You started by turning a skill, hobby, or interest into a side gig. Although it took a while, the time, money, energy, and resources you invested paid off. You’ve started generating enough revenue to pursue your business full-time.
Quitting your current job enables you the time and flexibility you need to take your business to the next level. While you’re anxious to take the leap of faith, you must be prepared.
Eliminating Your Safety Net
Your full-time job served as a safety net throughout your experience. The steady income provided you with a financial source to invest in your brand. It also ensured you had the money you needed to cover everyday expenses (whether your business made money or not).
When you give your employer notice, you’ll no longer have access to this source of security. As such, it’s essential that you can afford to cover these things yourself.
Commonly Overlooked Expenses
One way to prepare for leaving your job is to be fully aware of your expenses. Beyond the mortgage, utilities, and groceries, here are a few costs you don’t want to overlook if you’re going into business full-time.
A salary isn’t the only thing you lose when you quit your job; you’ll also lose insurance coverage. As a full-time entrepreneur, you’ll need to cover the costs of medical and life insurance for you and your loved ones. As health insurance can be expensive, there are government-assisted programs that help citizens find affordable policies.
You can also do some comparative research to find the most affordable life insurance premium. Once you’ve found suitable health and life insurance, incorporate the price into your monthly budget.
Healthcare coverage isn’t the only expense you’ll be responsible for. There are also medical-related expenses. Such items might include co-pays, medical devices, prescriptions, dental procedures, eyeglasses, and more.
Although your insurance may cover some of these expenses, policyholders often have to pick up some of the slack. You’ll need to assess everyone’s medical needs to get a general idea of how much you might spend to ensure their health and wellness.
At some point, everyone dreams of retiring and simply enjoying the fruits of their labor. However, doing so requires a sizeable amount of cash. Since a company no longer employs you, you’ll have to set up your retirement account.
As you start generating revenue, set a percentage of your earnings aside in an interest-bearing account. Do your very best not to access this cash until you’ve reached your retirement goal and are ready to enjoy your golden years.
What happens if your pipes spring a leak, the kid’s private school tuition increases, or the car breaks down? Do you have the money to fix it? As a full-time employee, you had options that you won’t have as an entrepreneur.
You could use an upcoming paycheck, ask your employer for an advance, or apply for a short-term personal loan. As an entrepreneur, you’ll need to have a nest egg you can utilize when emergencies arise. It is suggested that you have at least three to six months of expenses in savings before quitting your job.
You may have figured out how to cover the cost of business and personal expenses, but what happens if there’s trouble in the workplace? Let’s say your company suffers a slow period and doesn’t sell any products, or you end up injured and unable to work for a few weeks.
Do you have the money to resolve the issue promptly? If the answer is no, you need to build emergency savings exclusively for your business before transitioning to a full-time entrepreneur.
Whether your lifestyle blog has taken off or want to take on your love of photography full-time, you must prepare. Although nothing is foolproof, the worst thing you can do is quit your job without having the means to cover everyday personal and business expenses.
As you decide how much you’ll need to reach your goal, ensure that you remember to include some of the most commonly overlooked costs listed above. Having an accurate and realistic budget is essentially the most practical way to reduce risk and ensure your entrepreneurial success.