How I Went From Deciding to Start My Business to Turning in My Notice
In my last post, I talked about why I left a job I loved. It was a hard decision and while I do miss the people and the projects, I know I am achieving something greater for myself.
Deciding to leave a job that I loved wasn’t the only thing that I had to do before turning in my notice. I had to make sure that it was the right time and I was pursuing the right plan.
I am a planner. If I was serious about starting my own business, I had to plan out the details of leaving my job. I knew that as soon as I started to tell people, there would be questions. In my mind, the worst answer I could give would be “I don’t know” or “I haven’t thought about that”. The details could make or break my decision to leave my job and I made sure I had them figured them out before I started socializing my idea.
I financially tested my business idea
Right after I made the snap decision to quit my job to stay home with my youngest and start my own business, I took the next ten minutes to evaluate the earning potential of my initial business idea. While I was ok giving up my income for the short term, I needed to make sure I could achieve financial success in the long run. For me, there were three stages to get to what I would consider a financial success for my company:
- Completely replace my income
- Replace at least 50% of my husband’s income so he could leave his job and join our new business full-time
- Continue to grow our income every year
My first idea involved manufacturing a product. To quickly evaluate the financial feasibility I thought about what I would be willing to pay for the item. I then calculated out how many I would have to make and sell a week at that price to replace my income. The number was much higher than I expected and I knew I would have to at least double that number because making 100% profit was unrealistic. With my current skill level, I figured I might be able to replace a quarter of my income after expenses. However, in order to expand I would have to invest a lot of the profit back into the business making my take home pay very low. I saw stage one of my financial success plan too far in the future to pursue the idea at this time.
That lead me to my crazy idea…
I asked myself, “Why not me?”
My husband and I had always talked about running a software development company that would build web and mobile based applications based on our own ideas or those of our clients. He’s a software developer and I am not. I always tried talking him into leaving his job to start our adventure but he was always hesitant and not up for the risk. I felt like I was also waiting for him to start my dreams.
After realizing that my initial business idea was not financially feasible, I went back to our idea of owning a software development company. We had an idea for an application; we just needed to start making headway in the development. That’s when I thought, “Why not me?” Would it be possible for me to learn how to program so I could help my husband with the product development? It was a crazy idea but I was convinced I could do it.
I then started to research examples of tech companies that were started by non-tech people. I was surprised by what companies were on the list. If these people could to it, why not me? They had the passion to succeed; I have the passion to succeed. They had the drive to learn the skills that they were lacking; I have the drive to learn the skills I am lacking. They helped to show me that I should not let my lack of software development skills stop me from starting the company my husband and I had been talking about for years.
I evaluated our budget
It’s quite obvious that leaving my job would reduce our income. We would be going from two incomes to one and I needed to know that we could afford it. We’re pretty lucky with the fact that for years we have been living well below our means. My husband and I had experienced career success and never really adjusted our spending.
I created a budget and made sure that we could cover our monthly expenses with only my husband’s paycheck and still put some into savings each month. While we didn’t cut any consistent items out of our monthly bills, I did for the first time set a budget for items like groceries and random spending.
For us, it was quick to see that we could afford for me to leave my job. If you cannot afford to drop your income, look at your options. What can you cut from your budget? Do you have savings you can dip into without depleting your rainy day fund? Can you find a part-time job and work just enough hours to cover the needed income until your new business is making money. Or, take this as motivation to start saving more money. Start living as if you have a reduced income and put every penny you can into savings until you have enough to leave your job.
I made sure I had the time
One of the driving factors that led me to consider leaving my job was that I would not have to find childcare for my youngest and could spend more time with my oldest. In order to succeed, I needed to know that I could balance spending quality time with my kids with productive work time. If I couldn’t get in a decent amount of work hours, I knew my plan would never work.
I created two schedules. One for the summer when I would have my youngest with me full-time and one for the fall when my parents would be back in town. They agreed to continue watching the baby part-time. The schedule included when I would work and when I would spend time with the kids. I even scheduled the time to spend with my husband, time to play with my kids, and time to do my share of the cooking and cleaning. The most important thing was to be realistic. Mostly, I would work during naps and at night after the girls went to bed.
To my surprise, I was able to get in a lot of hours with this plan. I also knew that I didn’t need a full 40 hours to complete the 40 hour work week I was used to. At first, I would be working by myself. There would be no co-workers to distract me and I could be head-down focused. At home, in 20-30 hours I could complete the same amount of work I used to complete in 40+ hours at the office. The schedule I put together allowed for 25-30 hours easily even with no childcare help over the summer. I would be over 40 hours when my childcare help returned.
I created a Pros/Cons list
It almost seems cliche to say, but I created a pros/cons list. I then challenged everything I put on that list. For the pros, I asked, “how do you know that will happen?” or, “how do you know that will be a good thing?” For the cons I asked, “what does this con really mean?” or, “now that I know that there is this downside, how can I lessen the potential impact?”
Asking these questions resulted in me removing items from the cons side of the list. I was able to realize that they were fears instead of something that should hold me back from pursuing my own business.
When the list was final, I felt prepared for the tough questions that I knew would come from family and close friends as I shared the news. I was prepared for the “have you thought about…?” or “what are you going to do about…?” questions that I knew would be coming my way.
I planned my exit
Many people will say not to plan your exit from a goal because it allows you to give up. I believe that it’s not that simple. Any worthwhile goal needs to be specific. If it’s not specific, you’ll never know if you truly achieved it. Two of the items that make a goal specific are giving it a time frame and a measurement.
The planner part of me had to know when I could consider the goal of starting my own successful business achieved. The planner part of me also needed to know when I failed at my goal and either had to readjust or give up for the time being. To decide this I asked myself, “What is the minimum success I am willing to accept by a certain time in order to keep moving forward with my goal?” For me, the answer revolved around my children.
My oldest daughter has roughly two years until she starts kindergarten. Right now, we are leaning toward sending her and her sister to private school. With me leaving my job, we cannot afford private school. Knowing this lead me to the minimum success I would be willing to accept by a certain time in order to keep moving forward with my goal:
By the fall of 2018, I need to be making enough money to afford to send my oldest to private school. My income must increase every year to cover the increased yearly tuition and afford to send my youngest to private school starting in 2021. If these minimums are not achieved by the specified timeframes, I need to evaluate going back to working for someone else.
By setting this goal, I know I have something specific to work toward. I also know what motivates me and what will make me accept exiting my plan. For me, it’s the education of my children. I cannot let my business goal interfere with my personal goal for my children. Before I started, it was important to see how my goals could impact each other and when I would give myself valid permission to quit versus working hard through the challenges. Knowing this allowed me to accept the need for a clear exit plan.
It takes a lot of planning to decide that it’s the right time to start your own business. For me, all signs pointed to yes, take the risk and do it now. What other actions did you complete before deciding to start your own business? Were there any steps that you went through that made you realize that it was not the right time?