You're almost there...you're almost ready to make the leap from your full-time corporate job into being a freelancer or running your own creative business. You've been working hard at your side hustle, with the goal of making it your full-time gig. You don't want to jump ship too soon, but at the same time, you can't wait to be your own boss and spend even more time doing what you love.
Ask 10 different people the question, "When is it time to quit my 9-5?" and you'll get 10 different answers. So instead of trying in vain to answer that question, here are some questions to ask yourself, honestly, before handing in that two weeks' notice.
1. Am I making enough money from my side hustle to replace my full-time income?
If you make $4,000 a month at your full-time job, but your side hustle is only pulling in $2,00 monthly, make sure that you have some savings put away to make up the difference, until your freelancing brings in more money. True, not working at a job 40 hours a week means you have more time to dedicate to finding new clients and customers, but make sure the initial difference won't affect your ability to pay the bills on time.
Alternatively, you might need to stay put at your job a bit longer, until your freelancing gets to where it needs to be to fully replace your income. Get really clear on your budget, know how much you and your family need. There's something to be said for risk-taking, but there's also something to be said for being smart about it.
2. With my freelance or small business income, can I afford healthcare and retirement savings?
Most companies pay for or subsidize their full-time employees' healthcare coverage. Paying out of pocket for insurance can be expensive. So when you calculate your expenses post-9 to 5, research how much it will cost to pay for a health insurance plan on your own.
Similarly, many employers have retirement savings programs where they match part of what you contribute. When you leave your 9 to 5, you'll also be losing those extra funds. While starting your business is a big priority now, one of the number one things retirees say about saving is that they wish they'd started earlier. So take into consideration how you will save for retirement after quitting your 9 to 5. Your future self will thank you.
3. Is the income I'm making on the side sustainable in the long run?
You might have had a flurry of business recently in your side hustle. That's great! But is it a one-off stroke of good luck, or a trend that's going to continue? Freelancers often experience the "feast or famine phenomenon," where they either have more work than they can handle, or the phone hasn't rung in weeks. If you're in the "feast" phase, do you have enough saved up to carry you through the "famine" phase, once you quit your 9 to 5?
4. How much do I need to have saved up before quitting my 9 to 5?
This question can get lots of different answers. A common answer I've heard is 6 months' worth of income, which admittedly is a lot of money. But I think it's a good idea to have a strong safety net in the bank, that way if something catastrophic happens and you're not able to work (there's no sick pay when you're a freelancer), or business drastically dries up, you are able to get through the dry period without turning back to corporate employment. You can also work on cutting back expenses to make this easier.
5. Instead of quitting my job cold turkey, will my employer let me reduce my hours or switch to part-time?
This will totally depend on where you work and how your employer feels about your leaving your full-time role. But it's a conversation worth having if you think there's a chance. Shifting to a part-time job is a win-win situation: it gives you a stable income, while giving you more hours to devote to your own business. Keep in mind though, switching from full-time will likely mean losing your benefits too.
6. Can I quit my 9 to 5 and get a part-time job somewhere else, before totally leaving the corporate world?
Similar to the last point, getting a part-time job somewhere else allows you to have a stable income while spending more time on your passions. Something else to consider here, some companies provide healthcare benefits for their part time employees. That's another win, and for now it saves you from having to pay out of pocket for coverage.
7. Am I in good health?
Might sound like an odd question when we're talking about careers, but have you been to the doctor lately? Have your family members (who are covered under your insurance)? If you're in need of a surgery or medical treatment, it's much more cost-effective to do that when you are still covered under your employer's subsidized health plan (assuming that coverage is good), than paying out of pocket for your health insurance. Before jumping ship, pay a visit to your doctor and make sure there are no surprises.
8. Will I want to make a major purchase in the near future?
If you plan to buy a house soon, mortgage companies will want to see that you have a steady income. Leaving a full-time job for a less secure income path might not be the best move if you are planning to make a major purchase, unless you are confident with what you have saved in the bank and what you're able to earn in your business. Talk with an expert about how quitting your job could affect your home-buying prospects.
9. Is the timing right?
As they say, timing is everything. If you hand in your two weeks' notice right in the middle of a major project where you are the main player, your boss might not be happy. That's the definition of dropping the ball. Your co-workers might not be happy either, because sometimes when an employee leaves, the company assigns that person's responsibilities to other employees, rather than hiring a replacement. If your grand exit is to be as graceful as possible, be considerate with your timing. Never burn bridges, even if you don't like your job.
If you answer all these questions honestly, you should have a better idea of whether it's time to quit your 9 to 5 or not. You may decide it's better to stay put for now. If that's the case, I know it can be tough to further delay your entrepreneurial dreams. But, dear reader, you can always do this to blow off some steam.*
*Not that I advocate destruction of innocent printers...