I've been meaning to write about this for a while now, but it's such a complex topic. Every person's circumstance is different and there is no one-size-fits-all solution.
I'll do my best to give you advice based on my personal experience. So please don't see this as some step-by-step guide, but more as a thought experiment.
And let's get one thing out of the way first:
You don't have to quit your job, obviously.
This is important. Don't quit your job just because someone tells you to, or because it's trendy right now to be an entrepreneur. Quitting your job isn't something you should do because it's cool or you're feeling pressure to do it.
A few questions I have asked myself before leaving a job: Why is it important for me to do this? What do I get out of it? What is the end goal? Can I measure it? Is it worth the struggle for me and my family? Answering these questions helps me fully understand why I want to go on my own, even if that means I'm risking everything.
This article is intended for those who have already made up their mind and are ready for the next step. If you are perfectly happy at your current job, stop reading and don't let other people (including myself) tell you what to think or do. But if you're just curious, read on. Then decide for yourself.
1. Think Ahead
Quitting your job can be scary and doing it without preparation is usually a stupid decision. Even more so if your goal is to go on your own and not take on another full-time job. It's scary as hell but with the right preparation you can make it happen. But before you even put in your notice, try to sort out the following questions:
Could I theoretically go back?
Lots of companies, especially big companies, are happy to take you back if you've been a valuable member of the company. Try to answer this question for yourself because it would minimize your risk of failure. Talk to your manager or someone you trust at the company to get a feeling if that would be the case. If yes, boom, you have a pretty solid backup plan right there.
What can I get done financially and health-wise before I leave?
While you're full time still, get all the things done you would need to get done anyways. This means paying off certain bills or making certain investments. The reason it's better to do them now is because you have a stable income and you know there is cash coming in every month. The same goes for anything related to your health. Do everything you need to do while you're still on health insurance (assuming your full-time job provides one).
Can I make any other preparations?
Can I delay my resignation by 6 months and use the time to get a head start of whatever I want to do in the future? Can I still be a good employee while at the same time starting my side project at night? The idea is to go as far as possible while you still have the comfort of a monthly paycheck.
2. The Worst Case Scenario
I personally love the idea of defining my own worst case scenario. I even wrote a whole article on it. Before I've ever quit a job, I tried to imagine the worst thing that could happen if things didn't work out the way I planned. Usually that means understanding and agreeing that the worst case scenario would still be something I would be OK doing.
It's a mix of negotiating with your own ego but also talking it through with your loved ones, especially if you have family members who depend on you. A worst case scenario depends on your own living standards, your personal circumstances and other variables.
"I knew that if I failed I wouldn't regret that, but I knew the one thing I might regret is not trying." - Jeff Bezos, Amazon CEO
3. What's the Runway?
After I've figured out all the questions above, I usually sit down and make a rough financial plan. I'm certainly not an expert at financial planning, but I'm basically trying to answer the following question:
How long can I survive if I have zero income?
This is just a hypothetical question, of course. Obviously I will try to generate money after I quit, but I like to estimate how long I could survive if I slept every day and did nothing. Whatever the answer might be, this is crucial to know. I personally would not want to quit my job if I didn't have at least three month's worth of savings set aside, assuming I would make zero money in the next three months. (But to be honest, I have quit a few times in the past without having three months runway. I was much younger and more flexible.)
Answering this question takes away a little bit of fear. If you know you could survive for three months without doing anything, then how many months could you get by if you actually do something? Realistically, you are not going to do nothing during these three months. But if everything fails and you make no money for that long, knowing your buffer tells you how much time you have to figure out a plan B.
4. Planning the Plan B
OK, so we know about the worst case scenario now. We also know how much buffer we have, in case we decide to absolutely do nothing or have zero progress for whatever reason. Sorting out our Plan B before we quit is important, because the Plan B comes right between the worst case scenario and our buffer time. Assuming we failed to execute and generate money within our buffer time (three months, for example) we will move to Plan B before we hit our worst case scenario.
My Plan B is usually taking on a part-time job or doing some freelance gigs on the side. It can be anything, but the main goal of plan B is to extend your buffer time and not distract you too much from your main goal of going out on your own.
Essentially, the Plan B should be a temporary solution while you're trying to figure it out. The Plan B activity should give you enough income to survive, while at the same time giving you enough freedom to do your own thing. For example: I'd rather work in a coffeeshop as Plan B than freelancing on the side as a designer. The reason is mainly because a coffeeshop side hustle would occupy a completely different part of my brain and I'd have enough energy to work on my online business. If I freelanced, I would feel so tired and annoyed that I wouldn't want to spend the rest of my time on the computer as well. Obviously, this can be exactly the other way around for you, depending on what you do.
If you decide to move to Plan B, it's important to recognize that this is not a solution to make a lot of money, or save any money. It's simply there to cover the necessary expenses so you can focus on your own thing and not to worry too much about paying the bills. And the more income you get from your own thing, the less you need to get from your Plan B activity.
5. Adjusting Living Standards
Everyone has their own living standards (and depending on your job, you might be lucky enough to even have something called "Golden Handcuffs" which certainly don't make it easier to go out on your own). But you may need to adjust your lifestyle expectations when you quit your job.
Before I've ever quit a job, I go through all my current expenses to see how I can cut them. This would help extend my buffer time, giving me more time to figure stuff out.
Obviously everyone's situation is different so I can't get into too many specifics here. But I'm fairly sure you can come up with ideas on how to cut your own expenses and buy yourself time. The best thing you can do is get an app like WaveApps and categorize each transaction for 2-3 months before you quit. This will give you an idea of where your money goes so you can adjust more easily.
Most of us think we know exactly what we spend money on, but I was surprised when I saw the detailed statistics on where my money really goes.
6. Do It!
I know it sounds easier said than done but I believe in you, and you should believe in yourself. If there is one more piece of advice I have for you, it’s be stupid and keep your projects stupid, too.
Completing all the exercises I listed above myself usually removes most of the anxiety I have about of quitting my job. Well, except FOMO. There will always be the fear of missing out. I have that too, but fuck that.
I hope this advice helps you out if you're in the middle of making this big decision. If not, it may be helpful to you some other time.