Five Signs You’re Financially Ready To Quit Your Job
By Josh Felber, GOBankingRates.com (TNS)
Do you feel as if you’re not meant to be an employee, but the boss? Tired of the same old job routine and don’t want to spend another 20 years the same way? Have your own side gig or entrepreneurial dream? For some, the transition from employee to owner does not come easy, whereas others nail it just right. If you think you’re ready to let go of your job and start up your own business, here are five signs that will help you know for sure.
YOU HAVE A PLAN
To move on, you need a proper plan. You don’t want to be stranded in the middle of nowhere once you’ve quit your job. When you’re shutting down one source of income, you have to make sure you have another to keep the flow going. Without any financial support, it will become difficult for you to pay the bills.
To avoid such complications, a proper plan needs to be outlined first. Once you have a plan, invest time and money so the basics are covered. This step should be done well before you quit your job, so you can get started as soon as you leave.
Make sure you have the office completely ready before you quit; if you are planning to work from home, this will not take long. If you require employees, make sure that they’re ready to start as soon as possible.
Once this is all in place, you’ll be ready to quit your day job and start your own business.
YOU CAN STAY AFLOAT FOR 6 MONTHS
You must have invested a lot of money in starting your own business by now, but before you leave your day job, ask yourself this question: Will you be able to pay your debts and cover your living expenses with a fresh business?
It is important to know where you stand financially — analyze every aspect of your expenses and make you sure you’ve saved up enough to keep the boat afloat for at least the next six months.
Calculate expected finances, see where you’ll be able to trim down to save resources and money wherever possible.
Once you have a clear picture of your finances and the expected initial profits from your new business, it’s safe to quit. However, you’d be well-advised to pay off all your major debts before you dive in, as the revenue coming in from any business, particularly a new one, is far from certain.
Since paying off debt is the first thing you need to focus on, make sure your new business is stable enough to do so before you quit your day job. Try side-preneurship — I’ve seen a number of successful businesses start from the side gigs people had while working their day jobs. Expand it to full-time once the money starts coming in.
YOU’VE MET ALL LEGAL REQUIREMENTS
When it comes down to applying for a business license, waiting for its approval and waiting for it to be received, the whole process can take months. This step is mandated by law.
Apply for the license while you’re still working, because once you quit, and if there is no license, you will have no source of income. While you wait for the license to arrive, you can carry on with other things like buying office equipment or supplies, hiring employees, renovating, etc.
The legalities of starting your own business are not limited to just the license though. Another important aspect is self-employment tax laws. As an aspiring entrepreneur, you need to understand the impact these laws can have on your business. For instance, if your business doesn’t make any money for a certain tax period, you’d still have to set aside some money to pay the IRS.
YOU HAVE ENOUGH RESOURCES
To start a self-owned business, you need enough resources to launch yourself and the business independently. There are organizations that help new business owners set up shop as well as guide them on how to deal with the many aspects of starting up a business from the ground up, but it’s difficult if you’re not squared away first.
Since you will not be on a fixed income once you quit your job, make sure you have the right connections in place; this includes social media, friends, family, colleagues, and more.
YOU ARE CLEAR ON YOUR RESPONSIBILITIES
Your business is like your baby: You have to feed it, take care of it, babysit it and nurture it so it can grow. However, this is not a small responsibility. Once you understand your responsibilities and know you’ll be able to take care of all expenses, you’ll have enough to invest, launch and expand.
Photo: Kumar Appaiah via Flickr