It’s a hard decision deciding when to go all in on your own business. I’ve been asked by a lot of people who see their side business growing and are hesitant to quit their current job to take it on full-time.
If you make the jump too fast, you risk running out of money waiting for the business to grow, and if you do it too slow, you risk stalling the growth of your business or letting your competitors catch up.
So how do you decide?
When my wife wanted to quit her job to work full-time on her blogging business, we came up with a system that works well in many different business situations.
It’s simple; it minimizes the risk, and it can be adjusted to fit your business.
Before you take on your business full-time, your business should make you as much money as your current job for 4 months in a row. If you’re able to hit that mark, your risk of it failing are substantially lower, because you’ve just proven the business can earn enough money to live on.
Why 4 months? If you’re able to make the same profit from your business as you are paid from your job for 4 months it means the business is less likely to be in a short lived upswing, and as long as you aren’t spending any of the extra money you’re earning, it allows you to save 4 months worth salary to help weather any downturn.
Now I’m sure there are some people reading this who will say that their business can’t make enough money as their current job until they’re able to work on it full-time, and to them I say that the possibility of being able to quit your job and work full-time on your own business is one hell of a motivator. Once you set that 4 month goal in your head, you will be surprised just how much you can get done.
Now, there are some types of businesses that this can’t work for. These are the same ones that may need substantial investment or may be revenue free for a long time. For those types of businesses, I’d recommend having at least a years living expenses saved up, if not more before quitting a job. Those types of companies require an entirely different and more complex strategy I won’t get into here.
If you’re in the former group, and it’s at all possible to make the 4 month goal before quitting, give it a shot. As a business owner of 8 years, I promise you it’s worth it.
