Leaving the stability of a corporate job to become an entrepreneur is a significant decision. It’s a journey that requires careful financial planning and risk assessment. We spoke to eight entrepreneurs who successfully made this transition, and here’s their advice on how to know when it’s the right time to make the leap.
Start with a Personal Financial Check
Before you can manage a company’s finances, you need to have a grasp of your personal financial situation. Ludomir Wanot, who left a high-paying job at Amazon to venture into real estate wholesaling, emphasizes the importance of understanding your spending and saving habits. Making necessary lifestyle changes and setting a specific financial goal can ease the transition.
Determine Your Runway
Your financial runway is the time you can survive without a regular income. Building a sufficient runway is crucial as it provides you with the flexibility to learn and adapt as an entrepreneur. Mike Gardon, founder of The Break Community, suggests testing the waters through freelancing or consulting on the side before making the leap. Being conservative with your income projections is wise.
Projections and Contingency: Conservative Planning for Entrepreneurial Success
Katie McCarron advises doubling your cost projections and Tyler Wright shares his experience of building a financial cushion through diverse investments. Understand the significance of conservative planning and how it contributes to long-term entrepreneurial sustainability.
Create a Proof of Concept and Contingency Plan
Having a proof of concept and a contingency plan can give you the confidence to take the entrepreneurial leap. Katie Lauffenburger, co-founder of Wonder City Studio, waited until she gained recognition for her work before leaving corporate America. She also had a cash cushion from years of work as a designer and a backup plan.
Similarly, Tyler Wright, founder of Defining Wealth, had his side hustle generating revenue before quitting his day job. He emphasized the importance of having a financial cushion and a clear strategy for his business.
Making the switch from a steady job to entrepreneurship is indeed a big step, but with careful financial planning and preparation, it’s a leap that can lead to a rewarding journey.