Starting a new business can be risky. Statistically, around 50 percent of all businesses fail within their first five years , while many more fail to make a substantial profit. Thorough planning significantly increases your chances of success, so it’s important to take the time to look at your options and assess your choices. Here are six things you need to consider before quitting your job to start a business.
1. Living Expenses
Few businesses make a significant profit in their first six months, so it’s important to consider how you will pay for your regular living expenses. Consider your current expenses, like utility bills, food and travel costs.
If you intend to use your savings or take out a loan, it’s best to ensure that you have enough money to cover your living expenses for an entire year. If you are unable to do this, you might want to consider keeping your current job until your business starts to make a profit. Alternatively, you could look for part-time or temporary work to supplement your income.
Everyone has responsibilities they need to consider before starting a business. You might have small children, elderly relatives or a sick spouse to care for, all of which could require a significant amount of your time. Perhaps you also have social or charitable responsibilities that require your time and attention. Financial responsibilities can have an impact on the decisions you make, too. Getting support from family, friends or outside agencies may help you to balance building a business with your regular responsibilities.
3. Business Viability
Before quitting your job to start a business, one of the most important questions you need to ask yourself is, do you have a viable business idea? It’s important to perform thorough research to ensure there is a market for your products and services. Start by answering the following questions:
- Does your research show that people will buy your products?
- Will your profit margins make your ideas worth the time and effort you’ll need to put into building and maintaining your business?
- Do you have, or can you access, enough funding to get your business up and running?
- How will you compete against other new or established businesses that are offering similar products and services?
- What is your unique selling proposition (USP)?
Ideally, you should get independent advice from a business advisor or other experienced professional to assess the validity of your business idea.
4. Business Plan
Drafting a solid business plan provides a detailed roadmap for designing and growing your business. You can use your plan to set specific goals and milestones you want to achieve. A business plan is also essential if you want to apply for funding, such as a bank loan or startup grant. If you’re applying for funding, your business plan should include extensive information about your business operations, as well as customer profiles, market research and financial forecasts.
5. Contingency Plans
Contingency plans are designed to help you deal with and respond to unforeseen events that have an impact on your business. For example, if you intend to use physical premises to showcase and sell your products, you will need to consider how you will respond in the event of building damage or other problems that will affect your stock and your customers’ ability to access your store. While it’s not possible to plan for every unexpected problem, it’s a good idea to have a company policy in place for dealing with unforeseen events. The aim should be to get your business back to running as normal in the shortest amount of time.
6. Emotional Impact
Starting a new business can take its toll on your emotional and mental health. The relentless pressure of building a business, learning new skills and dealing with unexpected problems can cause a great deal of stress, so it’s important to take care of your emotional and mental well-being. Learning to meditate is one of the most effective ways to manage stress and prevent mental health problems. In fact, many successful business owners start their day by meditating. It’s also important to look after your physical health by eating a balanced diet, taking regular exercise and making time to relax every day. Keeping your body and mind healthy will help you to deal with the stress and strain of setting up your business.
If you’re considering quitting your job to start a business, it’s important to take some time to look at your situation and ensure you are making the right decision. Before moving forward with your business, you need to consider your living expenses, your responsibilities, the viability of your business idea and the impact your venture will have on your emotional health. You also need to develop a business plan and create contingency plans to protect your company.