The mere thought of having your own business sends a shiver down your spine and excites you to no end. The liberation that comes with being your own boss can be very tempting, and you may feel like taking the leap of faith, quit your day job, get a business line of credit, and start that business youâ€™ve always wanted.
The thing is, itâ€™s not always that simple.
Before you leap, itâ€™s necessary to look clearly what youâ€™re getting yourself into. Take time to research before even thinking of quitting your job. Here are the Considerations Before Quitting Your Job to Start a Business.
Evaluate your finances. Look at how much cash you currently have. If itâ€™s not enough to begin a startup, youâ€™ll have to borrow money or find investors. If you canâ€™t find a friend or relative to help you financially, you may need to approach a bank or other lending institution for a business loan, which can be hard to obtain.
If you seek business financing, you may look for grants in your industry because these types of capital donâ€™t have to be paid back. Another option is to use your available assets (car, property, jewelries, etc.) as collateral to obtain a business loan.
High-growth startups usually need equity funding. They have limited assets backed with a short history, since theyâ€™re new, and this makes traditional business loans hard. Investors that get a stake in the business are another option, but you may have to give up some control in return.
Consider time commitment. Many businesses can be run effectively evenings and weekends, at least until they start growing. Others need a serious time commitment to flourish. If itâ€™s time you need, you might have to consider giving up your day job to make the business work.
Understand investment vs. profit. While turning a profit early on is possible, experts suggest finding out exactly how much of an investment is necessary to get the business off the ground. Itâ€™s also necessary to estimate how long itâ€™s likely to take before the business will start generating a profit. The important question is: How much revenue does the business need to generate for me to replace my income?
Start market research. Ensure that you have a niche for your business and a market for your product or service before going too deep into your plans. Customer validation is one of the most vital things people need to do before quitting their day job or jumping in.
Do the legwork. Just because you have a new product doesnâ€™t mean people will want to purchase or use it. Every business needs a unique value proposition â€“ a unique feature that differentiates you from others.
Find professional advice. Experts recommend seeking out organizations, government agencies, and some online sources before starting a business and getting a business line of credit. In some States, local programs provide entrepreneurs crash courses in customer validation, opportunities to give counsel and assist with business plan idea development.
So, should you quit your job? When deciding whether to finally take the plunge, itâ€™s vital to apply all the considerations above. This will give you the benefit of hindsight on quitting your day job and diving into business ownership. Best of luck!