Quitting your job. For some it’s about retirement, for others it’s about reaching Financial Independence and Retire Early (famous buzzword FIRE). But for me, it was about finally achieving my childhood #1 dream: having my own business. When I was in college, I quickly started my first business with a Dungeon & Dragon friend of mine: we were going to sell and repair computers (how geek is that, huh?). It wasn’t a real business per se, but it was keeping us busy and we were making a few bucks on the side at the same time. However, it was quite obvious we couldn’t compete with Best Buy for a very long time and we stopped our little side gig a few years later.
Then, I met who was going to become my best friend for life and my partner in this real adventure. For 10 years, we had fun making money from personal finance blogs. We had very good years (we make over 100K in a year a few times), but we always treated this income as “fun money” and the business as a side gig. The thing is that we were making more money with our day job to even consider quitting our job. Because I was never able to make as much money as my main job, I always feared quitting for my business. But after more thoughts about FIRE, I decided to finally make the big decision. Then again, when you jump without a safety net, it doesn’t mean you have to jump without being prepared. This is the 6 steps I followed to achieve my goal.
#1 Identifying my fears and make peace with them
I guess the main reason why people don’t quit their job to start their own business is because they are afraid to do so. You might be afraid of a thousand things when you think of quitting your job. Things like:
- Losing your benefits
- Not making enough money
- Downsizing your lifestyle
- Losing your house
- Going bankrupt
- Not being able to pay for your children activities
- The look of others
- Not being motivated enough
- Not being good at what you want to do
- Losing the trust of your spouse/family/children/friends
- Never going on vacation
- Working 60 hours per week for the rest of your life
- Being more miserable that you are at work
- Being ashamed of not succeeding
- Being paralyzed by the mountain of tasks you have to do
- Not getting financing
I can tell you that I had all those fears plus many others. Because quitting your job and going full speed on the road of the unknown is God darn scary. But fear is only a concept that exists in our mind. Once you have identified your fears and wrote down on a piece of paper, they already become smaller. I looked at my own list and thought: “I can manage all of them as none are life threatening”. I’m not going to die or hurt anybody in my family because I start my own business. I’m only giving myself a shoot at being happy all the time. This is what is going to really happen. Now that I know my fears, I’m ready to accept and make peace with them.
#2 Identify the worst case scenario
Another trick to embrace your fears is to define the worst case scenario. If you decide to go off the path everyone follows, what is are worst things that could happen to you? Here’s my worst case scenario.
As I have about $70K in my retirement account, I can live on this money for about 1 year or so. This gives me roughly 12 months to generate enough to support my lifestyle. If the first months don’t go as planned, I can always use my CFP title and write financial plans for financial advisor. I have received a few offers for this kind of service. Then, in the event my online business doesn’t take off after a year, I would be left with $0 in my retirement account and forced to find another solution. At this stage, I could sell my house and go in an apartment. This would give me another $75K to live on for another year (this is the amount of equity I have on my house). If I want to keep my house, I could also go back to my previous job as a private banker. I was really good at what it and I left in good term. Finding a job in this industry would be relatively easy considering my experience and work background. In the worst case scenario ever, it would take me too much time to find a job or sell my house and I would go bankrupt. In this scenario, I would have nothing left and no credit. This would require me to work very hard, probably 2 jobs to get back on track.
Considering this scenario, I know now what I’m facing. Basically, the worst that could happen to me is to lose my house and retirement investment account. 10 years ago, I was exactly in this position: no house and no savings. Then, I would simply “lose” 10 years of my financial life. I could probably get it back within 5 years as I know the path to make it happen this time.
After defining the worst that could happen to me, I realise it wasn’t that bad. The only thing I don’t have control over with is insurance. Since I live in Canada, health insurances are pretty much covered. I already had life insurance covered before besides what my employer was paying. What’s left to be covered is disability income insurance which will be taken care of shortly.
#3 Review my budget
The third step I achieved before quitting my job was to review my budget and cut it down to a bare minimum. No vacation, $100 per month in restaurant and I even cut down on my “wine budget”. I was able to reduce my expenses by about $1,000 per month and drop it down to roughly $6,000/month. I know, this is far from being a small lifestyle. The decision I make was to keep my house and my children activities. Honestly, with 3 kids, food is about the biggest expense we have besides our house. We made the decision to keep one car only, but we have to keep the RV (purchase for our previous trip) since we owe about $8,000 more than we could sell it for.
#4 Review my income potential
Once I cut my expenses to a minimum, I then looked at the bright side: how much money I could make with my websites. I realise that by working 50-60 hours per week I had plenty of firepower to make my dream comes true. The idea was to focus on specific added value activities that would generate money. My partner and I agreed to meet on a monthly basis and identify a short list of 3-4 priorities to achieve in the next 30 days. This way, we can rapidly identify what works and what not and proceed with changes.
Rather than saying “income potential is limitless” (which is true, but unrealistic), I decided to identify how I would go from an average of $4,000/month to $10,000/month which is a point where I will break even. Then, I identified growth vectors that will bring me to an income where I will live a great life (like making $20,000/month). Looking at these numbers keep me motivated and gives me the extra push I need to work harder and harder every day.
#5 Setup a plan to break even – don’t wait you do before jumping
I guess the most important piece of advice of this article is the following: do not wait until you break even to make the jump, because you will never make it. For 10 years, I hoped to reach a sufficient level of income to quit. It never happened because you can’t build a successful business with partial effort. Each hour spent at a day job was taking away precious time and energy to build my dream.
The plan I’ve written down to make over $10,000 per month could have never been a possibility without being full time to make it happen. If having my business is the dream of my life, I should dedicate my life to it. Not some part time effort between 9pm and midnights. This is a plan to burn out, not to get rich.
So I jumped without making enough money to support my lifestyle, but with a good roadmap to make it happen before I hit the ground. The adrenaline it gives me is another motivating factor. I don’t have time to take it easy or to relax, I’m on a mission. Each day of solid work is a day where I smile and I’m proud of. Each day of solid work brings me closer to my dream.
#6 Jump and never look back
When you jump off a cliff, don’t make a half attempt. The very first thing that happened to me when the word got out I quit was that I receive full-time and part-time job offers. Many people wanted to use my knowledge and go on a partnership or contractual work agreement with me. A “sane and popular” decision would have to cover my basic expenses with some side gig work like this. After all, I could have written financial plans a easily make $1,000-$2,000 per week with that. But this would have been a very big mistake. Keeping part of my time and energy away from my business is slowing things down. When you think of a company, think of an exponential money making machine. You want to get rid of the slow curve and hit the “log phase” where numbers rise full speed ahead.
I’ve been working full-time for almost 3 full weeks so far and I can already feel the difference. Being 100% dedicated to a goal makes things so easier and you get rewarded with almost immediate small wins. I’ll share those with you next week!