Ramit Sethi: Don’t Quit Your Day Job To Start Your Business — Yet
Dolly Parton would agree that working a 9-to-5 job isn’t always the best way to make a living, but if you are currently gainfully employed, it can ease the transition of your next financial or career move to do so from a place of abundance rather than deficit. Breaking free from corporate life and starting your own business is all part of the American dream, but the allure of entrepreneurship and being your own boss needs to come from equal parts passion and practicality.
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Before you hand in your resignation letter, there’s a crucial piece of advice most successful small business owners swear by which is don’t quit your day job. Money expert Ramit Sethi would also generally agree with this assessment, especially if you are the sole breadwinner for your family. Keep reading to find out why you might want to hold on to your 9-to-5.
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Why Keeping Your Job Is a Smart Money Move
Starting a business comes with risks, and those risks are often underestimated. For example, Sethi was recently asked the question, “Can I take a risk and leave my 9-to-5 as the sole earner to start a business?”
This was asked by a married woman whose spouse is a stay-at-home dad for their child. She currently is in talent acquisition and is the only income for the household. This was Sethi’s response:
“The short answer is yes, you can start a business. However, if you, as the primary earner, are planning to leave your full-time job to do so, I wouldn’t recommend it. On the other hand, if you’re thinking of starting the business on the side, that’s a no-brainer.
“If you, as the sole earner, were to stop earning money, that would quickly become a problem because you’d burn through your savings rapidly. It’s one thing if you had three years’ worth of savings to give yourself some runway, but when starting a business, I always recommend people do it on the side.”
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Why You Should Hold onto Your Job While Building Your Business
Starting a business takes time, and it’s rare for new ventures to turn a profit right away. By keeping your day job, you maintain a steady income to cover your living expenses, health insurance and other essentials. This stability reduces the financial pressure on your fledgling business, allowing it to grow organically.
In fact, many entrepreneurs use their own savings to get their businesses off the ground. While there’s nothing wrong with bootstrapping, having a steady paycheck can prevent you from draining your savings too quickly.
Here are the reasons why Sethi says you should start a side hustle first:
“When you first try to start a business, it can take time to find the right business idea and refine your offer. This can’t be done with a very tight timeline and budget. You need to give yourself time to let the business develop. It’s like learning a new skill — you can’t expect immediate results. You need to learn the habits, try things, fail and ultimately succeed.
“When starting a business, set some constraints. For example, give yourself six months to see if it works. If it doesn’t, move on to something else, whether it’s another business or a job. Finally, another reason not to leave your job is the uncertainty of how long it might take to make the business work. If it takes two months, great. But if it takes six or nine months, you could burn more cash than expected, which could lead to trouble.”
How To Balance Both Your Job and Your Side Business
There aren’t infinite hours in the day, and even if there were, you don’t want to spend them all working. Balancing a day job and a side gig is challenging but possible with the right mindset and habits. Here are some tips for managing both:
Create a schedule: Time management is key when you’re balancing two jobs. Set aside specific hours each week for working on your business. This may involve waking up earlier, working in the evenings or dedicating weekends to your side hustle. Stick to a routine to ensure steady progress.
Prioritize self-care: Running a business while working full-time can quickly lead to burnout. Make sure you’re taking care of yourself — physically and mentally. Get enough sleep, exercise and carve out time for relaxation. Remember, entrepreneurship is a marathon, not a sprint.
Use your time wisely: Automate tasks where possible and delegate when you can. There are many tools that can help you manage tasks efficiently, from marketing automation platforms to project management software. Don’t waste precious hours on things that can be streamlined and be realistic about your timelines.
Final Take To GO: When Should You Consider Quitting?
The bottom line is that your business should be generating consistent revenue that is enough to cover your living expenses before you strongly consider exiting your current employment. Ideally, you should have at least six to 12 months of consistent income before leaping to the land of lesser-known income.
When you’re passionate about a new business idea, it’s easy to feel like you should be dedicating all your time to it. However, being practical is just as important a part of your financial planning. There will be long nights and weekend hours spent on your side hustle, but knowing you have a steady paycheck can provide peace of mind as you navigate this new territory.
So, take Sethi’s advice and don’t quit your day job just yet. Instead, think of it as a launchpad for your entrepreneurial success.
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This article originally appeared on GOBankingRates.com: Ramit Sethi: Don’t Quit Your Day Job To Start Your Business — Yet