Entrepreneurs juggling their day job with a promising startup have many tough decisions to make. Perhaps the most difficult is knowing when to quit the nine-to-five gig so your business can really take off.
Deciding whether to throw everything into your new business or stick with the safety net of a salary usually comes down to a matter of timing.
For Steve McCarthy, it was now or never. He left a well-paid job as the chief executive of an advertising company to kick-start his own company, Road Runner Mobile Tyres.
His partner John Shim was also in a successful job as a consultant for a global accounting firm before co-founding Road Runner, an online tyre shop that supplies, fits and aligns tyres.
“Both of us had a desire to have a crack at something of our own before we got too old and before the opportunity potentially passed,” McCarthy says.
It was a leap of faith that paid off. In just over two years, the new venture has made annual sales of $2.5 million.
Judging when to leave the security of a full-time job is essential to the success of your fledgling business. Done well, it will provide winning momentum. Done poorly, it could see you begging your boss for your old job back.
Here’s how to transition.
Know when to take the plunge
Ideally your business has managed to attract customers, or at least shows strong signs of doing so. You also know you’re ready when most of your spare time is being poured into your business and it still isn’t enough.
Have an exit plan
Before you hand in your resignation, do the numbers to make sure you can still afford to pay the bills. This may mean planning your resignation months in advance and saving as hard as you can in the interim.
Make a business plan
Your business plan is critical in mapping out the way forward. It should account for initial and ongoing operational costs.
Find mentorship and support
Join a business support group or a mentor to share ideas with. Advice from those who know the ropes is invaluable in the early days.
Quitting your day job is a big risk, but with careful planning and preparation the rewards can be great.
Kate Jones writes for the business and money sections of The Age and Sydney Morning Herald. She also writes for The New Daily, TAC, RMIT and is a news writing tutor at Monash University.