For many entrepreneurs, there comes that inevitable moment where balancing a full-time job with a growing side hustle just can’t be done anymore. It is time to take the next step and transition out of the traditional 40 hour workweek in favor of becoming an entrepreneur and growing your small business.
Don’t let the calm of that previous sentence fool you: this is a big decision and one that should be carefully considered before moving forward. From determining your plan of action to establishing your legal structure, ask yourself these five questions to determine if you are ready to take the leap.
- Are you ready to retire from your other job?
The expectations behind jumping ship from your full-time job to start a business generally come with feelings of excitement (“I’m my own boss now!”) and determination (“Time to embrace the hustle!”), but the reality means becoming a lot more practical. While your full-time position might not have been your dream gig, it does offer a lot of padding that your side hustle turned startup might not be able to provide at the offset. Here’s a look at some areas to keep in consideration before putting in your two weeks notice.
- Can you afford to leave? Full-time work provides paycheck security, which you might have found yourself leaning on heavily while your startup was getting off the ground. Figure out how much money you’ll need to generate per month to maintain a consistent income and keep the business (and yourself) thriving.
- Will you lose insurance? As a solopreneur, you’ll need to think about how you plan to be covered on your health insurance and dental plans from here on out.
- Can you handle more than full-time? Startups don’t run on fixed, predictable schedules and require a lot of time and energy to be invested into the business. This can easily bleed into your personal life and, if you aren’t careful, drain you completely. Strategize how you plan on working smarter instead of harder and set aside some time to rest and recharge as well.
- Do you have a business plan?
Typically, when we talk about business plans, we’re referring to five year plans that cover everything from an executive summary of the company to its industry and market analysis. While not every entrepreneur can think that far ahead, it’s good to have a document on hand that allows you to be strategic and set up goals for the next one to three years. Stay on track and check in on this document regularly, making edits as needed to reflect how your business is coming along.
- What will be your ROI?
This acronym stands for “return on investment” which essentially means that whatever the investor has invested in, they’ll see a benefit from. Ask yourself how you plan on growing your side hustle into a business and what will be the most successful expenditure of your marketing dollars. (And while you’re at it, consider the kinds of advertising and marketing initiatives you’ll be setting into motion, too!)
- Will you need to hire anyone?
If the workload grows to the point where you can’t handle it anymore or goes beyond your realm of expertise, you might want to consider hiring your first employee. This may be a lot of money to spend, but it’s also a big investment into your business. If you can’t afford to hire full-time, you might want to bring on an independent contractor or an intern to help out as you continue to grow.
- Are you ready to incorporate?
Last but definitely not least, if you’re going take your side gig to the next level make sure you incorporate or form an LLC. Doing this separates your professional and personal assets and allows you to build credibility with potential customers. Additionally, it’s also a great idea to look into protecting your intellectual assets (like the name of your business, its logo, or tagline) by registering a trademark or copyright to ensure that your work is indeed unique and nobody can plagiarize the hard work you put into that business.