1. Money Coming in Versus Money Going Out
Only you know what you need to survive on in terms of income. Many new business owners often forgo a salary until their new venture is on stable footing. Can you survive without a steady paycheck? Don’t imagine what you’ll be making; be realistic about what you’re making now and what you can anticipate making two weeks after you’ve quit. The harsh reality is you’re probably going to take a salary hit in terms of reduced weekly take home pay. Can you survive with that?
2. Business Plan Projections
What does your business plan say about generating income? If you don’t have a business plan, then you’re really not ready to quit your job! A properly prepared business plan will become your road map for success. If you have used realistic projections then you should be able to gauge when revenue will start rolling in. More importantly you should have a contingency plan ready to activate if those projections don’t hold up.
3. Emergency Capital
Your contingency plan should include a kind of “rainy day fund.” This should be additional operating expenses you might require to keep your business running should you experience a downturn in the first couple of weeks or months. Quick example: You’re starting a business selling beach umbrellas but on opening day it begins to rain for two weeks straight. Will you have the money to pay your bills while you wait for the sun to shine?
4. Family Support
You can never underestimate the need for family support when you open up a new business. You’re going to be asking for a lot of sacrifices from your family as you devote long hours to make sure your business is running properly. If they’re not as committed as you are to this start up then you’re going to have added stress which isn’t going to do anybody any good. This kind of support is critical when you are making the transition from one job to another. They last thing you want to ever say is, “Surprise: I quit my job!” Major decisions like that should be made in partnership with your family.