Starting A Business? The Most Important Thing You Must Do Before You Quit Your Day Job

When considering whether to leave your day job and start a new business, there are many factors to consider.

Besides the usual considerations, such as, validating your business idea, lining up prospective clients, doing market surveys to find out the market rate of your product or service, coming up with a business plan, and so on, we believe that the single most important consideration is:

Have Sufficient Money

“Some of the best ideas can be thwarted because the founders don’t have enough cash to get the product to market with enough quantities to make the business viable. If you have no savings and/or you have credit card debt and other financial obligations, you simply must do something about this before you can consider leaving your job if it’s your main source of sustainable income. You might even want to take on extra work, and extra job or extra shift, or pick up some work on to help you clear your debt more quickly and get you some savings in the bank. Have a nest egg and know how long it will last you.” – Naomi Simson, founder of RedBalloon and shark on Shark Tank

“My advice is to have at least six to 12 months of living expenses saved. You’ll want to jump in and focus on getting it off the ground without stressing about how to pay your mortgage or rent. If it’s in the incubating stage, I would challenge the person to explore launching the business as a side hustle until it generates enough income for a full-time transition.” – Leanne Wong

“It’s easy to underestimate the time and money that can go into creating a successful venture, which is why many fold in six months to a year. It’s absolutely critical that you have a nest egg of twice as much money as you expect to need set aside before you go full bore. But why wait? Fund your startup as you go as a side hustle. You can start slow and build enthusiasm while you still have a net.” – Laura DeCarlo

The start-up statistics are frightening.

  • A bit more than 50 percent of small businesses fail in the first four years.
  • Of all small businesses that start, approximately only
    • 4 percent make it to the second year
    • 3 percent make it to the third year
    • 9 percent make it to the fourth year
    • 3 percent make it to the fifth year
  • 40 percent of small businesses are profitable, 30 percent break even and 30 percent are continually losing money.
  • 82 percent of businesses that fail do so because of cash flow problems

Besides referring to Business Victoria’s checklist: Are You Ready to Start a Business?, we highly recommend that you speak to an accountant before you take the plunge.

If you need assistance with setting up your business, validating your business plan and projections, contact us today. We would be more than happy to show you the ropes to getting your start-up off the ground.