"Should I quit my job to start my business?" I asked myself that question a lot back when I was gainfully employed.
Roughly five years ago, I quit a pretty solid job because I felt unfulfilled and wanted to build my own thing. I'd already teamed up with a group of people and we were excited to bring a cool concept to fruition. We had it mapped out, but that was about it. I quit, moved, and started up.
Six months later, I had little to no income and my savings were spent. I was living on credit cards, which (spoiler alert) is not a great financial decision.
The business was floundering. The stress, plus fundamental differences between founders, created a relational powder keg. When it blew up, it was almost comically bad.
A little under a year after leaving my job, I left my business. Next came an existential crisis. And that was on top of (literally) not being able to rub two nickels together at times. Oh, and then there was the looming debt. Fun times. It took me years to get back on my feet in a way that didn't require me to get a "normal" job again.
If I did it again, I would still go out on my own — no doubt about it. But I would do things differently. Since I learned the hard way, I thought I'd share a few pointers. And while I'm at it, I'll include some of what the internet and other indie hackers have said on the subject.
First off, you're not alone. According to a 2018 survey, 62% of Americans dream of one day becoming their own boss. I'd be surprised if that number isn't higher now. And with 41% of employees worldwide considering leaving their employers in 2021, I think a lot of people are wondering if they have what it takes.
If that's you, your options are pretty straightforward. Of course, you could stick with employment. Nothing wrong with that at all, but I think we can assume that most people in this community want something different. So that leaves taking the plunge and quitting right now, or keeping your job and starting a sidegig.
Let's assume that you've decided to quit your job. Then the question becomes, "When?" Should you quit your job to start up or start up to quit your job?
No easy answer here — it's a deeply personal and circumstance-dependent question. But let's lay out some basic pros and cons.
Quitting will light a fire under you because you have no option but to succeed (or find a new job). It also frees up your time so that you can go all-in on your project and grow it faster.
But it also removes your salary, health insurance, 401k, and other benefits. This can be incredibly stressful, particularly as your money starts to dry up. And that, in turn, can lead to compromises, myopia, and diminished quality.
Sidegigs mean you can keep money in your pocket and avoid sacrificing your lifestyle. It also removes the risk, which means less stress.
But time becomes even more scarce, which is a different kind of stress. You'll have less time to work on your project and your limited availability may strain your relationships too.
So both options require sacrifice and some degree of stress. Ah, the joys of entrepreneurship.
Ultimately, it'll depend on each person and their circumstances. Here are some factors that you may want to consider:
While you mull this over, you may find it helpful to do a qualitative cost-benefit analysis — what will you sacrifice and what will you gain? There are some other good decision-making frameworks in this post, if it helps.
If you plan to quit your job, you'll need to make sure your finances are in order. Perhaps you have passive income or some freelancing opportunities. Or maybe someone has invested in your business or it's already profitable. But if not, you'll probably need a decent amount of savings.
You can calculate how much you'll need by figuring out how many months it'll take you to break even. Make sure to add a little cushion while you're at it, because things tend to take longer than expected. Then look at your bank statements and figure out how much you need in order to support yourself per month. Add some cushion there too. Then multiply them by each other and that's the minimum that you should set aside for your runway. From what I've seen most people recommend a minimum of 6 months savings. Most say a year. And I've even seen three years of savings. Here's a template for runway and cash budget planning that might help.
If you're all set financially, make sure your business is ready for your undivided attention. Is it a great idea? Try to validate it before you quit. There are varying degrees of validation so you can choose methods according to how soon you need to quit. Check out my post on validation for more information.
In whatever time you have left before your last day, do everything you can to build (and spread the word about) your business. The further along it is, the better your chances.
And, of course, if you have a significant other or someone who relies on you, have a conversation with them before putting in your notice.
Just like those who decide to quit will need to take stock of their finances, you should probably take stock of your other resources if you opt for a sidegig. I'm talking about your time and energy, in particular. You'll probably need to put a lot of structure into your life. That means scheduling time for working on your sidegig outside of your day job — usually evenings and weekends. Here's a post on effective scheduling that might be helpful.
Another idea I've seen a few indie hackers do is to take time off so that they can go all-in for a short time. Definitely worth considering.
And on the flipside of quitting too soon is wanting to quit but never doing it. Trust me, it happens all the time. So decide on a good time to quit, and stick to it. Maybe it's when you have $X saved, or when your side-gig is making $X/mo, or when you consider it validated, or maybe it's just a specific date. Set it and hold to it. Don't keep pushing it further and further away. At some point, you'll have to make the leap.
The short answer is that it depends, but most founders that I've seen (myself included) would advise starting your business as a side-gig first, and working until you hit a specific goal. Usually that would be a certain amount saved or a certain degree of validation. Then go full-time on your project (or part-time along with some freelancing).
Here's what other indie hackers have to say on the topic — it's a varied response:
It's a difficult (but exciting) decision. Good luck! 🚀