By Ismail Abdur-Rahman, CEO iVIBES
There's a common question that I get asked by people who are dabbling in entrepreneurship - "When should I leave my day job and go full-time as an entrepreneur?"
Well, let me start off by saying everything isn't for everybody. As you know from my last blog post, I rock with the side hustle. As a matter of fact, I rock with all forms of entrepreneurship (it's in my DNA), so let's not make that an issue. However, while we talk about sidepreneurs and validate their hustle, we don't always address the issue of transitioning from sidepreneur to full-time entrepreneur. Here are a few tips to help you decide when it's appropriate to take your side hustle full-time.
Sales Track Record
Before considering going full-time, the first thing you should do is make sure you have established a track record of sales that vets your product/service offering and establishes your market.
Why is this important? Well, there are two reasons. Sometimes you come across a product or service that you're willing to pay for because it solves a particular problem that you are tired of having to deal with. Unfortunately, if there aren't enough other people who have the same problem and value a solution enough to pay for one, you don't actually have a market. The other reason is that I've seen aspiring entrepreneurs who actually had a good product or service, but they were terrible at selling it. The first skill an entrepreneur needs to develop is presentation and sales skill. If you've got a great product, but you can't convince anyone to buy it, you're not going to make it very far. You need to be so comfortable with your pitch that you can deliver on the spot, anywhere, at any time. Before making the transition, it's advisable that you establish a track record of at least reasonable volume sales for a minimum of 3-6 months.
It almost goes without saying that, if you need to establish a track record of sales, you will also need a consistent revenue history. If you've been selling consistently for a minimum of 3-6 months, take a look at what your bottom line revenue is before making a decision. If, for example, you sell $500 in the first month, $800 in the second month, $600 dollars in the third month, $1000 in the fourth month, $750 in the fifth month, and $600 in the sixth month, what should you base your decision on? The average? That would be just over $600. But your bottom line revenue is $500. This is the lowest revenue earned over trial period, and this the minimum amount of revenue you should expect your business to make in a particular month. Using the average revenue might not give you the best result because outliers can distort the real picture of the financial health of your business, and you can't make long-term business decisions based upon short term scenarios that can't be duplicated.
The other consideration here is that before you decide to go full-time hustle mode, you need to make sure that your revenues can cover all of your expenses. The beauty of the side hustle is that you never have the expectation that the revenue generated from a part-time business will cover your living expenses. Unfortunately, not having to rely on this revenue to sustain yourself can give you an unrealistic picture of not only your real business performance, but also the real business potential of your hustle. let's say, for example, that your monthly expenses are $3000, and your business has been generating $3300 monthly for the past 6 months. In this case, you can feel comfortable with the decision to go full-time, as you have clearly nailed your sales process, established a market, and managed your cash flow well enough to project sales growth in a full-time capacity.
After establishing that you can sell consistently well enough to cover your monthly expenses, the next thing you will want to do is cover yourself with savings. If you can manage to save enough to cover at least 6 months' expenses, this makes things a lot more comfortable for you in the event that market factors conspire against you and you face challenges with supply chain management, inventory control, or scaling. If you have a decent stash to keep things under control, you can spend your time focusing on developing the channels your business needs to grow consistently (if not rapidly).
Timing is Everything
One last thing to consider is timing. There's a saying that alludes to the fact that whenever you think you're well-prepared for something, an event will occur to remind you that you couldn't prepare for everything. In other words, Murphy's Law has a way of rearing its head when you least expect it. Some things you just can't plan for, but try to arrange everything else in your life around your transition to full-time entrepreneur to minimize the headaches.
Of course, this isn't a comprehensive list, but taking care of these points should put you on the right track. Entrepreneurship is a marathon, not a sprint - and nobody said it would be easy. It's going to be tough. Count on it. Keep your head up, and keep your back straight. Stay focused. And above all.....hustle.