If you are like most SaleHoo members, you will want to turn your online retail business into a full time income earner. However, forgoing a steady pay check is a scary thought. So when is the right time to quit your day job and start working for yourself?
Below I have outlined a 3 step plan to help you determine when it’s the right time for you to quit your day job. Make sure you check it out before you go making any hasty decisions!
As an online entrepreneur, it’s far too easy for you to dream up a picture in your head about sleeping in, playing with your kids, catching up on day time TV and doing a couple of hours of work per day while earning a full time income.
You might be lucky enough to have a business model that will allow this, but in most cases, to generate a good income, you will work the same hours, if not more, than you do in your day job. Before you go any further towards working for yourself, it’s important that you understand this!
Knowing your numbers is crucial in deciding whether you can afford to leave your job. Go through your financials and find your average monthly revenue. This will be easy if you have been doing your paper work!
Once you have your total monthly revenue (how much money comes into your business), calculate the profit by subtracting the costs from your business such as website hosting, eBay/PayPal fees, shipping costs and advertising.
The number you get when you subtract these costs is your profit. How does the number compare to your current salary?
Can you live on that amount? Will there be money left over to reinvest into your business (i.e. wholesale purchasing)?
If the numbers don’t add up, and you probably aren’t currently making enough to supplement your income from your job, don’t make the mistake that some sellers do and assume that your sales will soar when you work at your business full time. My advice is to leave your job when the numbers are right; not when you think they are about to get better.
It would be foolish to not to address the potential risks associated with leaving a job with a steady income to work for yourself. Your business is unique, and so is your lifestyle and personal situation so it’s difficult to provide a cookie-cutter template for evaluating risk. However, here are four important questions you should ask yourself when evaluating the potential risks of working for yourself full time:
Only you can weigh up whether the risks are worth the potential gains, but the best thing you can do is safeguard yourself from potential risks with a bit of planning. For example, if you are worried about how you will survive during a dip in sales, start saving now and put money aside for this exact purpose.
ESSENTIAL TIP! Before you leave your job, aim to save the equivalent of three to six month’s salary that you can use if and when you have a slow period in your business and do not generate sufficient income. Although it may take time to save that amount of money, it is one simple way that you can significantly reduce the risk of going broke.
Finally, don’t do what an old friend of mine did, and hand in your resignation because you’ve had a bad day/week/month at work. Your decision to leave your job needs to be based on logic, long-term planning and not on your emotions.
Are you thinking about taking the plunge and working on your business full time? What are you looking forward to most about leaving your job and building your own business?
Lace Llanora on 8:28 4 MayEnjoyed reading your post Alice, I know a lot of people wanting to quit their jobs even before they have started a business! I understand it's everyone's dream to become their own boss but it's not as easy as what most would imagine. Adding to Alice's wonderful advice, it will be helpful to do your research before leaving your job. There are also paperwork that need to be done when jumping from employed to self-employed, realize that from now on, you'd have to take care of taxes yourself so brushing up on bookkeeping skills is a must :) If you're not as comfortable yet of leaving your job, you could try getting people on board to help with your business - your family, friends, or even consider hiring an extra pair of hands. This way, your business can grow while you enjoy a steady income from being employed. Finally, make sure you are passionate about your business and it is something you will never want to quit! :) Lace