self-employed

Should You Quit Your Job and Start a Business?

July 17, 2020 By Kathryn Vercillo Leave a Comment

You want to quit your job to start a business. Nobody can blame you. There are many wonderful things about being your own boss. However, it’s a risky endeavor. It’s not all sunshine and roses. Moreover, you can lose a lot of income at the beginning of starting a business. Should you really quit your job? Or should you perhaps scale back on your regular work as you first start your business? There are a lot of things to take into consideration when you make this decision. Let’s explore the pros and cons a little bit.

Why Do You Want to Quit Your Job and Start a Business?

This is the most important question to answer before you actually quit your job and start a business. And, in fact, you should answer it as two separate questions:

Why do you want to quit your job?
Why do you want to start your own business?

Many people consider it to be one question. However, if you are honest about the answers to both parts of the question then you’ll be a lot clearer whether or not this is the right step for you.

For example, let’s say that you answer part one: “I hate my boss.” As you dig into part two, you may realize that you don’t actually want to start your own business at all. In contrast, you simply don’t want to work for that same boss anymore. Realizing this early on will go a long way towards making sure that you’re taking the next right step in your career.

Alternatively, let’s say that you don’t have a clear answer to part one. You know that you want to start your own business because there’s a particular cause that you’re passionate about. Could you keep your day job and just volunteer in a capacity that fills that need?

If you are very clear about why you both want to quit your job and why you want to start a business then you’re well on your way to making smart choices as you move forward.

Benefits When You Quit Your Job to Start a Business

When you quit your job and start a business, you do reap some benefits:

You immediately begin to work for yourself. This gives you a huge feeling of freedom. However, don’t discount how much responsibility it requires.
You have plenty of time to devote to your new business. After all, if you regularly work 40+ hours per week and then you quit, that’s 40+ hours per week to devote to your new passion project.
You avoid any conflict of interest. If you want to start a job that’s similar to what you do now then there might be a conflict of interest that would prevent you from staying at your current job. Review any non-compete agreements and related terms of your contract.

If you are the type of person who works best under pressure then you might find that it’s worth it quit your job to start a business. You could thrive under the stress of trying to make a go of it when you don’t have another income to fall back on. The time you free up by quitting your job, and the freedom you get from working your own schedule, could be worth it. But don’t fail to take into consideration that there are drawbacks when you quit your job to start a business.

Drawbacks When You Quit Your Job to Start a Business

Research indicates that entrepreneurs do better if they stay at their job when first starting a business. There are some big risks and drawbacks to the decision to quit your job and start a business. Those drawbacks include:

You’re obviously no longer drawing an income. Therefore, there’s a lot of pressure on your new business to succeed dramatically and right away. You aren’t giving it enough time to scale up.
It could be harder to get loans for your business. If you can’t show that you’ve got an income coming in then getting credit for your new business could be more difficult.
If the business doesn’t do well, you might not be able to get your old job back. After all, the economy isn’t thriving right now. If you’re lucky enough to have full-time employment then you might not want to sacrifice that to start your own business.

Starting a Business: What to Do First

If you decide that you do want to quit your job to start a business, then you have to take that decision very seriously. You have to put your all into this new endeavor if you want to make it work. Here are some of the things that you need to do before you even quit your job:

Create a business plan. It’s imperative that you know exactly what you plan to do and how you plan to do it. You need goals, milestones, and timelines. Of course, those may shift with time but try to get a solid plan in place.
Crunch the numbers. Figure out what it’s going to cost you to start a business. Consider the initial costs, your own paycheck for the first year, and all other first-year expenses. Figure out how to make that work before you quit your job to start a business.
Start working. Don’t delay getting your first clients or customers. You might want to get the first few clients lined up before you quit your regular job.
Network. Just because you’re working for yourself doesn’t mean that you don’t need other people. Build your team. This might mean hiring people, working with consultants, or simply networking with other entrepreneurs. Make sure that you have a group of people in your corner.

Weigh the pros and cons before you quit a job to start a business. Does it make sense for you, considering the economy, where you are in your career, and what you truly want from starting your own business? The more thought that you put into the process ahead of time, the better chances you are to get the results that you desire.

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What is Passive Income?

April 3, 2017 By Ashley Price-Horton 2 Comments

Would you like to like to make money while you eat, sleep, and relax? If you are like many individuals who desire to make money without having a job, then you need to create passive income. What is passive income exactly?

What Is Passive Income

Passive income is income received on a regular basis without much effort aside from the initial investment of time. For example, let’s say you want to make passive income, and you’ve decided to create an eBook about saving money. You will create the book, put it online, and other people will buy it. Every time someone downloads your book, you will make passive income. That is just one passive income idea. There are many ways you can obtain passive income which can range from investments, classes, books, and many more options. Though passive income is a great source of money, it is important to understand the misconceptions surrounding passive income.

Misconceptions of Passive Income

Many people believe that passive income is the easiest income to obtain. Honestly, passive income is easy to obtain, if you are willing to put in the initial work without receiving money in advance.

When it comes to passive income, you cannot simply create it and leave it. That is a common misconception surrounding passive income. If you think that you will make a lot of money without maintaining or promoting your projects, then you will be disappointed. Yes, passive income is wonderful because you can make money as you do other things that aren’t related to working. However, passive income is not 100% passive.

Passive income is not 100% passive. You will need to maintain your projects and promote them. Let’s face it, if people do not know your product or service exists, they will not buy it. Also, it’s important to maintain your products and services. Information changes and you have to be willing to change your products as well.

Unlike a regular job, with passive income, you only receive money when customers buy your product or service. Therefore, passive income is not always stable.

Passive Income & Stability

Making passive income is great. Being able to receive money in your bank account while you do things other than work is a rewarding feeling. However, passive income is rarely stable. Some months, you may make thousands of dollars from your passive income project while other months, you may only make a few hundred.

A prime example of the stability of passive income is Pat Flynn. In January 2015, he made $109,175.58 in passive income. Yes, you read that correctly. $109,175.58! The following month, he made $87,418.77. That is a difference of -$21,756.81. Keep this into consideration as you build your passive income portfolio. Many factors can dictate the stability of your passive income.

If you want to make money while you sleep, travel, spend time with family, or watch TV, then passive income is definitely the best way to do that. Think of an income project you’d like to create, develop it, promote it and maintain it. You may very well be on your way to a lifetime of passive income.

Those interested in establishing a source of passive income should check out this in-depth guide on Chain of Wealth.

Photo: 401(K) 2012

The (Sensible) Leap of Faith

November 22, 2011 By Jennifer Derrick 2 Comments

Years ago I made the choice to leave the full time corporate world and go out on my own. I did it for many reasons, not the least of which was because I just couldn’t stand the toxic office games and politics. For the sake of my mental health I knew I had to do something. So I took a leap of faith and went out on my own. Of course it wasn’t all fairy tales and rainbows. I struggled for a while before I really found my footing and learned how to run a business. I adjusted, though, and the leap paid off.

A big reason why the leap worked out for me was that I didn’t make a blind leap. I didn’t storm into my bosses’ office one day and scream, “I quit,” at the top of my lungs (not that I didn’t want to). I planned my leap. At night I read about how to start a business. I worked my contact network and took jobs on the side to build up my client base. I learned about taxes and accounting. When I felt that I had a solid base in place, only then did I give my notice and quit my job.

Sometimes in your financial and work life you just need to take that leap of faith. It may mean the difference between an average life and one that is extraordinary. It may mean the difference between a so-so portfolio and one that leaves you short. The opposite can also be true. A leap of faith can leave you jobless, or with a portfolio in tatters. While there may be some factors that you can’t control that determine your success or failure, the main difference between a successful leap and a disaster is planning.

If you’re thinking about becoming self-employed, trying to invest on your own, quitting a job to stay home, or anything else that requires you to leave the safety and security of your known world, you want to do it sensibly. Just leaping off the edge can be exhilarating but is also dangerous. Take your time and plan your strategy. Learn everything you can about your new endeavor. Everything you can learn ahead of time acts as a hedge against confusion and disaster. Practice, if you can. If you can take jobs on the side to build your reputation, do it. If you can invest with just a few dollars, practice for a while and learn the ins and outs of the market before you commit all your savings.

A sensible leap of faith also requires that you prepare financially as well as intellectually. Don’t quit your job to start a business unless you can support yourself somehow until your new venture takes off. While you’re planning, save money and look for grants or other funding, if applicable. If you’re looking at taking risks with money in the stock market, don’t do it with money you can’t afford to lose. Build up a pile of “play money” that you can use to try out your strategies. If you’re trying to stay home, try living on one income for a while to see if you can do it.

A leap of faith can lead you to a more fulfilling and richer life, both personally and financially. However, it’s best done sensibly and with thought rather than impulsively. You wouldn’t just bungee jump off a bridge without checking your equipment and researching the safety record of the company overseeing the jump (I hope) so why would you treat your financial leaps any differently?

(Image courtesy of mic_p)

Versatility Equals More Income

September 27, 2010 By Jennifer Derrick 2 Comments

People often want to know how they can make more money. Beyond the standard answers of sell your stuff, take a part time job, do online surveys, or other ideas, there is one way that a lot of people don’t consider: Become more versatile. While there are some professions that reward specialists with high pay (think medicine, law, and the sciences), most of us need multiple skills if we want to earn more money. We need to let go of the notion that one job or one skill will be enough to carry us.

This is particularly true for the self-employed. Self-employment income can be variable with periods of feast and famine. Wouldn’t it be nice, if during a slow period, you could pull out another skill and get more work? For example, let’s say a freelance writer makes a good income writing support manuals for computer software. She specializes in technical writing. But one day, the tech writing work is hard to come by. No one is hiring and our writer’s income is in the dumps. It
would be nice if she could also write grant proposals, magazine articles, or advertising copy. Those markets might still be hiring and she could be earning money while she waits for the tech market to pick up. Even better, what if she could not only write, but also design web sites or brochures? Her opportunities just increased some more.

This works in all fields. Some examples: I know a freelance computer network engineer who has also taken the time to learn about sophisticated phone systems, as well as electrical engineering. When it’s hard to find computer work, he can also look for work setting up these phone systems or designing electrical systems. He’s never without work. I know teachers that also tutor, and writers that teach at the community school level. I know an artist who both teaches and does commercial work when her personal artwork isn’t selling. I know a secretary in a medical practice who works nights as a medical transcriptionist. The mechanic at the local quickie lube teaches shop class at the high school and does freelance shop work.

You can become more versatile in two ways. The first is by doing the same work but in different fields. The writer profiled above is an example of this. Everything she does is writing based. Grant proposals, technical writing, articles, and advertising copy are all writing activities but the markets are different and, when the need for one is on the wane, chances are another type of writing is still hiring. The second way to become more versatile is to acquire more and different skills. You can still work within your primary subject area, but you do different things. This is the case of the artist who also teaches art classes, or the teacher who does private tutoring. They are both still working in their chosen field, but they are tapping different skills and markets. If you can combine these two approaches, for example becoming a writer who can write in many areas and also teach, you open up your opportunities even more.

Even if you aren’t self-employed, being versatile can make your employment more lucrative. The more skills you have and the more roles you can fill at your employer, the more money you can command. Being versatile will also make your job searches easier. You can look for work in more than one field or narrow job description. During times of recession, if you can tap many markets or search for more than one skill based job, you are better off than the person who can only look in one area.

Becoming versatile takes some time. You have to learn your extra skills and then build up experience in your chosen markets. You have to invest time in educating yourself and improving your skills. However, the effort will quickly pay for itself. If you have no income coming in from your primary endeavor, anything you bring in from another job will be welcome. Even if you’re making good money from your first job, additional money may allow you to reach your goals faster. Versatility is one of the best ways to boost and protect your income.

Five Topics You Should Never Discuss With Clients

November 13, 2009 By David G. Mitchell 10 Comments

I am tired. I have been up for the past two nights until about 1 am trying to finish projects for clients and writing content for my website. I am also a bit under the weather, as I seem to have a sore throat and headache that just won’t go away. I can tell you such things. I can also tell my family when I am sick or tired, or even when I am just down in the dumps. I can tell my friends when things are not going right. There are a lot of people I can tell, but there is one very important group of people who never need to know, or even should know, when I am sick, tired, down or frazzled – my clients.

It is always important to remember that even when your clients are your friends, they are not your friends when they are your clients. Clients are a special class of people. They are people who want to give you money for your time, talent and energy. They do not want to know when you are tired because, by implication, they are contributing to your fatigue. They do not want to know when you are not feeling well or you down in the dumps because that means that they are not necessarily getting your best work. They do not want to know when anything bad is happening in your universe.

Your clients are special. You need to insulate your clients from every negative aspect of your life just as if you were always on a first date and doing your best to ensure a second date. If you are going to have a successful experience with your clients, there are a lot of subjects you need to avoid and they include:

Politics: Your clients do not need to know whether you are a Democrat, Republican or anything else. Do not offer that information. If your client asks you your political leanings, answer truthfully but briefly. If you can describe yourself as a moderate, do so. Of course, if you find out that your client supports a particular candidate or issue, and you actually support the candidate or your client’s position as well, you can talk about that candidate or issue. Just do not get too zealous.

Religion: As with politics, it is generally not a good idea to talk about religion outside of your church. If your client asks you to which house of worship you belong, you can answer truthfully but never get into a debate over the merits of one faith over another, even if your client tries to do so.

Gossip: Whether you live in a small town or a large city, it is never professional to gossip. If your client knows that you will gossip about other people, your client also knows that you will gossip about him or her.

Regrets: Whether you love your job or hate your job, your client needs to believe that you love it. Talking about career decisions that you regret or unpleasant things that you have to do for your job will not instill in your client any sense of confidence in you. Whatever you may have to do, do it with a smile.

Sex: In the work place, we are all gender neutral, sexless beings. At least that is how it should be. Keep it that way and you cannot run into problems.

What other subjects do you feel should be taboo when speaking with clients or customers? Have you ever had a conversation with a client that you regret? Have any people you have hired ever brought up subjects that you feel were inappropriate.

Starting A Business Resources

October 10, 2009 By David G. Mitchell 6 Comments

Now that I have made the decision to start a business, what next? Doing a good job in one’s chosen field usually requires entirely different skill sets and knowledge than running a business. Accounting software? Tracking time? Building a website? Forming a corporation? The list of tasks is lengthy and can be more than a little intimidating. Even more intimidating is the knowledge that chances are very good that you will miss some important task and have to scramble to complete it later on. You can only hope that the tasks you omit are not too damaging to your business.

Of course, if you have the time, you can spend several days, weeks or months preparing a detailed business plan. For many of us, however, the luxury of time may not be available. After all, a wonderful business plan does not immediately put dinner on the table. Nevertheless, you do need to do some basic research to determine the most important elements of starting the business that you want to start. Without at least a basic plan, you will likely move sideways or backwards as much as you move forward and that will likely cost you more money in the long run.

Fortunately, you may have a lot of resources at your disposal and those resources will help you a great deal in identifying what you need to do in order to get your business up and running.

People You Know: Chances are good that whatever business you want to operate, you know other people who are in the same or similar business. If you are a building contractor who has worked for other people in the past, for example, you will know other contractors who have their own businesses and who might be willing to talk to you about how they started out. Even though you might be a future competitor, you might also be able to work together on projects so those people have many good business reasons to sit down and share their insight with you. Make sure you take good notes.

People Who Want Your Business: Whatever business you may start, there will be other business owners who want your business. Lawyers, accountants, and other professionals will be quite willing to give you a free consultation (and be cautious with any who try to charge for the consultation). They will very often give you a great deal of advice without charge and I have known several who have freely shared do-it-yourself tips with businesses that are just starting out. Indeed, yesterday I visited a CPA who mentioned that although she could set up a corporation for me for about $450, she readily showed me the website that she would use and told me that it would be much cheaper if I did it myself. As a result, I saved $380 since the cost of incorporation was only $70. (By comparison, I spoke with one lawyer who quoted over $3000 for the job.)

State Websites: If you live in the United States, or in any of many other countries, chances are good that there are state-run websites that will guide you through the process of setting up a business. You should be able to learn the process for organizing a company and obtaining necessary local licenses.

Professional Organizations: If you belong to any professional organization, your organization probably offers programs that will guide you through the obstacles associated with setting up a business. From finding the best online expense report software to proper staffing, these organizations will give you a myriad of advice to correctly run your business. Spend plenty of time exploring the organization websites and don’t hesitate to call the organization for help. If you are paying dues the organization, you should find that the organization is there to help you.

Potential Clients: If you know potential clients who are likely to want your business, ask them to talk with you about the experience that they want to have and what would make them more likely to use your services. I had several conversations with potential clients to determine what they consider a fair hourly rate to be. I learned that the rate is about two-thirds of the going rate in my industry and area and about twenty percent of the top rate that I have seen quoted. I think I can very quickly find myself working forty-plus hours per week if I charge the rate that my potential clients suggested and I am sure that I will be quite comfortable even at that rate. I’ll also feel good about providing a needed service at a rate that is not excessive.

Perhaps these resources are intuitive to many, but I have found that many people I have known in the past have been afraid to ask questions. As an owner of a new business, you will not have that luxury. You need to explore all of the resources available to you and learn as much as you can from them. While you are doing your research, you also need to realize that every conversation you have can result in the possibility of new clients. That means that you need to be professional and courteous in each of the discussions that you may have. More importantly, no matter how confused you might be, you must present yourself confidently. You may not know what you are doing, but you cannot let anyone know that.

Do you own a business? How did you learn how to get your business ready for operation? With whom did you consult? What resources were available to you? Who was helpful? Who was not? For information on how to improve you business cashflow check out the credit crunch guide by Hitachi Capital Invoice Finance.