If you’re thinking about starting a business you might also be thinking about quitting your existing job. Quitting your job would give you more time to pursue your entrepreneurial dreams. However, it also comes with other effects which arguably outweigh the benefit of having more time to work on your business.
I didn’t quit my job to start my business. I was made redundant and decided to wholly focus on the business I was starting. Being made redundant and not applying to any new jobs to pursue my business full time ultimately had the same effect as quitting my job. As a result, I have learnt first hand why quitting your job to start a business is NOT a good decision.
You might watch business shows like Dragons Den or Shark Tank and see the business “tycoons” not investing because the entrepreneurs aren’t working on their business full time, tempting you to hand your notice in. In this blog I share why this isn’t a good idea and why you shouldn’t quit your job to start a business. I will highlight the process you should follow instead.
Let’s go.
To start a business you NEED time, money and the right mindset. You might think you have enough money saved to start a business and by quitting your job you’ll then have the time required. However, to establish a business it often requires more money than you expect and can take much longer than you expect. I am speaking from experience.
As a result of this, the savings you originally had saved quickly start getting used up by set up costs, running costs and your personal living costs. Without the income from a job “refilling” this savings pot, you quickly end up having a cash flow problem and you can start to run out of money.
This is not good news for you or your business. Money is one of the things you need to run a business (it is hard to market a business without it). In addition to this, running out of money can then negatively impact the time you have available to run your business and damage your mindset. Leaving you with none of the three things you need to start a business.
I’ll share my story…
I thought I had enough savings to start my business and get me through to the point where my business could pay me a salary. I was wrong. It took significantly longer than I expected to get to the point my business was making money, let alone enough money to pay me a salary. As a result, I started to run out of money. Conscious of my savings getting smaller and smaller, I started to cut back on both my personal and business’ expenses. I thought, if I reduced my marketing budget by half, I would have twice as long before I ran out of money. I also stopped socialising as much.
Depending on the type of business you’re setting up, it can take much longer than you expect to start making money. As a result I would recommend to anyone thinking of starting a business to start their business while at work, in employment. You can then grow the business with the help of your salary to the point where it is able to financially support itself as a minimum. Only at this point would I suggest considering handing in your notice and taking your business full-time.
Going back to the businesses on Dragons Den and Shark Tank. These businesses are at a very different stage to the business you’re going to be starting. They’re often already generating revenue and using the investment they’re asking for to grow their business further. As a result, they’re actually in a position to quit their job if they haven’t already.
By keeping your job, you minimise the risk and uncertainties that come with starting your own business. Other than helping to minimise risk, there are several other benefits:
- You have more money to invest in your business.
- You can work more efficiently as you have less time.
- You can leverage the network your existing employment gives you to grow your business.
- You get more opportunities to talk to people and can discuss your business concept getting valuable feedback.
Next time you’re considering quitting your job, remember my story. It hasn’t been easy. I am always happy to talk if you want to pick my brains, just drop me an email at lawrence@thesmallbusinesstoolbox.co.uk. To help you start your business while working another job, I have written a guide on how you can start your business while working fulltime. Read it here.
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