What to do before quitting your day job

We occasionally get asked "I'm going to start a new business in a couple months. What should I do before I quit my day job?" Here are four different perspectives on this.

Tats: Before you hand in your resignation, make sure you do your homework. You need to be sure that there is a good product or service offering in place. An idea, set of samples, prototype and the like does not count. There needs to be a real business opportunity in there. Wherever possible, it should be proven, backed by a good plan and operating on a sound business model. It takes solid front-end marketing to determine that. There is rarely any value in quitting a well paying job on just a hunch there is a good business opportunity. Whatever it is, it needs to be priced for sale and priced for profit with all the costs of overhead, production, sales and distribution factored in.

An equally important part of doing your homework is making sure there are real customers for your product or service. Unless you are selling quilts, family and friends are not considered customers. Whether your customers are end users, distributors, retailers, businesses or the general public doesn't matter as much as whether or not they are real and sustainable.

Guest Commentary from Cathy Andersen, President of Canawipe Distributors Ltd.:

Make sure there is enough money in the bank to sustain a prolonged dry spell. It can take three years to develop a business to the point there is enough profit above and beyond the needs of the business to generate a healthy income.

You also want to be somewhat assured the business will not likely go broke within three to five years. The sad reality is that about half of all companies are simply not around five years after they are started. About a third of the ones that close do so because they lose money, another third break even and the remainder are profitable. There are many reasons for a company to close its doors, but not making a profit is obviously the main one. Having a sound plan, great people on board and being sure your product has a place in the market go a long way to ensuring your company doesn't become a casualty.

Cathy Andersen is the President of Canawipe Distributors Ltd., a distributor of the popular Wysi Wipe biodegradable towelettes. She can be reached at 604.552.3175 or at sales at canawipe.com.

Guest Commentary from Cissy Pau, Principal of Clear HR Consulting Inc.:

Deciding to start your own business is both risky and exciting. For some people, making the transition from having a steady pay cheque to having sporadic income is the most difficult part of running your own business.
If possible, consider talking to your existing employer about your plans before you quit. See if you can make a gradual transition to entrepreneurship by gradually reducing your hours at your day job (so that you still can earn an income) while you increase your hours in your new business.

You want to ensure that you leave your current employer on a good note. It is critical that you maintain positive relations with everyone in your network when you start a business. Depending on the business you want to start, your current employer, co-workers, and all your business associates and contacts could become potential customers for your new business or a potential source of referrals.

Be sure to review the terms and conditions of your existing employment contract. Make sure that your new venture does not contravene any contract terms. If there are any issues, you need to discuss the potential concerns with your employer to avoid future problems or litigation.

Consider taking a self-employment course to teach you what you need to know about starting and running your own business. Most programs will help you develop a business plan and will provide you insight into all areas of running a business so that you will, hopefully, avoid costly mistakes.

Last of all, make sure the business you start is something you are really passionate about. Doing something you love to do will make it easier to weather the ups and downs of entrepreneurship.

Cissy Pau is the Principal Consultant of Clear HR Consulting Inc., a Vancouver firm specializing in employee retention issues for small and medium-sized companies. She can be reached at 604.688.3879 or at cpau at clearhrconsulting.com.

Peter:Have enough of the right "friends" in the area. A productive network is a great asset in building a business. If you have the right people in the right places available at the right time, your business is much more likely to succeed than if you don't. Use tools like LinkedIn, Facebook and industry networking events to enhance your network.

You also need to have key mentors and advisors in place. These people can help you develop the business long before full deployment. Call on more of your growing network of "friends" as things develop. These advisors can also help with determining when to quit your job (or the business).

The business also needs to become more enjoyable and satisfying then the job. This is easier for people who hate their job than it is for those who are very passionate about their work. There needs to be passion and enthusiasm for the new venture, otherwise it is bound to fail. This is always true if you are the one leading it and doing the sales. With few exceptions, this also holds true if you are simply taking over an existing business with a track record and organization in place. The attitude of the owner affects the whole enterprise.