A common question I get is: “When should you quit your job to start a business?”
Or some variation of it.
It’s easy to get excited about quitting your job. After all, you’ve been slaving in that soul-murdering 9-to-5 job for a long time now. Day in and day out the same uninspiring work that you don’t truly enjoy. Sure, you could lie to yourself and stick it out until retirement. But deep down you know that’s not an option. You were put here for something else.
You’re an entrepreneur and not some cog in the system.
But the big question is when should you quit your job to start a business?
Others have quit their jobs to pursue businesses and live life on their own terms. You’ve seen their successes, you’ve heard their stories and you’re ready to take the leap. You’ve binge-watched inspirational videos, get your first taste of financial and person freedom from others, and now you’re fired up. If you could, you’d quit tomorrow and tell your boss to f*#k off!
But you’re still unsure.
When Should You Quit Your Job to Start a Business?
There’s no easy answer to this question.
But more often than not it’s a disappointing one. Disappointing not in a dream-crushing sense, but in wait-a-second reality check sense. Maybe you’ve gotten one step ahead of yourself.
There are three types of people who consider quitting their jobs: Those who want to quit their jobs out of delusion, those who want to quit their jobs prematurely and those who want to quit their jobs because they’ve earned it. Right now you’re in one of these categories.
But only you know which one it is.
Delusional Job Quitters
If you’re thinking of quitting your job without having a plan B, you’re in this category. A plan B is defined by something that creates enough cash flow to replace your current salary.
Most people who dream of quitting their jobs are in this category.
They watch a bunch of motivational videos, follow other entrepreneurs, but they’re mainly students. They don’t have a cash flow generating side-business yet. They haven’t put in the work to create an additional stream of revenue. The only cash flow generating asset they have is the 9-to-5 job they’re working at. And it’s very important you appreciate it for what it is.
As much as you hate your job, without a plan B it’s the only asset you have.
Yes, your 9-to-5 job is an asset.
It’s putting food on your table, allowing you to have a roof over your head and paying your bills. If you quit your job, you destroy the only asset you have. Flushing your only cash-flow generating asset down the toilet is probably the most stupid thing you could ever do. You’re closing the money tap for good. You might have read that you need to “burn the boats”.
Surely you’ll find a way to build a business fast and generate enough cash-flow to survive. The pressure from quitting your job will leave you no other option: You either die or you survive.
If you’ve never built a business before, it’s unlikely that you’ll survive.
You’re speculating.
You’re sitting at a poker table and going all-in. The only problem is you’re a bad poker player. And you’re playing with the only thing that’s putting food on your table, a roof over your head and paying your bills. Sounds like the most stupid thing one could ever do.
And if you want my humble opinion, it certainly is.
“But you have to take risks in business”
Yeah.
But you’re not Elon Musk.
And most entrepreneurs focus on minimizing risk. Some of the word’s most wealthy investors, including Warren Buffet, are obsessed with not losing money. In fact, the first rule of investing is: Don’t lose money. And the first rule of life is: Don’t be stupid and lose your job.
Stop complaining and bitching about it, too. Your job is the only asset you have. And it’s this way because you haven’t built or created anything (yet) that could replace it. For you, my friend, it’s not time to quit your job. It’s time to swallow the bitter pill, hustle harder, put in more hours and build something on the side. So when should you quit your job to start a business?
Let’s look at the next stereotype.
Premature Job Quitters
If you’re currently slaving in a 9-to-5 job and made the smart decision to start working on your own business in the mornings, evenings and weekends, you might have an additional stream of income at this point. Congratulations! You’ve moved up one level from a delusional job quitter to a premature one. You’ve tasted blood and the urge to retire early is growing.
Maybe you’re making a few thousand dollars on the side, or maybe you’re even a big shot and making anything between $10,000-$100,000 a month. You feel great, and you should.
But is it time to quit your job?
Probably not.
Premature job quitters feel like they’ve made it.
They take their current success as proof for future success. This is human nature, but it’s a bias. Just because you’re making $10,000 one month, let’s say from a little drop shipping store, doesn’t mean it’s going to keep generating $10,000 two months from now.
Some businesses have a short life span. You might be making $10,000 a month or more from a successful ad campaign. But what happens when your results stale or decline?
What’s your plan for when this source of income is gone? I get a lot of messages from people who get successful fast with drop shipping and then decide to quit their job. The only problem is they’re making decisions too fast based on limited information. Quitting your job just because you had one $10,000 month online is stupid short-term thinking.
Here’s what to do if you’re in this category:
- Wait for at least 6-12 months to see if your new income stream is consistent
- Wait until you make at least the same amount or more money than at your current job
- Wait until you have at least enough money saved up to survive 6 months without any income
If that’s the case, I recommend you quit your job. Until then, I suggest you stick it out a bit longer and put in more hours. Continue milking both income streams and save up as much as you can. A good alternative might be to talk to your boss about reducing the hours you work from 100% to 80% or even 50%. This gives you some extra time to grow your business on the side.
Once you consistently make at least as much money with your side-business for 6-12 months as you make in your job, consider quitting your job. You’ve built up a new asset that’s feeding you.
Your business has completely replaced the cash flow from your job.
Earned Job Quitters
Quitting your job is something that you have to earn. Sure, everyone dreams of quitting their jobs and retiring early. But few people put in the work and hustle to make it a reality.
If you’ve proven to yourself that you can create sufficient and consistent income from a business, go ahead and fire your boss. Keeping your job at this point would be a stupid decision because it’s robbing you of valuable time you could use to expand your business, improve your skills and make more money. Don’t hold on to your job out of fear or insecurity.
You’ve walked the talk, you’ve created a real cash-generating asset, and it’s time to move on. You’re an entrepreneur now. A new and inexperienced one. But you’ve earned the title.
So when should you quit your job to start a business?
The answer is, you should only quit your job after you’ve started and built a successful side-business. At the very minimum you should have an additional income stream first.
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