“I want to quit my job, but my side business isn’t up to speed yet. Can I quit and hope that the extra time I spend on the business will make up the difference? When can I finally quit my job?” This is a super common question we get from entrepreneurs.
The answer is, it’s hard to decide when to quit your job. You have that discouraging feeling in the pit of your stomach when you think about going to work. But you have the same feeling when you think about leaving. What about the people counting on you? What about your sanity? Are you being selfish wanting to quit? Are you doing anyone any favors if you stay? Will your side hustle support you the way your job did? With so many unknowns, how do you know when it’s time to quit your job?
The one and only way is to face the brutal truth, just like Jim Stockdale.
Jim Stockdale was a POW in Vietnam for 8 years. To put that into perspective, John McCain, decorated war hero and Senator from Arizona, who ran for President, was a POW for 5 years, 3 years less than Stockdale. He made it through incredible trials and tribulations including being tortured over twenty times. In the classic business book Good to Great by Jim Collins, the story and theme of Jim Stockdale’s life is examined very closely. But, it is what he said about the men who didn’t make it out that is chilling.
He said it was always the optimists that died.
“They were the ones who said, we’re going to be out by Christmas. And Christmas would come, and Christmas would go. Then they’d say, we’re going to be out by Easter. And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again, And they died of a broken heart.”
Jim Stockdale came to the conclusion that he would prevail, but he was completely aware of the situation he was in, giving birth to what Collins calls the Stockdale Paradox.
You must retain faith that you will prevail in the end, regardless of the difficulties. And at the same time, you must confront the most brutal facts of your current reality, whatever they might be.
So, as you dream of going places, moving ahead and doing things are you leaving out one of the most important things? What is your brutal truth? What do you need, really, in order to get where you are going?
Do you have a clear path to the next step? You may not know exactly how to get where you are going, but do you have a plan? Here are three things that will help you decide if you are really ready to make the move.
Do you have plenty of savings to bridge the gap between where you are and where you want to be? Do you even know what “plenty” of savings is? The average budgeting rule of thumb is to have 3 months of savings in case of an emergency.
But you do not want to be living in a state of emergency during this time.
You will have enough on your plate trying to grow your business. Give yourself at least 6 months of savings before you make the leap into space. Lou Cariozo offered the same advice on moneyunder30.com.
2. The time formula.
You need to know how much your time is worth. “But John, I want to quit my job because I’m tired of trading time for money,” you say, somewhat irritated. I understand completely. But, even though you won’t be punching a time clock, you have to know how much you can make with the time you will free up, if you quit your job. It’s really fairly simple.
If you make $52,000 per year working 40 hours per week that is $1000 per week, (thank you GED math!) If you are working 20 hours per week on your side hustle, it needs to be producing around $500 per week for you to quit your job. You have to realistically be able to see that your time has a track record of producing income before you are close to quitting. When we work with new entrepreneurs, we have them track the hours they work and the money it generates for at least two months prior to quitting.
Your family, bill collectors and nerves will be glad that you took this step!
3. Your benefits
Don’t forget to factor in your benefits! The three biggest benefits most people lose when they quit a job are,
- Health insurance
- Life insurance
There are just too many factors in your life and in the market to make a good recommendations here, but there are many more options than you think. Before you quit your job you need to make at least three phone calls.
Call your doctor to find out about different health insurance options she takes. This is a highly overlooked resource!
Call a reputable investment advisor about retirement. These are the companies with names you recognize, not your brother-in-laws neighbor! Investing is easier than you think.
Call your insurance company to ask about life insurance.
If you take these three measures, you will set yourself up to succeed. You have worked way too hard and have too much to offer to do this halfway. So even though it will be an incredible day, make sure you take the final steps to insure the success of your dream before you quit your job!
Dream big. Believe that you can do big things and make big changes. If you know the brutal truth, and have a good plan you will be unstoppable!