A question we often hear from our SCORE clients is When do I quit my full-time job? The obvious answer is: When you have clear evidence that the business will net sufficient income to allow you to maintain a lifestyle meeting your needs.
Thats pretty much a canned answer. There are many more considerations. So perhaps another answer could be: When you have built up a reserve account that can cover both your business and personal expenses. Depending on the business, that reserve fund may need to cover up to two years. Many startup companies take that amount of time to break even.
At that point of the discussion, we stress that before committing full time to the business the client should have a business plan that includes a comprehensive marketing plan. We cant emphasize enough the need to have a marketing plan. The No. 1 issue raised by clients is requesting help in finding customers.
Our experience indicates that the primary reasons new businesses struggle are:
Inadequate capitalization. Most people start with enough money to open the door but not enough to keep the doors open.
Lack of understanding of the competition. When a new business starts up, the competition takes notice. Price deals and special sales are offered by the competition, services are added at little or no cost, advertising picks up and new products appear. When unaware of actions taken by the competition and unprepared with an appropriate response, a startups sales will nosedive.
Lack of a marketing plan. As indicated in a previous paragraph, finding customers to purchase your products and/or your services is the No. 1 issue business owners face. Your marketing plan should address your market focus, your brand and your positioning.
Inability to demonstrate a value-adding perspective. Some buyers purchase your product or service because they like you, but most buyers are motivated by added value beyond that offered by the competition.
The planning process stops. The business environment is always changing, and we need to frequently reassess where we are and where we are going to stay on the right track.
Lack of customer focus. A sale is not a one-time event. Are the customers needs being met? Do you follow up and keep in touch? While there is a need to gain new customers, it is critical that you retain the customers you already have.
If you cover the above bases you will enhance the likelihood of business success and justify the decision to leave your day job and commit fully to the new business.
One last thought: A business owner could consider hiring someone on a part-time basis while continuing to work or perhaps narrowing or limiting the business scope to limit the workload or time commitment. It rarely has to be an all-or-nothing situation if thought is given to the startup strategy as part of the business plan.