Transcript of the recording:
When do you quit your job and pursue entrepreneurship full time?
It’s a very tough question but I do have my opinion on that.
Doesn’t matter if you are a freelancer or building the next SaaS unicorn. But I often come across people that want to quit their job right away after scoring their first clients or dollars.
Reality is different. A lot of them end up going back to corporate because they were not prepared for the highs and lows that come with entrepreneurship.
So, when do you quit your job?
I made a list of a few reasons, which can be seen separately or a combination of either of them.
NUMBER #1: Have at least 18-24 months of runway
And by runway I mean you are able to cover your rent, food and unforeseen expenses for 18-24 months.
I have seen others advising that 6 months would be sufficient but I would never take that advice.
6 months is short. Building a business can take a year before seeing any significant results.
Not only that, but if your runway is short, you tend to make bad decisions or start to feel utterly stressed when you’re 3 months in with no progress.
Entrepreneurship is a volatile journey and you need to be able to stomach the bad beats coming your way.
With 24 months of runway, you buy yourself time, peace and the ability to pivot in case things are not working out.
NUMBER #2: When It Becomes Predictable
What I mean is that your revenue is somewhat stable. Freelancers tend to live and die a million times per month. One day they have 10 clients, the next morning they have zero.
Ensure yourself that you build a more predictable path in revenue as a freelancer and business.
A prime example would be:
If you’re having 1 client that pays you 5000 USD per month or 10 clients ongoing paying you $500 each, I will take the latter. Simply because I minimize my risk of losing a big chunk of my revenue in one go.
You want to have at least 6 months of stable income with minimal fluctuations before considering going Full-Time.
NUMBER #3: When You Earn At Least Double Your Paycheck
And yet again, this has to be stable for at least 6 months.
If you net 1K per month at a job you should earn at least double that to cover taxes, expenses, insurance and so on.
If you can remain consistent and prove yourself that it’s possible, you can consider quitting.
NUMBER #4: When You Raised Money For Your Business
Tons of startups are hunting for seed money or capital. And most of them include a salary for themselves.
As they should. Investors often prefer that YOU should include that. Because they want to protect their money by allowing you to work on the business Full TIME.
Not only that, but they want you to quit your job because they want to see hyper growth within the next 2 years or sooner.
If you are raising money, bake in those expenses (your salary) and tell the investors why.
All in all, I do think that people need to be careful about quitting a stable life and consider timeframes.
But it’s use case dependent. A 22 year old individual has fewer responsibilities than someone with a mortgage, kids and a family to feed.
But don’t quit your day job yet because you think entrepreneurship is a better way of living. It’s not a lifestyle, it’s hard work, determination and requires tons of discipline.