Today’s salaries are not growing fast enough to keep up with inflation and to match the rising costs of living. If you are having problems in your finances, you might be tempted to consider quitting your job to pursue an entrepreneurial dream. However, you need to understand that starting a business is not a guaranteed pathway to creating wealth and you’ll need to do some groundwork to improve your odds of success. Here are 4 things you must do before you quit your job and start a business.
1. Test the viability of your idea
Before you quit your day job, it is very important that you test the viability of your business idea. You’ll also need to test the viability of your idea across three levels. You need to test that you have the a product or service, you need to be sure that you are passionate about the product, and you need to be sure that people will be willing to pay you for the product.
Testing out the viability of your idea could help you avoid tunnel vision for creating a product that no one wants to use. Testing out the viability of your idea also includes market research on pricing, competition, and creating a financial model.
2. Be mentally prepared for a challenging journey
Being an entrepreneur is much tougher than the picture that the media paints of casually dressed people signing multimillion-dollar deals during a weekend retreat. Many people think they’ll move from zero to million dollar revenue because of their great idea, but they often fail to consider the volume of work that will take them from conceptualization to reality.
As an entrepreneur, you’ll be juggling many roles all at once. You’ll be the chief executive officer, chief financial officer, brand strategist, production manager, and sales representative all at once. You should prepare yourself mentally for a challenging journey before you send in your two-week’s notice.
3. Make a proactive personal finance plan
You can’t start a business today and start making money the same day – of course, you can start booking revenue but you won’t start eating your business profits immediately. However, in between the time your launch and the time your business scores sustainable profitability, you’ll need to find ways to keep your personal finances afloat.
You may want to consider crunching the numbers to know how much money you’ll need to maintain your current lifestyle even when your business is not yet profitable. You may want to look for a personal loan supplier that can give you access to revolving line of credit to keep your finances above water. If you are currently employed, you may want to increase your savings from your current income before you quit to start your business.
4. Take your business to relevant stakeholders
You can travel faster if you are going alone but you are likely to go much further if you are travelling with a support network for people. Before you quit your job to start a business, you should take the time to talk about your plans with the relevant stakeholders. Your friends and family members could be great sounding boards to test out the viability of your idea.
You should also discuss your plans to start a business with your spouse or significant other and kids (if any) before you start the business. Your family member will need to prepare for the possibility of reduced income (at the start) and they need to understand that might have less of your time.
