When Is The Right Time To Quit My Job And Do Something New?
A baby panda dies in a bamboo forest every time someone quits their job. One should never quit their job just like one should never make an investment in something they don’t understand. Always get laid off to receive benefits such as free COBRA, WARN Act pay, severance pay, deferred compensation and unemployment insurance. Figuring out how to get laid off instead of quitting bought me literally six years worth of San Francisco-level living expenses to pursue entrepreneurship.
Without such a long runway of financial support I probably would be more stressed in my pursuit of creating a lifestyle business. There’s no way I would have spent $20,000 to take six weeks off this past summer either due to a constant worry my online revenue would fade. I’d feel guilty experiencing so much freedom only a year post Corporate America. Making money while having fun is an odd feeling that takes time getting used to.
For those of you who are too stubborn to take my advice about never quitting I’d like to give you parameters to think about before throwing away what’s likely your largest revenue source. By way of background, I’ve consulted with dozens of individuals who have successfully made a small fortune by leaving their jobs. I’ve also consulted with a handful more individuals who just said “Screw it, I’m quitting!” One of them moved back home with his momma. A couple others gave up and went back to work 10 months later. A couple other quitters are still slogging it out on their own. Don’t be a quitter. Be an engineer. A day job is so much easier than entrepreneurship!
THE RIGHT TIME TO QUIT YOUR JOB
1) When you’d rather die than go in the next day. If you are being abused or harassed at work, please speak up with Human Resources. Although HR’s main purpose is to protect the company’s interests and then your own, hopefully you will find someone sympathetic to your situation if you cannot speak directly to your manager. If work is really that agonizing to the point of suicide, then take all your sick leave, then short term disability, then long term disability, then leave. It’s important you take your leave in my recommended order because vacation days have monetary value that must be paid to employees upon departure. The value is usually one sick day = one work day’s pay.
2) When you’ve got another job opportunity lined up. This is the easiest reason for quitting a job you no longer enjoy. If another job opportunity provides new challenges, new excitement, a pay raise or promotion and you are no longer growing at your existing job then by all means make the move. If you still like your existing job, then speak to your manager and see if they can match the suitor’s offer. You have nothing to lose unless the suitor pulls their offer so speak quietly.
3) When your side business generates livable income for at least six months in a row. Business is highly cyclical e.g. down during the summer, up during 4th quarter holiday season. The longer you can generate livable income from your side business, the better since it smooths out cyclicality as well as flukes. It’s up to you to define “livable income.” The monthly income you generate should be able to cover all necessities such as food and shelter. The longer you can juggle a day job and a side business usually the better.
4) When your side business income shows six consecutive months of increases. Perhaps your side business isn’t generating livable income yet, but is showing tremendous month over month growth. If you can see your side business income successfully grow into and surpass your livable income hurdle then perhaps it’s OK to quit. The likelihood is high that your business will continue to grow if you dedicate yourself full-time although nothing is a guarantee. Just make sure you’ve got at least a year’s worth of savings in this scenario.
5) When you have a sugar mamma or sugar daddy. If you have a spouse who will take care of you no matter whether you succeed or fail, then go for it. Ideally your spouse has been making enough for years where only his or her income is needed to survive. Practice the art of living off one partner’s income for a good year. If you don’t have a partner or spouse, there are actually websites out there like Seeking Arrangement which puts sugar parents and sugar babies together. Some sugar babies are so entrepreneurial they’ll have multiple sugar parents of either sex give them over $10,000 a month! What an amazing internet world we live in where being resourceful can go a long way.
6) When you have a trust fund. Thank goodness for rich parents or parents who have the foresight to protect their assets and take care of their kids if certain stipulations are met! Everyone wants a trust fund, but sometimes having one can be very demotivating (future post). I’ve interviewed several trust fund folks who all seem to not maximize their potential. Why bother doing something on your own when you’ve already got a million in a trust by the time you are 21? But if you take the opposite view and get motivated to be somebody because you’ve got little downside risk, then go for glory!
7) When you have little education and not much in the bank. Imagine going to college for four years and then spending hundreds of thousands of dollars going to medical school for another four years. Unfortunately, you have no choice but to become a doctor even if you have a change of heart! Folks who are thinking of going to law school should be very wary given the three year and often $150,000+ commitment. Surveys after survey say that the majority of law school graduates end up not practicing law and also end up disliking law as a profession. If you have hardly anything in the bank and just a high school diploma or an inexpensive state school degree like me, then it’s much easier to go off on your own. You don’t owe anybody much of anything. You only owe it to yourself to pursue your dreams.
8) When you don’t have any dependents. Supporting yourself is much easier than supporting a family of four. How much do any of us really need to survive anyway? We can be on our parents health care program through our 26th birthday. Health insurance is theoretically much more accessible and affordable to lower income individuals now with Obamacare. We can crash at our parents or on our friend’s sofa. McDonald’s continues to have their $1 meals, including salads, 20 years later in spite of inflation. When the only person depending us is ourselves, then going for entrepreneurship isn’t that big of a risk.
9) When your idea is so great other people are throwing money at you. Sometimes you know you just have a fantastic idea. Feedback from users is great. Growth is phenomenal and investors are climbing over each other to buy a piece of your company. Waiting a year to graduate would have been foolish for Mark Zuckerberg of Facebook. This is the time when you should quit your job to focus on your business full-time. Investors want to invest in companies where the founder believes so much in his business that he’s willing to dedicate 100% of his effort to making the business work. Just remember the Startup Riches Myth where you might sell your company for multi-millions and still not be a millionaire in the end!
10) When you are prepared for a long, spartan road of existence. Unless you don’t make much in the first place, creating a business that matches or surpasses your previous work’s gross income is very difficult. It’s important to compare a business’s operating profits to job’s gross income to keep things apples to apples. I highlight three examples in a post entitled, “Quit Your Job And Die Alone” which hopefully illustrates the point that making money on your own is harder than you think. The less control you have over variables that determine your income, the more you are at risk.
11) When you see the writing on the company’s wall. Companies come and go just like people. If your company is looking like it’s in trouble due to rising competition, slowing sales, unfavorable regulator environment or even a scandal, it’s best to get out of there before it’s too late. By the time a company goes under you’ll be competition with everyone else at your company for a new job. Have the foresight to leave by paying attention to quarterly town halls and personnel changes in management.
12) When you know your end is near. If you’ve been diagnosed with a terminal illness then please, by all means quit your job and seek all the things you’ve always wanted to do before it’s too late. Just make sure you’ve got your will and insurance in place so that your death does not become a burden on your family. Even if you don’t know you’ll be dying soon, it helps to truncate your life expectancy to boost your initiatives.
13) When you become more credible. It takes time to build credibility and authority. If you’re recently out of college and want to start an advisory business what do you really know about life, economic cycles, building a business, happiness, or getting wealthy? Not much, and you will realize how little you really knew when you’re older. If you do manage to get clients, you won’t be able to charge any meaningful amount due to your lack of experience. As a result of your inexperience, you’ll have to deploy the “fake it until you make” it strategy which is a very difficult uphill climb. It’s much better to get at least 10 years of experience under your belt and then anoint yourself as an expert in some field. If you can’t wait 10 years to build your expertise, then at least wait until 30. There is a palpable bias against the way clients treat a 29 year old and a 30 year old. Now if you’ve invented an incredibly better way of doing something, then you have all the credibility in the world.
Bottom line: Unless you’ve got a fantastic job offer, quitting your job to do something new sounds like a bad move. Do you really want to join the ranks of the long-term unemployed if you fail at your entrepreneurial effort? (see chart again) I know I sound like a Debbie Downer but that’s because I strongly believe quitting without a financial safety net of at least a couple years is the wrong decision.
Nobody really tells you about their failures just like how nobody shares their stock market losses, only their wins. I’m telling you straight up as a person who went through the quitting process and is in the middle of building a lifestyle business that it’s much harder to achieve success than it seems. Work a day job and a side hustle concurrently for as long as possible until you think your day job is holding you too far back. Please embrace patience.
MISERY AND REGRET ARE YOUR TWO BIGGEST ENEMIES
Despite all my warnings of quitting, I’ve found through my research that misery and regret are the most common attributes experienced by people who want to quit their jobs. They feel they are wasting their lives working at jobs that provide no purpose. There’s also a profound fear of regret being on one’s deathbed and never pursuing a dream. The fear of regret is the biggest reason why I left my job. The second reason was the rational pursuit of doing something more exciting.
Once you quit your job you’re not destined for a life of poverty. Like any good poker player, you’ve carefully weighed the risks and rewards of your decision. Sometimes you’ll triple up and go far beyond your expectations. Sometimes you’ll get bad beat on the river and curse the world. There’s a good chance you can always return to the work force to rebuild your finances if things don’t work out. That said, I’ve consistently seen managers treat entrepreneurs who want to rejoin the workforce like outcasts.
For those of you who do end up quitting, set realistic timeline goals for progress. Six months, one year, and two years should do. It’s very easy to get distracted by multiple opportunities once you have a tremendous amount of free time. If you are not close to achieving your goals after six months to two years, it’s best to return to the work force at least part-time so that you don’t become permanently unemployable. After two years of being out of the work force, your chances of finding a similar job becomes slim-to-none.
If you know of anybody who is considering short circuiting their careers too soon or wants to start a long shot business, please send them this article. We’ll have some great discussions in the comments, and after digesting everything they still want to quit their jobs and try something new, then they’ll be in a much better place because their expectations will be much more aligned with reality.
Related post: 15 Things To Do And Consider Before Quitting Your Job
Background for new readers: I worked for 13 consecutive years in finance, figured out how to engineer my layoff, wrote a 100-page book advising about the process, advise those who want to leave their jobs, and now spend my time writing and traveling.