When I started a business, I quit my job on a whim without having any savings or a plan. Though the proverbial fire beneath propelled me into action, it was a stressful road to stability.
Many friends and colleagues ask me about the right time to start their business. There is no right answer to this question, as every person is different with his or her own unique path. Many paths can lead you to a life of entrepreneurship--here's how to know if you're ready to take the plunge.
Can you afford to buy health insurance?
When I first was getting started with my business, I did not realize how expensive it was to purchase individual health insurance for myself. So I did what any struggling business owner did--I decided to go without. Not having insurance felt like a badge of shame that I never discussed with friends. It wasn't until years later that I found out many of my founder friends had been in the same boat when they got started. If I were to launch my business again, I would have made sure I was in a financial position to afford good health care.
Take a look at your current insurance policy. Then find out how much it would cost to maintain your current level of coverage. Taking a hard look at your finances will help you avoid running short when medical emergencies happen. When calculating how many months of runway you have, make sure you can afford not only things like rent and living expenses--but also insurance.
Are you 100 percent committed to your idea or service?
Many times in the past, I'd get worked up about a business idea, only to lose momentum and excitement a few weeks later. Don't make an impulsive decision to quit your job because of a "good idea." Think on your idea for a few months, to make sure your business is something you'll still be excited about months, and even years, into the process.
- Would you enjoy working on this idea for 5 to 10 years?
- Does the idea give you purpose?
- Do you have the ability to execute?
If you answer "yes" to these questions, then it's clear that your idea has long-term legs, and quitting your job could be a good decision.
Are you willing to give up your current lifestyle?
When I was gainfully employed, I had a bit of disposable income to spend. When I started my business, I had to cut back one thousand percent; I put all of my savings and sales income back into the business. Business is a roller coaster, and not a cheap one. If you're looking to start a business, ask yourself if you'd be okay cutting back on your current spending.
I might have made a lot of mistakes starting my company, but I've never been happier to have complete creative and personal freedom. You can avoid many of my stressors if you ask yourself these questions, and are better prepared for the road ahead.