Starting a business without funding can be challenging. Not everyone has the luxury of having a large savings account to fall back on, so taking the leap to self-employment can be financially nerve-racking. I put off starting my first business for years because I feared not having that steady paycheck. It was not until a layoff forcing me to finally break free that I made the jump from employee to employer. Although scary, being laid off to start my own business was one of the best things that ever happened to me both personally and financially.
Over the years I have mentored many entrepreneurs making the transition from corporate job to self-employed. Everyone's situation is different so knowing when you should leave the paycheck behind is very personal. In my experience, you should weigh these two major factors - time and money. Which one will cause you the least amount of stress to give up for short-term while building your empire?
1. Are you better at sacrificing your TIME?
If you have a regular job while you are trying to start something on the side, time is of short supply. Weekends and evenings that were previously reserved for leisure will be consumed by the new business activities.
The upside to giving up time is that you have extra funding from your day job to put toward investing in your new business and have less financial stress. The downside with this angle is that your business isn't getting your full attention which leads to slower growth, scattered focus and being overwhelmed. Another downside is that your comfortable salary gives you a great excuse to delay your dreams (and sometimes even makes you abandon them altogether.)
Mindset Tips: If you choose to give up time instead of money, give yourself a deadline to how long you will stay in your job before you take the leap to managing your company full-time. Make sure you give yourself space for downtime. Call your day job your "dream-funding" activity while focusing on the long-term big vision.
2. Are you better at sacrificing your MONEY flow?
If you don't have a regular job, you will have the luxury of time but money may be limited. You may need to temporarily to scale back on expenses to balance your budget. You may have less cash available to apply to your business investments.
The upside of having the luxury of time is that you may get your business running at a faster pace because you are dedicating 100% of your passion toward it. You won't be distracted and stressed out by another job, so you will have more energy and joy in creating the dream.
The downside is the stress of financial uncertainty. Worrying about your bills can destroy your motivation and make you hyper-focused on the money aspect of the business. Your business can become the "job" that you resent if it does not pay you enough or something you do to make ends meet.
Mindset Tips: It is imperative to discipline your mind to focus on possibility, especially during times of financial stress. Surround yourself with successful people you can learn from and keep you mentally-aligned with success. Have a strong work ethic. With the free time, there is a temptation to feel like you are on vacation and get loose without a regular schedule.
Be realistic. I've seen people hoping and praying for success without a solid business plan or support of a qualified mentor to help them. If you truly believe in your dream, armed with the right plan, no outside force will stop you from making it work.
Time or Money?
This decision is not about fiscal responsibility and more about mindset. If you can manage your mindset around money, then you can get started sooner and build your dream business with more bravado. If money stress causes you to shut down and be ineffective, then you should keep that income-producing job until you feel confident to make the shift. Ultimately success is driven by your mindset, so don't forget that when factoring your path to creating your business.
There is no right or wrong decision. Sometimes, like me, you will be forced into the choice because your dream cannot wait any longer. Once the calling of entrepreneurship is awakened inside of you, it will find a way.