As budding entrepreneurs, when we start a new business we obsess over every detail. We feel an adrenaline rush with every sale and we often look at our day job as a disruptor on the journey to fulfilling our dreams.
I would challenge you to view your day job as your first investor.
Research published in The Academy of Management Journal shows that entrepreneurs who kept their day jobs while starting their business were 33% more likely to be successful that those that jump directly into full-time entrepreneurship.
But my business is different
So, you discovered that you have a talent in voiceover or in another business. That’s fantastic! Your business is no different than any of the other start-ups that we have read about – like Toms Shoes who went from a $625 million company to being taken over by its creditors. Your early success does not mean you should quit your day-job and examples like Toms can demonstrate how quickly businesses rise and fall.
Want to be your own boss?
Often, I hear people say they want to have their own business because they want to be their own boss. News flash, if you go into business for yourself, you will discover that you continuously work for someone else and they are the boss. Every client that hires you to deliver a product or use your service acts as your boss for that project or transaction. Always consider the facts before you quit a good job. According to the U.S. Bureau of Labor Statistics, about 45% of new businesses fail within the first 5 years.
Are you building a business or just creating yourself a JOB?
The “day-job” gives us an opportunity to spread our wings and learn the basics of business. The job teaches you how to navigate complex issues, how to provide customer service, and the direct deposit always shows up on time.
When working as an entrepreneur, you manage every aspect of the business. There is no phone to pick up and say “let me transfer you to our customer service department.” You are the customer service department. When the customer doesn’t pay on time, you get to be the controller. After you add up the time you spend to get the paycheck you dreamed of, you may discover your hourly rate dropped significantly.
What am I suggesting?
I am saying don’t quit your day job, yet. Wait until you have enough money in the bank to manage your expenses for at least a year (and don’t forget about insurance and taxes!). Make sure the money saved covers you in the event of a sickness or an economic downturn.
Make your decision to leave your career based on facts, not emotions.
The U.S. Bureau of Labor Statistics states that 20% of U.S. small businesses fail within the first year, 50% fail within the first 5 years and only about 33% of those businesses survive to see their 10 year birthday.
I am not all doom and gloom. I firmly support small business endeavors. In the “resignation” era, I am suggesting that we hold on to that resignation letter a bit longer. Don’t push send just yet. Give yourself time to grow in your business. Let the facts guide your decision to quit.
What if you hate your day-job? There is hope!
If you hate your day job and are counting the days until you can quit, then let’s talk about how to do that safely.
9-Steps to leaving your day job.
- Save at least a 6-month cushion.
Most people will ignore step one and save enough to make it through the month. Here are the facts. Vendors and clients take time to pay. Sometimes you can have receivables sitting on your books for 90-120 days before you receive payment. Your cushion could be all you need to keep your business alive and thriving. However, if you fall into the camp that quit without a cushion, then go straight to step two.
- Payoff all debt, except maybe your mortgage.
If your side hustle is as good as you think, then you should be able to pay off your debt with all the extra cash you have earned. If you discover that you CAN NOT pay off your debt, then maybe you shouldn’t quit your day job yet!
- Make sure your business entity is completely set up. S-Corp, LLC, Licenses, etc.
Most companies offer legal insurance. Use that insurance to get legal assistance to set up your business, trusts, wills, etc.
- Research health insurance.
Understand your health insurance needs and how much you will have to pay each month for appropriate coverage. Don’t forget disability insurance, if you get hurt or your vocal cords get damaged, who is going to pay you while you heal? There is no “paid time off”. You need coverage. Let’s also talk about the D word. What happens if you die? Your day-job normally provides a small life insurance policy. You are now the day-job. This means you will need to get life insurance to protect yourself and those loved ones you leave behind.
- Create a monthly budget.
Before you quit, you must understand how much you need to earn each month to live the life you have become accustomed to living.
- Set up your retirement account.
Yes, one day you will retire and you will want to sit on a beach and tell stories about when you were caught up in the hustle and bustle of life. If you want to do that, then you need a savings like that 401k/403b or other investment account offered at your day job.
- Figure out how you will handle your administrative tasks.
Decide how you will handle billing, collection, marketing, social media, relationship management, customer follow up, complaints, etc. Who is going to wear these different hats? Will you be the person or will you outsource? If you plan to outsource, start now. You don’t want to discover that the contractor you planned to use is awful at billing when you are depending on their collection abilities to live.
- What will your working hours be?
Often entrepreneurs blend personal and professional life, which means there is not a lot of separation and family can get tired of being dragged into every business matter. You need time to take care of yourself and those who love you. Do not allow your business to intrude on everyone’s life. Your day job has hours of operation. You should too.
- Decide how much money you expect to earn this year.
You would never take a job without first understanding what the pay would be right? Why wouldn’t you do the same thing for yourself?
Write down how you plan to get to this dollar amount. This involves a little math. Here is a quick voiceover example. You want to earn $100,000 this year. Average job pays $350-500. Including taxes, you need to earn $130,000 in gross sales to keep 100,000.
$350 per project-voiceover / $130,000 = 371 jobs
$500 per project-voiceover / $130,000 = 260 jobs
$1,000 per project-voiceover/$130,000 = 130 jobs
Now that you have a goal. Try it out WHILE you work your day job. Be the best employee and make your first investor happy to have you and sorry to lose you when it’s time to go.