A few weeks ago I shared 4 reasons not to quit your job to start a business. Today I have 4 more reasons to not quit your job to start a business.
I’m not against entrepreneurship; to the contrary I’m a big supporter of people starting businesses.
What I am against is jumping into business ownership without a plan. I definitely do not advocate quitting your job to start one, except in specific circumstances.
So before you quit your job and dive into entrepreneurship, read these four reasons not to quit your job to start a small business:
You need additional skills/experience before starting a business
In some cases there are additional skills you may need before launching your business, or at least before making a full-time living off your business. For example, if you want to start a company that builds apps but only have a basic level of understanding of how to program apps, you would benefit from spending the next year learning and developing your skills before making a full-time job out of your business.
Consider the skills you need to run the business you have in mind. If you are going to need to spend significant time training yourself, it’s much better to do this while you are still gainfully employed versus when you are out on your own and your business is your sole source of income.
You have a high-paying job
Regardless of how many will disagree, I believe that having a high-paying job is a legitimate reason to not start a small business. If you have a high-paying job it typically means you invested a lot to get there, whether through your education or “paying your dues” at lower-level positions before reaching the higher-paying level. You also have more to lose by quitting and taking the risk of starting a business, as you will want to make (at least) as much as you are currently making.
High-paying jobs sometimes come with longer hours, which limits the ability to start a business in addition to your full-time job. Because of this I do not think it makes sense for someone in this position to start a “side hustle”, either. There are only so many hours in a day. With that being said, if you can live on less and siphon your money into income-producing assets, you may be better off than pursuing starting a small business from scratch.
For example, consider purchasing dividend-paying stocks. I even made a tool that will tell you how much money you would need to replace your regular income with dividend income. Buying and renting property can be another alternative to starting a business. Managing rental properties requires less hours than managing a business and can be much more realistic as a “side hustle” for those working long hours (and hopefully making more money).
You hate your job
Don’t get me wrong, hating your job can be incredibly motivating. Many dream of escaping from their cubicle and having the freedom that comes with “being the boss” at a business they own.
If your reason for quitting your job and starting a business is because you hate your job I think it’s important to take a deep breath and bring in a little perspective. Hating your job might motivate you to run a successful business, but it doesn’t mean it’s the right move. A simple change of departments or companies can drastically alter your opinion of being an employee.
Essentially what I’m saying is don’t be blinded by your hatred of your job. Instead of quitting, consider looking for a new job and see if all you need is a change of scenery. In addition to looking for a new job, you should consider starting a business at night and on the weekends. There are many businesses – or “side hustles” – that can be done easily at night and on the weekend. This includes things like social media management, freelance writing, or selling things on Etsy or eBay. Check out what I personally look for in a side hustle.
If you do want to go the blogger route, I have a post about how to start a WordPress blog in 5 steps.
You don’t have the capacity or support for a Business
Whenever it comes to taking on something new – whether it’s a business or something else like a volunteer commitment – it’s important to make sure that you have the capacity to do it to the best of your ability. When I say capacity I mean the energy, time, resources, etc.
One example may be the high-earning employee I described earlier. Assuming high-earning employees inevitably work longer hours and output a lot of energy in their full-time job, it’s important for them to consider whether they have the capacity for a business or if it’s better to simply invest their money in assets that provide them passive income.
Other people may be working through health issues, have significant commitments to family, or other commitments and responsibilities that limit their capacity. It’s important to be realistic about what you should – and shouldn’t – try to accomplish.
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If you didn’t see the first 4 reasons to not quit your job to start a business, I’d recommend checking them out. Ultimately I am a supporter of entrepreneurship, but advocate people to “test the waters” before taking the full plunge.
Under what circumstance would you quit your job to start a business? If you already did quit your job to start a business, what was the thought process and planning that went into taking the plunge?
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As you know, I’ve written a ton about my thought process and wrote about it today over at Sprout Wealth. :) Generally speaking, I’m right on with you. Many think that quitting to start working for yourself is the way to go and that it’s all puppies and rainbows. But, that is simply not the case. That said, I think the high paying job situation needs to be taken on a case by case basis. We have a friend who is paid relatively well in his profession and is leaving to start his own company in two weeks actually. He has been able to do it because they already have clients signed that would make up a massive chunk of what he’s already getting paid as they’re going to be servicing a need that’s not currently being met in their industry. They’re also starting the company with 3-4 other people so it’s a bit of a unique situation admittedly. In many other cases though I’d be right there with you.
I quit my job for a variety of reasons, but it wasn’t really to “start a business” necessarily. I already had one. I just wanted the freedom to work on my own schedule and get away from the 9-5 grind. I just put my daughter on the bus this morning and literally came inside to start working. At my old job, I would never be able to put her on the bus and be waiting outside for the bus to drop her off. That feeling is priceless.
Important points. I can’t imagine how much harder it must be to make that transition when you have other people- spouse, children, etc- relying on you.
Great points DC! Starting a business and running it to a successful level is not easy. It is very difficult and time consuming!
I always dream of starting my own business, but I think the grass is always greener. I do have a well paying job, with excellent benefits and last but not least a pension…yea not many places have that any more. It wouldn’t make financial sense to leave, especially when starting your own business might not be something I really want…it’s much more fun to dream about it maybe.
Great post! So many people think running a business is easy. I’m not sure who started that myth but it’s something I hear all the time from friends. Running a business is not a never-ending vacation! It is hard work and not everyone enjoys it.
I agree with your thoughts on those with a high paying job. When you earn, say, six figures, a side business typically isn’t going to offer a good enough return when you consider the time and risks inherent with that. A side hustle doesn’t happen in a vacuum — you’ll be more tired at work, less alert, maybe your work suffers. Don’t kill the golden goose.
Holly at ClubThrifty It’s great to hear about success stories like yours, Holly. Obviously you had something in place and were just building upon it. I am more concerned about people who blindly leave their 9-5 jobs to start a business that has no solid foundation.
DebtRoundUp I agree 100%. It’s important to be realistic about the chances of your business succeeding. Even if you work like hell your business could still fail for reasons outside of your control.
brokeandbeau It would take a lot of planning, that’s for sure! I think that’s why college is the ideal time to start a business. Typically no one is relying on you and you have little to lose.
Andrew LivingRichCheaply Yeah having a pension is a great perk for you. It becomes more and more difficult to leave a job to start a business as your career progresses. There’s too much to lose by leaving.
I would love to be my own boss. That’s certainly what would make w
Green Money Stream Definitely, if at all possible starting the business on the side is the way to go. There are good ways to start businesses while quitting your job, but the most important thing is to be cautious and keep yourself in check.
Oops, I just did quit my job! But I wasn’t making a high income, nor did I hate my job. If I was making a lot of money, and freelancing wasn’t comparable, I wouldn’t have done it. I think people should have a side hustle and build up clientele while working their day job.
While I have debt, I would never quit my job because it is high income. Sometimes I hate the stress and workload, but then I remind myself, there would be just as much or more if I was working for myself. I remind myself of the good points about my job and try to keep everything in perspective.
These are all good points. I think you really need to have a plan in place and a backup plan, as well, if you’re going to jump ship. A solid efund is also a must!
Hey DC,
Good to be back although I’d still much rather be in South America :).. How’d did you end up finding the World Cup (although I know this was a while ago now)..
You definitely have to have a solid reason in place as to why you want to do it and not be focused only on the benefits or a dislike of your job :)
These are all great points DC. I think too many people fall to the siren call of “being your own boss” without realizing that you’re the owner, CFO, CEO, etc, and it can be a lot more demanding and stressful than anticipated, all without the benefit/guarantee of steady income.
I agree with your points. I think it’s best to dive into entrepreneurship when you’re 100% ready, and not because of a short-lived hype. It’s even better if you can already earn sustainable and significant income (higher than your regular job) from your business that you do as a side hustle before you commit to it full time.
ImpersonalFinance I agree 100%. It’s tough to take on all that responsibility and have no guarantee of being compensated – especially not like you’d be compensated for just one of those roles at a company that employs you.
I prefer the idea of starting a business along side your current job, until it makes sense to quit. I have watched people lose everything due to quitting their job before the should have from a financial standpoint. At least develop a large savings prior to quitting.
PoorStudent I know a few people who waited until their side hustle was close – or exceeded – their full-time job before taking the plunge. I think this is the best approach. Personally I would even consider just trying to outsource my side hustle so that I can take some profit off the top versus giving up my career to pursue it.
MoneyMiniBlog I think people can be really tempted to leave their job for a business if they have initial success with the business. Problem is, what if something changes that you didn’t factor in? It’s generally just too risky to quit your job to run a business.
I love that you bring up the point about not being blinded by your hatred of your job. Yes you may hate your job, but that doesn’t mean it’s time to leave and start your own thing. Take a step back and look at the decision to do so objectively.
LisaVsTheLoans Exactly! There may be another job out there that you love, it may even be very similar to what you are already doing.