Some people decide to do it as soon as an idea enters their head. Others will trial it for several months or years before finalising their decision. In truth, there’s never a “right time” to focus on your business full-time, but there are some key questions you should pose before taking the plunge.
As today’s title and introduction may have signalled, we’re now going to focus on these questions.
Do you have a well-prepared emergency fund?
In truth, emergency funds should be part of anyone’s life, but when it comes to taking bigger financial risks, the importance escalates.
As soon as you decide to go full-time, you’re giving up that guaranteed, salaried income. This is a huge step, and you need a financial safety net if things don’t go as planned.
This doesn’t mean that you’re planning to fail. Instead, you’re buying yourself time, which is crucial in that all-important first year.
Do you know your costs inside-out?
If you’re employed, your costs are probably pretty low. But, as soon as you go it alone, a lot of new ones pop up.
You need to factor in:
- The cost of your office space
- The cost of travel
- The cost of equipment
- The cost of marketing and advertising
- The cost of insuring your business
- The cost of accounting and legal fees
- The cost of staff, if you’re planning on hiring any
All of these need to be considered before you make the switch. It’s vital that you have a clear idea of your overheads so that you can budget accordingly.
It’s too easy to simplify the situation and consider the “headline costs”. Don’t go down this route. Instead, account for every eventuality.
Do you have scope to trial your idea?
We touched upon this at the start of today’s article. It’s perfectly normal to want to test the water before diving in headfirst.
This is especially important if you’re leaving a well-paid, secure job. It would be foolish to just up and quit without first trying out your business idea, although this won’t work in every industry.
For example, if you’re a freelance writer, you could start taking on small projects in your spare time before deciding to go full-time. This will give you an idea of what to expect without putting too much pressure on yourself.
However, starting a business that requires a significant amount of up-front investment (like a restaurant) might not be possible. In this case, you’ll have to take a leap of faith and rely on the other questions we’ve outlined to reach your decision.
Do you have a clear idea of what you want to achieve?
This is a crucial question and one that a lot of people fail to answer satisfactorily.
Before you go full-time, you need to have a very clear idea of your goals and objectives. This will dictate everything from your marketing strategy to how you run your day-to-day operations.
For example, are you looking to build a lifestyle business or aim for world domination? The answer to this question will have a big impact on how you approach things, from how much time you dedicate to the level of financial risk you will go towards.