Self Employed or Bust

10 Things To Do Before You Quit Your Day Job

July 18, 2008 – 7:00 am

My previous Tens List gave you 10 Good Reasons to Quit Your Day Job. But regardless the reasons, are you ready to quit in the interest of focusing on your own venture? Your home based business has taken off. Revenue is really starting to roll in. Your day job is robbing of you of time you feel would better be applied to making your dream of freedom and independence come true. Is it time to fire your boss and quit your day job? Being self employed requires you give some serious thought to at least these 10 considerations.

1) Assess your financials - If you’ve finally set yourself up for self employment, don’t jump the gun and drop your day job without first ensuring your self employed job can legitimately take care of you. Granted, you may be spending less working from home with home lunches, no work wardrobe, no gas expenses for commutes and less wear on your car but you’ll also find yourself solely responsible for new expenses such as health insurance, unmatched retirement contributions and legal/financial council.

2) Plan for the worst - As mentioned, health insurance for the self employed is something you shouldn’t overlook. An unexpected illness or injury will complicate running your home business enough as it is but you’ll be in a real jam if you haven’t arranged for health insurance. The cost of uninsured treatment could wipe out your business and your dreams or at least seriously delay things. Price your self employed health insurance options and deduct the cost from your self employed job earnings to get a feeling for where you really stand. Can you still afford to quit your day job?

3) Set aside emergency funds – You’ve most likely been slowly building your fledgling business for some time and if you feel you’re making enough to substitute for your day job, you may be right. But, have you set aside an emergency fund or have you been blowing all that extra money? Nothing could be worse than having your business hit a dry spell and suddenly finding yourself sitting through interviews in hopes of a steady job working for somebody else again. Having at least 3-6 months worth of emergency money socked away can help you pull yourself through temporary downturns.

4) Get a lawyer – If you’re going it alone, don’t get caught with your pants down. There are a number of legal pitfalls you could find yourself in. The company you are considering leaving has lawyers for a reason. No matter how you feel about lawyers, the best person to protect you from a lawyer is another lawyer. Make sure you and your business are protected before it’s the only source of income you have available.

5) Speak with a tax specialist – Your self employed business might be subject to all kinds of tax laws you haven’t thought of. You also may be eligible for all kinds of tax benefits you know nothing about. Wealthy people stay wealthy by protecting their wealth and legally minimizing their tax exposure. You should do no less. You should start thinking about your company’s interests, as well as your own, so that you can maximize your profits right out of the gate.

6) Protect yourself – What happens if somebody sues you because of some harm they suffered as a result of your company? It would be bad enough if the suit bankrupts your business but without protection, your personal assets are at risk as well. If you haven’t considered incorporating, it’s a smart idea to do so. A good business advisor should help guide you here as there are different types of company’s offering different benefits. The important thing is to ensure some stupid mistake or unscrupulous individual won’t destroy you along with your business in a worst case scenario.

7) Plan for success – If your self employed venture is going to succeed, prepare to really step up. You’ve been working your day job and your own business for some time now. Don’t think you can slack off just because you’ll have freed up 8 hours when you quit your day job. Plan to apply at least 50% of that newly gained time to your own business. That will still represent a breather from the two jobs you’ve been working but will represent a boost in effort (and hopefully in profit) to your personal venture.

Have everything ready – Your last day at your day job is also your unofficial “grand opening” for your personal venture. It marks the day when you throw yourself full time at your objectives. Don’t let dumb little obstacles ruin the moment. Have your home office ready to go (and setup AS an office, not just a desk with a computer). If you might need a fax, get one. Need to upgrade to broadband, do it. Need a separate business line, order it. Get all this stuff up and running while you still have the benefit of a second paycheck rolling in from your day job to offset the expense.

9) Start ramping up – If you can devote an extra hour or two a day to your self employed venture before departing your day job, do so. Get the ball rolling a little so it has some momentum going for that wonderful day when you can finally invest yourself 100% to its success. A few extra clients, a few extra links, a few extra leads, every little bit of it will make things go that much more smoothly when you come home from your day job for the last time and throw yourself completely into your own business.

10) Leave on good terms – Provide as much notice as possible and do everything you can to wrap up loose ends at your day job. Try to recruit or secure your own replacement, mend fences, smile at the folks who have made you frown and thank the people for whom you’ve worked. Do NOT burn a bridge you might need to cross again some day. I don’t mean that in a defeatist sense. Some of the same people (or even the company) for/with whom you have worked may someday become your clients. Or they may associate with people you want to win as clients. Leave on the best note you can so they all remember you fondly and you may find some business coming your way through them. Take as much time as you feel warranted for this important step before handing in your notice.

The day you walk away from your day job for good and begin throwing yourself at your self employed venture will be a frightening but liberating moment. This list of 10 things to do before you quit your day job is a starting point but you should give serious thought before you commit to it. Your personal circumstances or business model may require additional considerations not listed here.

Bonus # 11 – Drop your new business cards at the desks of a few of your closest coworkers on your way out the door. Maybe they’ll pay you a visit. J

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