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If you are like most SaleHoo members, you will want to turn your online retail business into a full time income earner. However, forgoing a steady pay check is a scary thought. So when is the right time to quit your day job and start working for yourself?
Below I have outlined a 3 step plan to help you determine when it’s the right time for you to quit your day job. Make sure you check it out before you go making any hasty decisions!
Step one: Understand that working for yourself is still working
As an online entrepreneur, it’s far too easy for you to dream up a picture in your head about sleeping in, playing with your kids, catching up on day time TV and doing a couple of hours of work per day while earning a full time income.
You might be lucky enough to have a business model that will allow this, but in most cases, to generate a good income, you will work the same hours, if not more, than you do in your day job. Before you go any further towards working for yourself, it’s important that you understand this!
Step two: Establish how much your business is making
Knowing your numbers is crucial in deciding whether you can afford to leave your job. Go through your financials and find your average monthly revenue. This will be easy if you have been doing your paper work!
Once you have your total monthly revenue (how much money comes into your business), calculate the profit by subtracting the costs from your business such as website hosting, eBay/PayPal fees, shipping costs and advertising.
The number you get when you subtract these costs is your profit. How does the number compare to your current salary?
Can you live on that amount? Will there be money left over to reinvest into your business (i.e. wholesale purchasing)?
If the numbers don’t add up, and you probably aren’t currently making enough to supplement your income from your job, don’t make the mistake that some sellers do and assume that your sales will soar when you work at your business full time. My advice is to leave your job when the numbers are right; not when you think they are about to get better.
Step three: Evaluate the risks
It would be foolish to not to address the potential risks associated with leaving a job with a steady income to work for yourself. Your business is unique, and so is your lifestyle and personal situation so it’s difficult to provide a cookie-cutter template for evaluating risk. However, here are four important questions you should ask yourself when evaluating the potential risks of working for yourself full time:
- What is at risk if your number of sales drop? Your mortgage? Your children's college fund?
- What potential risks might your business face (i.e. problems with suppliers, Customs hold-ups, heavy competition from other sellers, a new trend overshadowing your items).
- If your business slows down, what options do you have? i.e. Do you have personal savings to cushion periods of slow sales or a bank manager that will grant you a pause on your mortgage?
- What can you do to reduce these risks? i.e. Can you diversify your product range, sell on multiple platforms, rather than just eBay, etc?
Only you can weigh up whether the risks are worth the potential gains, but the best thing you can do is safeguard yourself from potential risks with a bit of planning. For example, if you are worried about how you will survive during a dip in sales, start saving now and put money aside for this exact purpose.
Finally, don’t do what an old friend of mine did, and hand in your resignation because you’ve had a bad day/week/month at work. Your decision to leave your job needs to be based on logic, long-term planning and not on your emotions.
Are you thinking about taking the plunge and working on your business full time? What are you looking forward to most about leaving your job and building your own business?
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