It's one of those moments of truth in life when you have what you think is a great business idea. You might also have a pretty good day job that supports you and your family. So, should you throw caution to the wind and quit your day job to launch your business? Or should you just stay the course and count your lucky stars that you even have a day job?
Quitting your day job and launching a successful business is the stuff of dreams. Visions of yourself as a successful business founder start dancing in your head. You could be the captain of your own ship, never having to answer to anyone ever again. But, if you go forward and your idea is a big bust, you run the risk of pushing your family into a different economic class. But, then again, if you decide not to go forward, you put your idea at great risk of falling into the 'woulda, coulda, shoulda' category.
If you're contemplating leaving your day job then these scenarios are likely playing out endlessly in your mind. Your decision-making process might be made easier if you can check a few items off of your 'quit your day job to-do list' before you actually quit your day job.
1. Test Your Idea
Don't quit your day job until you prove to yourself that your business idea is a good idea. Entrepreneurs are a passionate bunch and that type of enthusiasm can be a slippery slope, sometimes serving to convince oneself beyond doubt that success is imminent. Talking up your idea to your friends and family is a great way to initially vet your idea, but drinking your own KoolAid is a problem. What you really need are some cold, hard facts to back up your premise that the business idea is good. The facts come from either having incredible, in-depth knowledge from years of experience in that particular field or from testing your idea.
Testing your idea allows you to prove that your theory might really be a good idea. You can do this by putting your concept in front of people and listening to their feedback on your product's usefulness and pricing. Create a simple prototype and give it away for free to your friends and family. You can quickly assess the value of your idea and, if necessary, do what we in the software business fondly refer to as a 'pivot.' It's a polite way of saying the idea is not working and needs a change of direction, pronto. Refine it, if you can. Let it go, if you must.
2. Know How Much Net Profit Your Product Will Make
Launching a business requires expending a lot of time, energy and money over the course of several years. Convince yourself that your product or service is actually something that will return a worthwhile net profit before taking on this colossal challenge. Accurately forecasting profit is tough, even when you're an accountant. One way you can solve this problem is by using a tool I developed called Enloop, which is a free online solution that automatically generates a customized business plan with complete financial forecasts. The system also provides a predictive score that can help you understand whether your idea is solid enough to pursue. Think of it as a living, cloud-based document that you can refine as you gather more feedback.
3. Have a Backup Plan
Putting a safety-net plan in place before you leave your job can help on a lot of levels. Many people choose to stay put from fear of the unknown. Having a personal 'pivot plan' can get you beyond that stopping point. Even if you've done your due diligence and have ample evidence that your products and services might have real value, there are factors outside of your control that may cause your business to fail. For a brutal example, witness the latest economic downturn that forced so many good businesses to close their doors. Reduce your debt, get rid of as many bills as you can and sock away as much cash as you can muster before you resign. When you're ready, give as much advanced notice as possible to your employer. Don't burn any bridges that you might need to cross back over if you're not successful.
Managing passion is a big challenge for an entrepreneur when that loud sound in their head is opportunity knocking. Practice being that successful business owner you're envisioning and let the facts be as much of a guide as your heart is in making this first decision.