Question: I have a photography business that I’m starting up but don’t know at what point I should make the full leap from my day job to this startup. Is there a certain amount of income I should reserve before I make the transition?

Well yes, that is the question, isn’t it? Life would be so simple if there were only a pat answer to this question. Take your monthly income and compare that to your savings, or something like that. But of course it doesn’t work.

This is a good place for a reminder about the business plan and business planning. The business plan isn’t something you do just because somebody told you to; it’s about reducing uncertainty and making your way carefully.

Review your estimates: sales, costs, expenses and, most important, cash flow. No dreaming at this point. Do your numbers well. Be conservative.

Here are some things to consider and factors that might help:

  1. Take a step back from your finances and look at your life. Can you afford to fail? Be honest with yourself. Are you going to lose a relationship? Never bet something you can’t afford to lose. The answer here should be very different for an unattached single person with some savings than for an attached person in a relationship who has people depending on him or her. That’s just a fact of life.
  2. Use your imagination. Throw yourself forward six or 12 months and imagine how you’ll feel if things don’t work out. Would that be a complete disaster? Can you live with it? Now do the same and imagine how you’ll feel if you don’t jump into the water. You didn’t risk anything, you didn’t do it, and now the window of opportunity has passed. How much will you regret?
  3. Take your business plan and cut the sales in half. What happens? Can you survive? What kind of conditions would cause that disappointing result.

For the record, I jumped off a good job when I was 35 years old, married with four kids, and mine was the only income for the family. It worked out, but it was scary. I don’t think what I did was the smart thing to do. I wouldn’t recommend it to anybody, but we did survive.

Additional thoughts. I posted Don’t bet the house on this blog a couple of months ago, and more recently, I linked to an excellent post by Pamela Slim on Escape From Cubicle Nation. She gives a very thorough list of recommendations on this point.

Think it through. Feel it through. And good luck.

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