How do you know when to start a business and quit your day job? Whether you’re dreaming of giving notice at your current job and walking out in a blaze of glory, or you’re so consumed by your passion project that you’re ready to give it 100 percent, timing is everything. Early in my career, I spent a long day with some paper, a pen and a glass of vino, trying to decide between launching my business and venturing back into the corporate world.
If you’re thinking of starting your own business, you’re not alone: Small businesses comprise 99.7 percent of all companies in the United States. Here are some signs that may indicate it’s time to turn your side hustle into the real deal.
1. You Hate Being Managed
Let’s start with the number one reason: You hate being managed — or, you just can’t stand being in an office anymore. One freelancer I know, who wished to remain anonymous, gave her notice the day after her officemate cut his toenails during a conference call. My own story? I started freelancing after the organization I worked with closed. The siren song of a flexible schedule was more persuasive than the lure of a steady paycheck.
When office nightmares become a reality — like when your manager starts counting your bathroom breaks — or you’re suddenly scheduled for meetings seven out of eight hours a day — every day — it might be time to move on to greener pastures. Sure, the reasons aren’t always so dramatic, but kicking off your own business lets you create your own schedule and get a fresh perspective of the daily grind.
Before you take action, ask yourself if you:
Have a plan for what your schedule will look like
Can stay motivated and on task without someone else managing your workflow
Need a list of tools and strategies to help you focus
2. You’ve Established a Client List
You’ve got the skills — but do you have a client list for your side hustle? A solid book of business is one of the most valuable assets you can have when you’re getting ready to press play. Evaluate how much income you’re making and how much you could increase that number based on current client relationships if you had more time. Need some tips? Try initiating a marketing campaign to existing customers to assess demand, asking for referrals to widen your network or marketing to other potential customers in your niche.
3. You Understand the Financial Impact
You’re already thinking it, so let’s just say it: Launching your own business can mean your cash flow will be tight for a while. It’ll take some time for things to get underway while you find a new group of clients to delight. But if you’ve run the financial analysis and you’re ready to dive in, that’s a strong signal that now could be the right time to move forward. So when you’ve got your mind on your money (and, if you’re Snoop Dogg, your money on your mind), consider the following:
What are your monthly fixed and variable expenses? Can — and would — you cut those down to free up some cash?
How much money do you have in savings?
Are there other incomes you can rely on, like a partner’s income or passive income streams?
What’s your timeframe for successfully moving forward?
4. You’ve Found Your Passion
When you find your passion, it might feel like your business is just waiting for you to start. And you’re not alone. A Deloitte study found that having “a sense of meaning” and “opportunities to progress” were two of the most important attributes millennials are seeking in a career today.
Whether you’re on cloud nine when you’re creating advertising concepts, or you can’t imagine anything more fulfilling than freelance accounting for small businesses, a vision and passion can take you far. But slow down for a second, and make sure your passion is sustainable by determining whether:
There’s a market demand for what you’re offering
The cash flow can support your lifestyle and budget
You have the credentials and positioning to stand out
You have a portfolio of projects you can show prospective customers
5. Your Freelance Income Is Sustainable
Talk to any group of freelancers, and you’re guaranteed to find a handful of them who made the jump to full-time when their freelance income outpaced their day job. If you have an income coming in, you’ve already tested your ideas out on the market — so you know they’re profitable. But even if your income hasn’t surpassed that of your day job just yet, you should invest the time to grow a passion project that seems sustainable.
When I was first considering the switch, I immediately thought about the longevity and steadiness of a freelance income. A bunch of one-off projects can quickly turn your bank account into a desert, but contracts for repeated business or retainers may be enough to prove that you’ll be smooth sailing long-term.
If traditional employment isn’t working for you, you’re probably already tuned into the right signals to discover when to start a business. Determine what you bring to the table — whether that’s a reliable client list, a solid savings account or a determination to never listen to Martin from accounting talk about his stamp collection again — and, when it’s time to make the leap, do it with your eyes open.