As the saying goes, if I had a nickel for every time someone asked me “When is the right time to leave my day job?”, I would be rich.
Just the other day, I received the following email:
“Can you recommend a good strategy for leaving the “cube nation” when there are limited job opportunities should you fail at your own business? Is there a formula to determine if you should stay at your day job? This is my situation and I know there are others who feel the same way.
The company I work for pays the best and offers the best benefits for technology people (which is my background and experience). Most people I meet on the street have tried for years to get in my company. When I hear this I think I’m crazy for wanting to leave. I know I could leave and possibly return, however I have already done this once and feel I might not get a second chance to return.
So essentially I’m frozen by the great pair of “golden handcuffs” with the fear of never getting a good pair again.”
This is a very typical situation for many cube dwellers.
For starters, this decision ranks right up there with:
- How do I know if this is the right person to marry?
- Should I buy this house?
- Is it safe to sink $20,000 into this stock?
All of these decisions have both emotional and practical components. And they all involve great risk. Because they are totally dependent on your individual tolerance for uncertainty and change, there is no magic answer, as much as I would love one. But here are some things to weigh if you are considering quitting your day job:
1. What is at the root of your fears?
If you are like most people, “When is the best time to leave my job?” is not the question that gets your heart racing. Underneath that question are concerns like:
- What if I fail miserably and fall on my face? How will I get over the embarrassment?
- What will be the impact on my relationship if I finally follow my dreams?
- Will I lose my entire savings and end up eating leftover bits of hamburger from trash bins?
Napoleon Hill, in his 1934 book Think and Grow Rich names six basic fears that hold us back from success: fear of failure, fear of poverty, fear of criticism, fear of old age and ill health, fear of loss of love, fear of unknown.
The thought of quitting your day job plays into most of these fears. It is no wonder that most people sit in a perpetual state of “wait and see” instead of plunging head-first into self-employment.
So as a first step, be honest and dig down to figure out what is at the root of your fears. Then take action to address the problems and concerns. Think you don’t know what you are scared of? You may just be afraid of the truth.
2. How much do you loathe your day job?
- On a scale from 1=I don’t love my job, but it is fine for now to 10=I feel violently ill when I drive up to my building, how do you rate your day job?
- The question of loathing is a key determinant in the timing of your
departure, because if you have a high loathing scale, it is very
probable that at least one of the following things will happen:
- You will develop serious health problems like high blood pressure, migraine headaches, ulcers or an autoimmune disease
- You will do something very inappropriate like attack someone in a meeting or skip an appointment with a very important customer
- You will get laid off (for seemingly “business, not performance reasons,” when we all know better)
- You will get fired
- Unfortunately, there is no correlation between the degree to which you hate being an employee and the degree of success you will have as an entrepreneur. I have a non-empirical hunch that some of the best entrepreneurs today were not management-hating grumblers, but rather generally positive and productive employees with bigger dreams than the confines of a corporate environment could handle.
- Bottom line? If you hate where you are, you better start making plans to leave before someone makes them for you.
3. What is your financial situation?
- Do you have at least 6 months worth of expenses saved in the bank?
- Do you have low debt?
- Is your partner or spouse willing to step in and support you while you are in the start-up phase of your new business?
- Are you aware of all the costs involved in starting your new venture?
- Are you up-to-date with your taxes?
- Are you willing to scale back on expenses,including steps like moving to a lower-cost city or trading your Executron mansion for a smaller house?
While none of these conditions are mandatory prerequisites for going out on your own, they will certainly help you feel safer about cutting off your regular income stream. If you are in a less-than-ideal financial situation, you may want to spend at least six months focusing on this area.
I also suggest talking with a trusted, objective financial adviser who can help you sort out different options, like whether to use savings or debt to finance start-up costs, what to do with your retirement and health insurance plans and how present your financial situation in a way that will be attractive to lenders or investors.
4. Is there any “there” there?
Obviously, a key part of your success as an entrepreneur depends on having a viable business idea. Have you done the following things?
- Chosen a target market and specific niche?
- Determined the major problems or concerns faced by people in this market and developed your product or service to address those needs?
- Evaluated your competitors?
- Shared your idea with a successful, more experienced entrepreneur?
- Developed and deployed a prototype or sample of your offerings and gotten good response?
- Had success in any other self-directed parts of your life like volunteer activities, fundraising drives or lemonade sales?
Of all these elements, I recommend testing your real product or service with real people to see if it works. Make sure you are not betting your livelihood on an idea that has never made it out of your head.
5. What other employment options do you have if your self-employed gig doesn’t work?
The reader quoted in the beginning of this post stated:
“I’m frozen by the great pair of “golden handcuffs” with the fear of never getting a good pair again.”
While I know that this can feel true, when you look at all of the ways that you can make a living, this is obviously not the only job opportunity on the planet. And fearing not getting a good pair of handcuffs in the future makes me think of a correlated analogy:
“He may be a low-down, cheating husband, but he is MY low-down cheating husband.”
Ick. Don’t live your life that way. You are worth more than that.
Be creative in researching your options for generating income. You may be surprised that instead of feeling trapped and limited, you have endless opportunities, including living the globe trotting lives of my virtual buddies Lea and Jonathan.
6. How close are you to retirement?
For those that have worked for many years in one company, or who will receive significant, long-term financial benefits by staying another two or three years in your day job, consider this:
- Sometimes it is worth staying in your job now to have lots of freedom later.
- You can make the most of these last years of employment by building out the infrastructure necessary for going out on your own.
- Much depends on your loathing factor, described in point #1. I knew a miserable, dedicated employee who put up with tyrannical, abusive bosses for most of his 30+ year career because he wanted to have security post-retirement. In his last week as as employee, he was riding the subway into the city. With no warning, he clutched his chest, slid down in his seat and exhaled his last breath on earth on the floor of a commuter train.
7. How supportive is your partner/spouse?
If you are in a serious relationship, you know that career decisions are never only about you. Your spouse will feel ramifications in every aspect of his or her life, including financial, emotional and work/life balance. Although living a dream may seem like a good idea, you may find that as you change, your relationships change too. For tips on how to have the “I want to quit my job” conversation with your spouse, look here.
Even if you checked every single box on this list and find that you are mentally and physically able to quit your job, your business can still fail miserably. I am sure I will hear (and hope I do) stories of wildly successful entrepreneurs who started their businesses without testing anything, in a financial cesspool and against the virulent protests of their spouse.
Your inspiration to quit may come from a much more improbable source, that lies somewhere between a small hunch and a profound spiritual revelation. Many people who have made the leap say that they just “knew it was the right time.”
For my dear friend Steve Darden, the inspiration to quit came through his son Seth, who woke up from a nightmare one evening and called out for his Dad. Steve was a hundred miles away, staying in another city so he could fulfill his dream of managing a large agency. Haunted by the loss of his own father when he was just 3 months old, Steve realized that he was sacrificing his role as father for a job. He quit, and never looked back.
For those who made the leap, please share how you did it.