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29 Oct 2014

BEFORE YOU QUIT YOUR JOB

With the sky rocketing unemployment rate figures you would think that everyone is holding tight to the jobs that they have. Surprise, Surprise! The reality is that, most of us hate our day jobs and/or work outside our passions such that quitting sounds like a dream. I found myself talking to a friend about important things to consider before one quits his or her day job this afternoon. Here goes:
Gautrain Rides - (Before you Quit your Job)
Before you quit your job to work for yourself consider doing the following:

Draw a Business Plan
Drawing a business plan should be for yourself to get a clear understanding of the industry you are about to join. And YES, quitting without a thorough research of the business you are going to own and run is a bad idea. A business plan is not drawn solely to access funding but to also scrutinize the business idea you have. Have a clear understanding of your service or product, look at the expected income and expenditure, ask questions from the right people in the industry, and, and... This gives you answers to all the question you should ask before you quit your job.

Start Part Time
If possible, test the waters and start your business part time. This is a very tough approach but it works in a lot of business models. If you will be selling stuff, writing or crafting, just start already and see how the market responds. Be careful not to steal time and resources from your employer. Create time outside your working hours to work on your dream. Its quite exhausting but rewarding.

Build a Safety Net
Remember that you may not be getting any profits from your business for the first year or so. Time to build on your savings is whilst you still have a day job. Most people save at least six months to a year’s worth of their expenses to keep them going whilst they are building on their dream. These are the expenses you have monthly and not necessarily your monthly income. Look at stuff like:
  • Homeloan, rates, taxes, levies, insurance or rental costs
  • Water and electricity costs
  • Groceries
  • School fees
  • Consumer needs like clothing
  • Transportation, fuel, insurance and car service and repairs if you own a car
  • Medical expenses
  • Other unplanned costs
This is bare minimum of what you need. Add a little to what you think covers your budget just in case. You have to be sure you can do without your salary for a year before you quit your job.

Don’t Touch your Pension Fund Planning a business around a pension fund is a bad idea. Your pensions are meant to take care of you at retirement and not a day before that. Your business should have a start-up capital that is saved elsewhere. Invest as much of your pensions as you can in a tax free retirement tool if you have to take them from your employer. This is where most people miss it. Your business should grow to enable you to add into your retirement funds and not withdraw from them.

Reduce your Monthly Budget
A lot of money is wasted on unnecessary luxuries. Cut on all unnecessary expenses before you quit your job. I can immediately think of pay TV (DSTV), take away lunches, take away coffee, and any other unnecessary expenditure. You probably need to start washing your own car and fixing your own lunch.

Get a Mentor
If possible, get a mentor who is experienced in the business of your choice. Getting a free mentor is ideal. A lot of people are willing to share their knowledge and experience. You may even start subcontracting with experienced firms and individuals as you start your business. This is also a perfect way to learn until you have an understanding of how your business works and how you can go about securing your own contracts.

Business versus Personal Income
You may have started on your business already. If so, separate your personal income from the business income. Your business income is for your business needs. It is not to escalate your lifestyle. Your business should be saving for its times of need. A lot of small business owners are quick to withdraw from the business funds before their businesses develop some wings.

Starting and running own business is definitely tougher than being employed. It may look like a bed of roses. It is definitely not. As you start, you work twice as hard as you worked at your day job only to make a fraction of what you earned. Whilst the outcome is rewarding, make sure that the journey is as enjoyable. You cannot cut corners. Make sure you are mentally and financially prepared.

All the best with your plans,
SISA

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