If you are an entrepreneur then there could be tons of questions on your mind especially when you are starting out. You might be thinking how much money do I need to quit my job and start a business! It’s definitely an important question to consider. You’ve landed in the right place.
How much money do I need to quit my job and start a business? Honestly, it’s hard to say! There are various factors to consider. For example, you could be young and single or you could be married. You might be in your 40’s! You have to see what works best for you.
Let’s find out more from the discussion below so that you can know the answer to “how much money do you need to start a business?”
How much money do you need to start a business
You might be tempted by the idea of starting a business. Or you could be bored by your current job. In any case, you have to see what works best for you. How much money do I need to quit my job and start a business is indeed a tough question, but it doesn’t have to be.
Consider the following:
#1. Your Current Job Is Boring But Pays Off Well
Let’s say you are bored with your current job. You want to start a business as soon as possible. Despite the fact that your current job would be boring, it’s paying for the expenses. You might have not thought about the expenses yet.
It’s important that you pause for a while and make a list of all the luxuries your current job is offering you. If you are thinking to quit your job because it’s boring you could be tempted by the ads you see about digital life and earning six figures income.
You would be enjoying free dental care, free vision care, and a lot more. There are many such benefits that you might not even consider.
So you have to see if you quit your boring job today then who is going to bear all the expenses that you have just mentioned in your list.
You may like, How to quit a startup you founded.
#2. Make A Budget for Next Six Months
Let’s say you quit your current job. Now you have to make a budget for the next six months. Ideally, you should have enough money so that you need not worry about the next six months.
Think about it, without a job how are you going to pay for the rent or the groceries. If you have pets and kids in the house then it would be even more important to consider the needs of your family members.
When you look at your budget for the next six months, you would get an idea of how much you need to save so that you would feel ready to quit your job. But again there are a few things to consider before you take this big step.
Consider the following for your reference:
- Rent = $1500/month
- Groceries = $500/month
- Gas = $300/month
- Entertainment = $300/month
- Other Expenses = $400/month (including phone bills, internet packages, subscriptions, etc.)
This is just a rough estimate. Based on your family size and needs you can adjust the amount. You have to include the amount that your company is paying on your behalf, for example, a pension plan.
A rough calculation shows that you are spending $3000/month.
You can cut unnecessary expenses such as entertainment and unnecessary subscriptions. But still, you definitely need $18000 for the next six months. Plus add unexpected costs, emergencies, and other things that happen in life.
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#3. Are You Ready
When you are thinking about starting a business, you have to ask yourself whether you are ready or not. It’s a big decision, especially with the kids.
If there are two breadwinners in the house or if you are rich things would be different, but if you are finding it hard to make ends meet then you have to be careful with your decision.
Only you are aware of your current financial situation. No matter what advice you get from other people, they are not going to step in your shoes. You have to be there for yourself. Others can only suggest what you can possibly do, but you would be the final decision maker of your life. Think wisely!
#4. Start Working Part Time On Your Business
So far, it sounds uneasy to quit your current job. It doesn’t mean that you are stuck in a rat race. In fact, you can start working part-time on your business. When you come back from your current day job, start working on your business idea.
It’s best to test waters before you finally dive into it. You are the one who is doing a fine job and you would be the one running the business.
Maybe try your hands on the part-time business and see if you are able to transition it to full time and then you can easily quit your job.
If you start working part-time for your business, you would know whether you are heading in the right direction or not. There could be tons of things on your mind and you could be busy, but you have to start somewhere right.
Why take the chance when you are not able to do your business part-time. In fact, when you start working on your business you would know whether it would be a lucrative option or not.
#5. Make A Business Plan
Words have power, but without action, they are just words. The same goes true for your business idea. If you are not taking an action on your business idea then this idea would just be wise words. And you don’t want that right!
Thus, it would be a good idea to consider making a business plan. You can make a rough business plan yourself or consider hiring a consultant to do it for you. It would be wise to put down all your thoughts in the business plan. This booklet would be your guide to start a business.
The business plan would let you see the financial health of your business. You would know if you are in good financial standing and whether you would be able to bear the expenses.
Businesses are not profitable in the beginning, so through a business plan, you can get a rough idea of when you would be able to see the profits. Plus, you would also be able to know about the relevant rules and regulations that you need to follow for your business.
Also, read, How much does an entrepreneur make in a year.
#6. Ask Experts Opinion
There would be experts that you look up to and you can ask for their opinion. Remember no matter what advice you get, you have to make the final decision. You would be able to hear their side of the story plus, a new perspective can open your eyes.
When you are talking to experts you would be able to see your business from a different angle. It’s possible that you could be too possessive for the business idea and when something is really close to your heart then it’s hard to find any flaws in it.
However, an expert can let you see things that you might have not yet thought of.
#7. See How You Can Save Money
If you are finding it too tough to manage your current lifestyle and you want to escape the 9 to 5 life then you have to see whether you would be able to cut down your expenses or not.
You might be paying for the gym membership that you no longer use. You might be paying for the subscriptions that are of no use! You could be spending too much money and it would be like throwing it away.
You have to make a plan of saving money. Give yourself a target and start saving. It’s best to start your business part-time or something of the same nature and see if you are able to earn and save.
Also cut down the unnecessary expenses from your life. It’s hard to take a step back, but you can take one step back so that later you can be 10 steps ahead.
You may like to read, How to Become an Online Entrepreneur.
#8. Give Yourself A Target to Save A Certain Amount Per Month
After making a business plan and going through your budget, you would know where you stand in terms of financial standing. It’s also possible that there is certain debt that you might be trying to settle so don’t forget about that as well. It’s wise to give yourself a target to save a certain amount.
You can say that you want to save an extra $1500 each month. It’s a big amount if you are relying on your salary so you can start part-time work or business.
Try getting a job that can teach you more about sales and how businesses work and operate. All knowledge can come in handy for your business.
#9. Start When You Feel Ready
It’s also possible that despite all the challenges you are feeling more than ready to start your business. If that’s the case it would be best to start your business when you think the time is right.
You could be motivated enough. But it would be wise to give yourself a week and see if you still feel the same about your decision.
It’s possible that you have enough amount saved for a year so you want to take your chance. Plus, you might want to start young so that if nothing works as per your plan, you can again go back to a job.
You may like, 10 Amazing Work Life Balance Tips for Entrepreneurs.
Tips to Save Money for Your Business
If you want to save money for your business you can try the following:
- Start working online to save some side income. Nowadays there are tons of possibilities that can help you save some money. For example, you can become a freelance writer. If you are a good writer then you can write blogs and articles for other businesses. In fact, you can start it part-time and turn it into a full-time job when you are ready. You just have to be smart and good with your writing skills.
- You can become an online bookkeeper for a company. It’s possible to work as a part-time bookkeeper. You can even learn to file taxes and help people during the tax season. You can hustle and save for your future business.
- You can work as an online teacher. While doing your full-time job, you can start teaching kids online after coming back from the office. Whatever amount you earn, you can save for the business.
- You can become an online blogger, influencer, and YouTuber. You just need to learn modern knowledge. Learn digital marketing and you can start a business quite sooner. In fact, all such skills can help you no matter what business you plan to begin in the future.
You may like the following business articles:
- 8 Reasons Why Entrepreneurship is Better in the United States
- How to Become an Entrepreneur with No Money
- Entrepreneurship activities for every step of your entrepreneurial journey
- Top 10 Entrepreneurship Ideas for Software Engineers
- 18 Important ways of Bootstrapping to Achieve your Entrepreneurship Goals
Wrapping It Up
You are thinking about how much money do I need to quit my job and start a business. Honestly, if you ask a random person this specific question how much money do I need to quit my job and start a business they won’t be able to give you a specific answer.
It depends on your current situation. Your age, your marital status, your savings, your financial health, and a lot more are important to consider. Roughly you can save money for the next six months. Make sure you are including all your expenses that include personal expenses and also expenses related to your business.
Starting a business can be costly and it would depend on what type of business you plan to initiate and whether you have enough amount saved for the relevant expenses. You can make a business plan for your business and a budget for yourself. You can see what’s the most viable option for you especially when you have kids and you are the only breadwinner of the house.
Do you think now you get an idea on how much money do you need to start a business?
Bijay is an entrepreneur and start-up founder having more than 14 years of IT industry experience. He is the co-founder of TSInfo Technologies, a SharePoint development company.
A dedicated professional and very passionate about public speaking and also wrote thousands of technical blogs in various technologies. He also wrote a lots of blogs on entrepreneurship, investment, startup, business, manage money tips, etc.