When To Go Full Time With Your Small Business
One of the top questions we get asked is .... "When will I know when to go full time with my business?"
It's a big question, and the answer is a little different for every person. But we are going to stick with the fundamentals that may help you to gauge when you might be ready for that big step.
Your finances are the number one indicator of when you should quit your day job and go full time with your small business.
Ask yourself - How much do I need to make in a year (after taxes, expenses and an emergency fund?)
Then calculate how many sales/clients/jobs you need. Now times it by 1.5 or even 2. That is the number you should be shooting for. This is all due to taxes, expenses, and unexpected expenditures. And don't forget about insurance and vacation time.
Now the scariest part of this is calculating your projections. Will you have the same amount of sales/clients the following year? What do you do if those numbers drop? We would highly suggest you give yourself two years of steady growth before considering going full time. Sometimes, we experience a huge flux one year that is followed by a great dip whether it is due to economical shifts or otherwise.
Personally I believe in saving at least 1 year's income in the bank before going full time to give you a cushion incase anything crazy happens. Some people think 6 months salary is enough but I'm overly cautious when it comes to money. But this is definitely the first step.
Once your finances are in order you'll start to see that your time management is taking a big hit. At first it was completely normal to be working 80+ hour weeks, managing multiple email accounts and enough clients to make your head spin. But once I was transitioning to full time I started to notice that things were slipping through the cracks. I wasn't able to spend as much time working on my day job and they were definitely starting to notice.
(SIDE NOTE: This is different from having poor time management, usually small business owners are putting in at least 40+ hours on top of their regular jobs. Never neglect your day job as this provides your paycheck unless you're willing to lose it. If you can't afford to get fired definitely only take as many side orders that you can handle)
And just like that my side business was eclipsing my day job. I wasn't at a loss for appointments and was constantly booking new ones. It was the right time to transition to full time employment.
We've always said that your business should be your passion. It should be driving you to create and inspire you to do more. Really, if you love what you do, putting in the hours should come easily. However if you find yourself getting bogged down because of your day job and it's effecting your drive to create and push your business, it might be time to give it up.
(This is of course meaning you followed steps 1 and 2)
I wanted to hold onto my day job for as long as I could. (As mentioned above I was very afraid to leave financial security behind). However, even though I could rely on the financial security of my day job, I realized being so stressed out and managing so many schedules was not only terrible for my health and well being but also not fair to my clients. Once I was able to relieve that extra stress I was able to focus more, take my time on my clients, and improve my client experience to 110%
So if you're toying with the idea of quitting your day job but are still unsure of what you need to make that a reality, let us know. We'd love to help you figure out what steps you need to take and when the right time for you could be.