Whether running an Etsy store, a food cart, a photography business, or working as a freelancer, many entrepreneurs start their businesses as a “side hustle” while still working full- or part-time jobs. It’s a smart way to test the waters before pursuing entrepreneurship full-time.
If you’re one of these people, the time will come when that side business grows large enough for you to consider ditching your day job altogether. And how you go about making the leap is every bit as important as the steps you take to get to that point. If you don’t plan your transition properly, you could find yourself sheepishly returning to a day job because you leapt before you were ready.
To make sure your transition goes smoothly and that you set yourself up for success, take these steps:
1. Build Up a Savings Fund
The standard advice given to those considering the leap is to save up six months’ worth of living expenses before calling it quits. Entrepreneurship is naturally a feast-and-famine cycle, as your projects or orders can fluctuate from month to month. Having a little something in reserve can carry you through the leaner months. It’s also important when you first make the switch to full-time self-employment, as this is often a time when you’re still building and expanding your client base and may have some gap between your income and your budget.
Having some money put aside will do more for you than making sure your budget stays in the black each month—it will also give you the freedom to build your business on your own terms. When you’re struggling to make ends meet, you can find yourself accepting clients and projects with terms you know aren’t the best. Some extra bucks in the bank gives you the freedom to say “no” to projects you know aren’t worth your time.
2. Know How Much Income You’ll Need to Quit
In addition to building up your cash reserve, you’ll also want to have a clear handle on how much income you’ll need to bring in monthly to reasonably clear your expenses as an entrepreneur. This will give you a better idea of when your business gets large enough that you can feasibly “afford” to quit.
Keep in mind that once you’re no longer working for an employer, your expenses can change. If you’ll be working for home, for instance, you can deduct commuting expenses like gas, parking, and tolls. However, you may need to pay extra in other areas, like heating and cooling your house now that you’ll be home eight more hours a day, or boosting your Internet package so you can work more efficiently. Put together a budget for your projected monthly expenses so you know how much you’ll need to bring in to make the leap.
3. Know Your Potential to Scale
Once you know how much you’ll need to quit your day job, it’s time to tally that amount against what you’re currently bringing in from your side hustle and what you can expect to bring in once you’re doing it full-time. You may decide to wait until you’re bringing in exactly what you’ll need, or you may decide to leap with the faith that having more time to devote to your business will enable you to quickly scale to reach that amount.
When I quit my day job to pursue my writing and editing full-time, I wasn’t bringing in everything I knew I’d need to support myself on my own. But I knew what my hourly going rate was, and I knew I had enough projects lined up that, once I could focus on my business full-time, I would quickly make up any income I still needed. Start putting out feelers with existing clients and contacts to determine if there’s any additional business you can reasonably expect to bring in when you go full-time.
In the End
Making the leap from side hustler to full-time entrepreneur is always a bit of a risk, but by making it a calculated one, you can better ensure your success.
Here’s to a smooth transition!Click here to join the conversation (1 Comments)
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