Should I quit my job now?

Here’s a good one from the mailbag:

I am seriously considering quitting the (day) job and dedicate myself to my consulting activities but, it’s scary decision. On one hand I feel it’s the right time. I have no family nor other important obligations and in a few years it’ll be too late. But on the other hand the cost of living where i live and the financial crisis make me hesitate.

Do you think that today’s crisis should affect this type of decision? Any insights you can provide me on your decision would be very appreciated.

Big decisions are always scary no matter what’s going on in the world. You’d be nearly as scared in boom times to quit as you probably are now. Keep this in mind. Much of the fear is yours. I know mine was. It’s easy to say “oh, it’s not the right time” as if there could ever be a perfect time. No angel is ever going to drop down from the sky and say “Quit now! It’s time! The universe has your back”, yet people seem to expect it will feel like this. It will always feel scary, weird and uncomfortable because it is new. And after the stability of a proper career, something you likely worked hard to get, it goes against the grain of our cultural attitudes to abandon that for the unknown.

Now I’m not saying everyone should quit today – far from it – but I am saying there is this fantasy about what it should feel like that can never possibly happen.

In short, going out on your own you only need one thing: enough clients to earn a living. That’s it.

Depending on what you intend to do this could be one single client. Or three. Getting one or three clients might be very easy for you. Or very hard. But either way you can start figuring out how hard or easy it will be before you quit your regular job. The quality of your business idea and talents are things you can measure no matter what the state of the world is. If you see a way to make money, can verify it, can get good businesses to sign contracts to pay you, then why wouldn’t you do it? Recessions or depressions are macro trends: there are always countervailing micro trends and that’s all you need to find.

The major advantage of being an independent is your low overhead and agility. You only need to pay one salary and that’s yours. You don’t need to build a factory or find investors – your constraints are much simpler. Even in down times if you see an opportunity to provide a service people need, and can pay for, you can do very well. Strong businesses are relatively stronger now given all the troubles weaker companies are in. Even during global downwards trends there are always pockets of opportunity and sometimes the people who strike out on their own during tough times, and survive, are best positioned to do well in boom times too.

Here’s a basic and time tested approach to all this:

  1. What are you lowest possible expenses for the next 12 months. Do the math on how much you need to survive. Note all the frills you can cut, like cable TV, nights out on the town, skiing trips, moving to a cheaper apartment, etc. Put together your lean expenses for a year. If you have new business expenses you expect to spend before you can make income, consider those too.
  2. Examine your savings. Based on #1, you know how much you need, assuming ZERO income, to last for a year. Look at your savings and do the math. If you find zero clients, how long can you last? A good guess is you need 6 to 12 months to build a base of clients. If you don’t have 6 months of savings, start saving now. Without a cushion you will have little margin for error, which you’ll need because you are doing something new and will make some mistakes along the way. Account for this before you start.
  3. Be clear on what you want.  Is it more autonomy? Is it more free time? Is it to have so much money you can wear clothes made from $100 bills? Think carefully about what you are trying to achieve. Simply ‘not working for the man’ anymore isn’t much of a target to aim for. I quit for more autonomy – I was sick of needing approvals for things. I also wanted to see if I’d like writing books and if I did, could I make a living around them. I decided if I could do that and live acceptably well, I’d be happy. So I quit.
  4. Find your support team. Ask your friends, your spouse, your colleagues, and find a small group of people who will support you and help you out as you start this new thing. You will need to know who can help when need it, who will encourage you and who will give you tough feedback you need to hear. Line up your support team before you make the leap.  It might surprise you how people react to your decision, so sort it out early. Groups like biznik.org or even more general networks like linkedin can connect you with like-minded people who can give you advice, support or who are a little ahead of you in the process. Blogging is an easy way to make connections and draw attention to your work, provided you like to write, or more importantly, write well.
  5. Start looking for clients. Ask around. Of your network, who are the five people most likely to need your services. Talk to them. Ask them if you were a freelancer if they’d be interested. Talk to other freelancers in your field – buy them lunch and ask for advice. Do they like being on their own? Why? Why not? Before making the leap become a student of freelancers in your field and sort out if your fantasies about it approximate the reality. Start working your network and building it now. Start a blog about your expertise: it creates a home for your knowledge and if you go on your own, your business.
  6. Get your first client fast: work for free. A good referral is worth much more than payment for a new independent. Be willing to work for free, on the basis it’s a limited time only arrangement, in exchange for a good referral or use of a client’s network (If you can’t find someone willing to let you work for free, be worried: your network or reputation are weak). You can do this on weekends or when off from your current job. Get projects under your belt now, while you have almost no risk. If after two weekend projects you hate it, you’ve learned, before quitting, freelancing isn’t for you. Get a taste for free before you mortgage your house for the meal.
  7. Leave your job on good terms. Give plenty of notice, more than the minimum (Wouldn’t you be pissed if someone gave you only two weeks notice?). Finish all your work. Make sure you do everything you can to leave on excellent terms so worst case the door is open for your return, or to possibly use your former employer as a client.
  8. Value life experience. When I quit it helped me to accept that even if I fail I’d have learned a great deal about myself, my industry and life in general. I was convinced there were lessons I’d learn I couldn’t buy any other way, and I got strength from this (It turned out I was right, but I didn’t know this when I quit). I was convinced on a personal level I could not lose, and if I planned #1 and #2 the financial risks were small. Worst case I’d take those experiences and return to the kind of career I’d had before, but much wiser and appreciative of what I have.

I’d also check out books like Million Dollar Consulting, which outline many of the considerations needed to run a successful consulting or freelance business. And Guy Kawasaki’s Art of the Start is a good starting point if you’re thinking along the lines of a business rather than consulting.

Also see: How I make a living -  in detail.

Have more questions? Leave ‘em in the comments.

14 Responses to “Should I quit my job now?”

  1. Chuck

    In the process of making that exact same transition right now. Gave my notice last week. I’ve saved this post for the helpful info and will be referencing it.

    Reply
  2. Jussi

    Me too – gave notice last week and going out on my own at the end of March 2009. Scary isn’t it?

    I have made a note-to-self to try and avoid getting hung up on world news (seems they’re mostly bad) and instead focus on my own vision and getting that first client and project in the door.

    You might also find Paul Graham’s “Startups in 13 Sentences” worth a read for more solid advice: http://www.paulgraham.com/13sentences.html

    Good luck – we’ll be fine!

    Cheers, Jussi

    Reply
  3. Alan Weiss

    There are hundreds of free resources on my site: http://www.summitconsulting.com. If you were to buy a book, get “How to Get Started in Consulting.” You can buy it on Amazon less expensively than from me.

    Do NOT do anything for free in terms of consulting. Understand your value (client results), identify your buyer, and then make it easy for the buyer to reach you and for you to reach the buyer. But CHARGE for your value.

    Reply
  4. c. thompson

    great set of tips – comments on a few things…

    - general point 1: figure out what rate you can charge for your services before you dive in. in most industries, you can charge a lot more for the same thing than what you might make hourly at a company, but what is that rate? and what rate is your industry supporting for what you offer? you might see consultants in your industry making 10 times what you do hourly at time X, but by the time you summon the courage to quit and take on what they do, the market has softened and you can only charge a percentage of what you could have N months ago. be aware of the pool that you are diving into.

    - general point 2: always protect yourself. be aware of what you are doing and where you are liable. if you as an individual are doing work under your ssn only and 1040s, you and everything you own are vulnerable should you get sued by an unhappy customer. getting an llc or insurance might seem crazy (and quite honestly it might be – don’t get me wrong), but evaluate your own personal situation and make sure you are covered for a worse-case scenario. remember that people can sue for anything – it doesn’t matter how right or wrong they might be. the end result for you is that you have to spend your own money and time defending yourself against whatever it is, and even if it’s frivolous or otherwise, you can’t get that time and money back.

    - #1: the above said – it’s all relative. while you can’t guarantee income at any given point, always keep in mind your currently hourly rate vs. what you can contract for – it’s usually a very favorable rate. for example – say you make $15/hr at your day job and you can make $65/hr consulting doing the same thing:

    $15 x 160 hrs/month = $2400/month gross
    $65 X 30 hrs/month = $1950/month gross

    now of course taxes are worse and there is health care and all of that, but with the above example, you can make a somewhat comparative salary working 1 hour a day 7 days a week vs 8 hours per day (or more depending) 5 days a week. bump that to 1.5 hours a day consulting and you’re doing pretty good for starters. of course, you spend the other 7+ hours every day networking and trying to get new work, but it’s the actual billable hours to focus on. if you get a day where you spend 8 hours on a project for a client, then you’ve covered your week right there and anything else is gravy. think small. every dime you make is one less dime you have to take out of savings, and when your hourly rate is 3-4 times what it was before, it all becomes relative rather quickly.

    again – if you really can get that kind of bump when it comes to consulting vs working for the man, you can get by on a lot less work than you might imagine. and that can also reduce your stress while you build your business. you don’t have to swap 60+ hour week for the same thing. you can work a lot less, be a lot happier and actually be able to take in a relatively equal amount of money.

    (that said, really do consider taxes, health care, 401k matching and the likes – your current boss not covering your health care and their % of social security tax is a big hit.)

    - #5: to a point yes. in the software startup world, we call them “early adopters” (http://en.wikipedia.org/wiki/Early_adopter). they can be fantastic champions of your product (or service), but you have to make sure you find a good champion. way back when, an old friend called the classification “clients” vs. “grinders” and it really couldn’t be more true. you can offer your services to somebody, but don’t ever forget what your ultimate goal is, which is to leverage that person into a great reference for you. this means that you have to not only find somebody who is not going to abuse your offer of reduced rates on services (the “grinder”), but also carry enough weight in your industry to be able to offer a reliable reference for what you’ve done. be up front with anybody – say what the ultimate goal is. you want them to help you refine and develop your product and/or service, and they in exchange will be greatly helped by not only your product, but all the attention to detail that they wil get because of their willingness to jump on board as early as they have. but don’t just do free work with the goal of a great reference in mind…think bigger and cover your bases. be sure to think out what happens down the road – say you make it big – what happens with this early adopter then? do you raise rates to cover your time now that you are making good money or do you continue to support them at the greatly or reduced rate or free just because you once did? people latch on to free things, and the better you are at what you offer, the more likely they are to not let go. and if they don’t want to let go and you break it off in the wrong way, suddenly you might find your early adopter turning on you in a variety of unpleasant ways.

    but now i’m really rambling. a great post and best of luck to you should you decide to take the plunge! :-)

    Reply
  5. Mike Barrett

    I agree with all the points made above, there will never be a “right” time, if you think you have valuable skills or knowledge that are relevant regardless of the downturn then there’s no reason you can’t make it right now.

    I took the plunge 2 years ago now and I’d say it’s the best thing I’ve ever done. Having been employed for more than 20 years, I’ve learned so much more about business, sales, marketing, finance and about myself than you ever can inside a business.

    There are good and bad sides to it of course, it can be lonely, if you don’t like that then you should think about it carefully and you need the support of some good friends/family. I highly recommend Alan Weiss’ book as a great intro to how to set your fees and not bill by the hour which is the best advice I ever had along with knowing when to say no to a client.

    The blog is crucial, my two main search referrals are my name and company name, people will Google you before they meet you so setting out your philosophy/thoughts/ideas in public really helps when you’re on that important first meeting.

    One other tip is to offer to write about your experiences for a suitable website. I was lucky enough to have worked for an on-line publisher so they were very happy to create a column for me to document my progress. Have a look at http://comment.silicon.com/mikebarrett/ there might be some useful advice in there for you too.

    Good luck!

    Mike

    Reply
  6. JohnB

    Anyone can get the first client. Getting the second client is *always* the issue — because when you’re working for the first client, you’ll find it difficult to be out marketing yourself to your target market to land the second contract.

    A much better approach would be to stay in your day job and start marketing yourself now by giving seminars, making presentations at workshops, etc. When the people you are presenting to start coming to you to ask if you can do some work for them … then — ah, then! — you can safely consider working as a consultant.

    Of course, if you just want to be a contract programmer then there are numerous body shops willing to do the marketing for you (at, of course, their standard and indefensible uplift of your rates to them).

    Reply
  7. Cairo

    Hi Scott,

    It is good to see your post on this subject. Against all common sense it seems (given the environment) I left my job and struck out on my own at the beginning of this year.

    I tend to make decisions based on what I want, rather than making them because of the things I am afraid of. Most actions are not entirely irreversible, so in the event that the worst-case scenario comes about, what would that look like? and could I cope with it? If the answer is yes, then off I go.

    Tony Byrne wished me luck on my new ‘Indie venture’ and although I hadn’t thought of it in those terms he’s right, that’s exactly what it is. So now income-production (i.e. my job) is comprised of consulting around and writing about content, information and knowledge management; working on a graphic novel in which the heros travel through time to save the future of the planet and, painting pictures, drawing and making art in general.

    I’d be kidding you and myself if I said the money was streaming in, it’s been a tough month for sure. Still I’ve managed to keep the roof over my head and the food on the table, and I’ve not regretted the decision for a minute.

    I love nothing more than to see people doing what they want. While there are some baseline considerations which Maslow and Herzberg will happily tell you about (roof overhead, food on the table), it is refreshing to see you moving up their scale of needs and bringing life experience into the fore. We can be so busy being ‘safe’ that the very term becomes an oxymoron. If you were 80 years old and providing advice to yourself, what would that be?

    I look forward to hearing more from you.

    Regards
    Cairo

    Reply
  8. Ted Payne

    It is funny that I just came across this blog post on twitter now – I am not sure if you have decided to quit officially but it is a huge decision.

    A close friend of mine left a cushy(6 figures) gig at IBM and went into business on his own 2 years ago (well he took me with him lol). It was a rough start – but we learned a ton and now we are both happier than ever. Making good money, tons of family time, and everything we do promotes our bottom line – not someone else’s.

    It is also funny you mention consulting, because just recently as a side gig, my friend took a 1k a day consulting gig for his old employer. So don’t burn any bridges!

    His story is here: Quit Your Job

    Reply
  9. Chaminda

    Do you have any strategies on either turnoff or diffuse negative self chatter in the head?

    Reply
  10. Unstoppable Family

    “Only a life lived for others is a life worth while.”
    Was just looking around on google today and came across your blog great stuff. Just wanted to take the time and give you some kudos for your work. We are currently on crazy 3 year trip around the world and blog about it come check us out.

    Unstoppable Family
    Brian and Rhonda Swan

    Reply
  11. Chris M

    I’m almost 4 months into running my own company after working in house for 7 years in high demanding positions, I have honestly never been happier! The thought of doing it was intense and I’d be lying if I said I wasn’t scared, but I noticed that I was less scared when I had the entire day to work on client acquisition and such – whilst you’re employed and thinking about quitting, you don’t realize that you’ll have a great deal more time when you do quit and that’s something I wish someone could have told me about earlier :)

    Reply
    • Scott Berkun

      Congratulations. Regardless of the outcome it takes courage to make big changes. You should be proud for that alone.

      Most unhappy workers spent much time in unhappy meetings waiting for things to happen. It’s a wonderful surprise, and eventually, an interesting challenge, to be the only person who decides how you spend your time.

      Reply

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