job.
Your can make your entrepreneurship dream a reality, if you go about it the right way. You’ve probably seen the stats on businesses that fail. Those stats don’t have to apply to you if you have a strong foundation in place and have an answer for these questions. I hope this is the year it happens for you!
Related: Richard Branson on Knowing When to Quit Your Day Job