There are endless reasons why you might want to quit your job and start a business, but what should you consider before making such a massive decision? Let’s break everything down so you’re more confident when taking the next step in your career.
Top reasons employees leave their job
Fundamentally, people are motivated to quit their jobs because it’s making life bad or they’re chasing something good.
Top reasons employees want to escape a bad job
- Being underappreciated
- Low salary
- Toxic or incompatible work culture
- Poor management
- Feeling burnt out and stressed
- Lack of flexibility or work-life balance
Top reasons employees explore other jobs
- Looking to switch careers
- Lack of career growth development
- Better opportunities/benefits elsewhere
- Looking for a challenge
- Seeking more independence
Which list did you find yourself relating to more? There’s no right or wrong answer but it is vital that you go back and pick one before we move on.
People who gravitate towards the first list are more likely to be suited to finding another company to work for. After all, being an employee for the right business has many benefits like stable income, sick pay, and pension schemes. Although 9 to 5 can feel like a slog, it’s usually less of a headache than running a business.
The second list appeals more to ambitious people who are willing to put in hard work and battle through adversity in pursuit of goals. They tend to find fulfilment in achievements and getting things done. There is also an element of seeking control over their own output (and sometimes others). This can be a personality thing but if you’re exceptional at your job you may feel held back and wanting to make better use of your time.
As a general rule of thumb, the less skilled and experienced you are, the better off you’ll be staying employed. Being within a company will help you pick up transferable knowledge, skills and processes to effectively run a company later on. You may have a completely different experience changing jobs and find you can tolerate or even enjoy the same thing you were doing. As you do this, pay attention to whether it’s the role that is making you unhappy or the environment.
What is required to quit your job and start a business?
#1: Evaluate your finances
When you quit your job the biggest immediate danger is losing money. Unless you have a family who can pay for everything, you’ll likely have payment obligations in your life that you need to cover e.g. rent, food, utilities, travel. Find out how much you’re spending on a monthly basis and then you can understand what you will lose once you’re no longer getting paid. Based on the amount you have saved in your bank, you’ll be able to calculate the length of time before that money runs out. But that’s just to survive. When starting up a business you need a separate stash to be able to get going with operations and sales etc. In that sense, it’s not wise to quit until you know exactly what you’re doing. However, if you know how to save money, you could keep outgoings to a minimum, which will grant you more time to make a new business work.
#2: Get proof of concept
It’s a much safer route to transition from your job into a business that is already making money. In an ideal world, your startup will already make enough income to fully replace your current one but this is not always realistic when you’re short on time. Consider starting a side hustle while in your existing job and once you have found a formula that generates regular revenue you can begin to think about leaving.
#3: Create a plan of action
If you want to start a business you need to decide on what that is, whether it’s financially lucrative, and if you have the resources/ability to deliver quality goods or services. You’ll also want to estimate how much money you need to raise to cover ongoing costs until you’re able to replace that with the revenue your business generates. So if your cost of living and business expenses are expected to cost £25,000 annually, that helps to map out how many sales you need to bring in to at least break even, but this is only possible once you have developed an idea so you know things like pricing, profit margins, and cost of acquisition. One trick you can do is look at competitors and then improve on their value proposition.
#4: Have a fall back option
If everything goes wrong, you want to know that you can go back to another job and start saving money again. Inexperienced and young professionals are much less likely to secure an alternative to their current employer and should think about developing more skills and accolades they can put on their CV. Maybe you have family or friends who will give you some work. Either way, it helps to create a safety net to future-proof your employability.
Other considerations when starting a business
Consider the size of the business. A low cost startup where you can begin trading your skills and time as a service is way more likely to work out in the short-term. If, however, you have a grand idea that needs a lot of capital investment such as an app or physical premise, it’s almost never a good plan to abandon your job unless you have prepared a large nest egg to keep you afloat for 1-2 years minimum. Even if you don’t use your own money to fund the business, it will still take several months to raise capital from others.
Most new businesses fail. A study from the Genome Startup Project claims that 92% of businesses fail within the first three years. So starting a business is not a decision to take lightly nor an easy way to make money. With that said, if you study how they fail and make every effort to avoid the mistakes of others you can vastly increase your chances of success. Of course, you must be driven and energized about what you’re doing. But if not anything else, let this be the reason you should research everything diligently rather than rushing into it.
Prepare to adopt the qualities of an entrepreneur. You may want to start a business but if you’re reading this you probably lack experience in this area. There are traits that make some entrepreneurs millionaires and while you don’t need to exhibit all of them they will definitely help your chances. If you don’t see these qualities in yourself, it’s going to be a shock to the system when you face the challenges of running a business. A few desirable qualities are problem solving, discipline, and risk taking. You can find the full list of success habits here.
Now that you’ve read this, go research everything you need to make a decision but take some time to analyse your situation further with this new knowledge. Need some financial inspiration in your life? Check out other articles from The Money Mind.