It’s most entrepreneurs’ dream. Quitting that grueling 9-5 and making a passion project or entrepreneurial side hustle your full-time gig. But when should you make the leap? Todd dives into everything you should know, track, and anticipate before walking away from your day-job and embracing entrepreneurship full-time.
Assess The Risks
It goes without saying that walking away from stability and health insurance is a very different choice to make when you’re 20 years old and couch-surfing versus 40 years old and raising a family. The older you get, the more likely it is that you’ve got others depending on you for an income, and any business loss means losing a lot more than months of hard work.
So before quitting your desk job, ask yourself the hard questions. How much are you willing to risk? And understand your personal and professional risks before taking them. Because when you understand the risks, you’re more likely to have a backup plan.
Plan For Plan B
Which brings us to our next point: have a Plan B. What industry can you re-enter if your business doesn’t come to fruition? What bridges can you cross back over when you’re struggling to gain the momentum you’d hoped for?
Todd also recommends having an emergency fund of 3-6 months savings. And forget fun money. Emergency funds are an insurance plan for losing your job today or your business tomorrow. That money is for bare-bones life necessities. Regardless of your circumstances, an emergency fund is something to save for in case of life’s inevitable unpredictabilities.
Push Through Feelings of Self Doubt
Entrepreneurship is filled with ups and downs. That’s just part of the game and we all experience difficulties at some point or another. When you think about it, there’s no rule book, no supervisor telling you what to do, and no “best practices” sheet to stare at for comfort. You have to depend on yourself to succeed, and that means finding ways to push through moments of self-doubt.
Todd recommends figuring out what’s causing your moments of self-doubt. Maybe you don’t have enough saved or maybe you’re scared of what friends and family will think. Maybe you’re scared of change or failure or losing dignity. Whatever the reason, if you can articulate it, you’re more likely to fight through it. And as a business owner, there will be plenty you’ll need to fight through to survive.
Start To Pay Yourself
Before taking the plunge, Todd recommends putting as much effort and energy into your business as possible. So before quitting your day-job, treat your own venture like a second full-time job.
While that may mean a few sleepless nights, as your business grows, you can at least start to pay yourself. And paying yourself gradually will do a lot for you psychologically. Those small wins help you gain the confidence and momentum to go all-in. Not to mention, they’ll put your business in the best place possible for flourishing full-time.
Account For Every Dollar & Cent
Finally, before jumping wholeheartedly into your business venture, you must know every penny that’s going into your hustle and every dollar that’s coming out (hopefully, it’s a similar ratio). So ask yourself, or an accountant, what are your profit and loss statements each month? What do you spend on equipment or employees? How much are you setting aside for taxes? You need clear answers on your business’ profitability before you can even think about relying on it for a full-time income.
Also analyze the hours you’re putting in now versus the benefits you’re reaping, and multiply that profit by full-time hours. Going full-time means more growth avenues that will allow you to scale your business quicker, so that number won’t tell the full story. But getting a glimpse into your paycheck is necessary for obvious reasons.
So, Should You Go All-In?
When all is said and done, should you make the leap? Well, it depends on everything from risk factors to balance sheets. But if you’re ready to work hard, go for it. Just make sure you’re prepared for the tumultuous twists and turns and joys of being a full-time business owner.
Resources From This Video
Hey what’s up everybody? So, today we have a viewer question from Valerie on “how do you know when you are ready to go full-time on your business, stay tuned.
Ok, so first I just want to thank you Valerie for taking the time to ask a question and wanting my opinion on the question.
So Valerie’s question was “how does one determine when they and their business model are ready and enable to leave the day job and take entrepreneurship full-time?”
Now, that’s a fantastic question because that’s a question that I recently had to struggle with myself, in deciding to go full-time as well and it’s not an easy question because it really depends on a lot of factors I am gonna go in to some of those factors and what it depends on to decide if you are ready to go full-time in this entrepreneur adventure.
So, one of the big things that it depends on is the amount of risk that you are willing to take and only you can answer that as to how much risk you are willing to take in your own life. And how much that you have to lose. So for Valerie for instance I know that you do have a family and you have a job currently as well, so you have more to lose than someone who maybe is starting out in life and is younger entrepreneur in high school or in college. So, if you left your full-time job and went entrepreneur full-time and it didn’t work out you could potentially risk losing maybe your house or not being able to put food on the table or whatever the case may be. So there’s a lot more for you to lose. So you have to think about that. And understand how much you are willing to risk. Are you willing to risk that happening and if so what is your backup plans? You want to have a backup plan in place so that if the worst case scenario comes to fluish in which is unlikely but possible, you have a back up plan to fall back on. So think about that as to what is your backup plan could be. So for me, for example I know that if my business fail I can get another job in the computer industry, very easily, very quickly, making good money. So if all else fails and I have to go back to the business world I can definitely do that. In addition, before I went full-time, I put about $9000 in doing emergency fund. Emergency fund is something that I would highly recommend for everyone out there regardless of, if you want to become an entrepreneur anytime soon or not. And what an emergency fund is 3 to 6 months of expenses, so that if you lost your job today or your business failed today, and no money came in for 3 to 6 months, you will have enough money in the bank to cover the bare minimum expenses. Like the car, the house and putting food on the table, paying for the electric bill, things like that, they are absolutely critical that you can’t live without. Now, that’s not include the cable bill, it does not include going out to restaurants to eat your fast food, it does not include buying music or anything like that, it is just bare essentials that you would need to live on. So that’s something that you can do to temper the risk that is involved in becoming an entrepreneur.
Now, when I decided to go full-time, I had a lot of doubts in myself. It’s kinda of the role of the entrepreneur. You have a lot of ups and downs, ups and downs. One minute you are feeling awesome like you are a king of the world and then the next minute you’re wondering like what am I doing, and you have to push through that. You really do have to push through that. It happens to all of us you have to try to get rid of the self doubt as much as possible because you can do this, we all can do this. You just have to push through and make it happen. And understand that those struggles are going to happen, push through to complete the goal that you have set for yourself. And build the business that you’re trying to build.
You really need to find out what is causing the doubts. Is it that you don’t think the business is ready, you don’t have enough money in the bank to feel comfortable, are you afraid of failing, afraid of what your parents will think. Are you afraid of what your friends will think? Those are things that you have to push through, you have to get over. We all have those but you can’t let those hold you back because if you’re always worried about those things, you’ll never move forward. So, you need to do whatever you have to do to push through those doubts that you have. We all have them, it’s natural, you just have to find a way to push through them. You can do it, I’ve done it, millions of others have done it, millions of other people will do it, and you can do it as well. I have no doubt in it.
Now for me for example, my doubt for a long time, for that 3 months that I have put in to my job, as I was going to be leaving, I was actually looking for part time work to try to be a supplement to the business. I was a little afraid of going fulltime in the business and having not work, it’s a something that we all gonna have and I did not find a part time job or I did not take a part time job. Which I’m really happy for because I would not have time available that I would need to sink in to the business. Even during this full time I feel like a lot of times I don’t have enough time to complete everything that I want to complete. So I am glad that I did not put that crunch in there but that is something that you can think about if you need that. I would recommend when you are ready to go, full-time with it, you’re gonna find, there’s a lot more things that you’re not doing right now because you don’t have time to do them that you will be doing once you go fulltime in the business. A little bit about preparing your business to go fulltime, you gonna want to basically work 2 full-time jobs. One fulltime job is your fulltime job and the other full-time job is your business. Putting in as many hours as possible after work, before work to feel comfortable in where your business is at for you to go full-time on it and start bringing in money from your business. So you can prove to yourself that, “hey, I was able to pay myself 250 bucks this month, 500, a thousand, 2 thousand, whatever the case may be. So you can start taking a little bit of money onto your business. You don’t want to take a lot of money from your business upfront because if you take too much you don’t have enough to sync back in, so you want to temper that but you do want to start paying yourself something right away. I strongly believe that. When I started my first job TCText computers, we were super excited when we started paying ourselves $5 a day so that we can pay for lunch out of the business and not have to pay for that out of our own pockets. And that felt really good. Starting of, just that small amount. So even something that small can start helping you feel confident in your business and that you’re moving forward and you can slowly start incrementing that up as you go forward in the business and building. Another thing that you can do to kinda get an idea on where you business is headed, hopefully you are doing good financial book for your business. If you are not, keeping accounting for your business, I highly recommend you do that so you know where you at, how much profit and how much lost are you making in your business every month. You really can’t run a business without knowing the numbers of your business. So, if you keeping good records and you can see your profit and loss for the past month, you can get an idea on how much time and effort you are putting in to your business now vs how much time and effort you gonna be able to put in to it when you go fulltime and multiply it by how much more you are able to put in to it. That’s not going to be an accurate number most likely if u go fulltime you gonna find new avenues of growth for your business so the multiples is going to be higher when you go full-time. But it will give you an idea of the amount of profit that you going to see when you go full-time at least a rough estimate, something that you can go of to see if is something that you are able to live of, is that enough money that you are able to live of.
Another thing that helped me have a little bit of a crunch I guess that you can call it, I actually have a credit card that is completely paid off and they continue to send me those checks that you get in the mail that, I could take out the $10,000 that is available on that credit card for a 3% fee and not have to pay interest on that for a year. Now, I set that check aside, I haven’t had to use it, hopefully I never have to use it.
So really Valerie as I said in the beginning it really depends on your level of risk and how much you have to lose and how much you are willing to risk. But with that said, I highly recommend that you take the job. One way or another, find what you whatever you need to put there to make you feel better. Building up your emergency fund, having that credit card sitting there ready to use, building up your business to a certain profit level before you are willing to make that jump. But I guarantee you, when you do make that jump you will feel much better about everything in your business will start to take off incrementally.
In the past when you’re just been doing it part time, it is really difficult to really build a real business and focus on the business. Because when gonna build that business you can really push the business and start seeing a lot of new avenues for profit and ways to build that business that you never would have noticed doing it part time because you are distracted by everything else and you really don’t have the time needed to make it happen.
I really hope that this has helped you Valerie that you are able to make that jump. Keep me posted on how that goes. And when you are ready to make the jump. I wanna help you along in any way that I can and any motivation that I can give you, I would gladly give it.
Same with everybody else out there, all the viewers who are watching this, let me know on the comments down below where you at in your business journey. And if you have any questions click the link down below there as well. Ask Todd any question that you would like. And if you want to record them, send me a video or on the link below you can record audio, I will play that as well on the beginning of the video.
So, thank you all for watching this video. I really hope it helped you out there. Keep on going down on this Entrepreneur Adventure. This Todd Welch signing off. Thank you and have a great day!