618: 7 Questions to Ask Before You Quit Your Job

0:00:03 – Seven questions to ask before you quit your job.
0:00:05 What’s up, what’s up, Nick Loper here.
0:00:07 Welcome to The Science Hustle Show,
0:00:09 part of the entrepreneur podcast network
0:00:12 because building your own income streams
0:00:15 is the best way to recession-proof your life.
0:00:17 So how do you know when it’s time to hand in your two weeks
0:00:20 notice and become your own boss?
0:00:22 That’s what this episode is about.
0:00:24 Now, quitting your job to pursue your business full-time
0:00:27 is a dream for a lot of science hustlers,
0:00:29 but there are a few things
0:00:30 that I think you should have in place
0:00:32 before you make the leap.
0:00:33 When I was working my corporate gig,
0:00:35 my one and only corporate job out of college,
0:00:39 I probably stuck around longer than I needed to
0:00:42 because maybe I’m just more risk-averse.
0:00:43 I had my little shoe business
0:00:45 plug it away nights and weekends on this thing.
0:00:48 And the cool part was because it was an online business,
0:00:50 it earned money even when I was at work.
0:00:52 So I have that in the back of my mind
0:00:54 that this could be a full-time thing.
0:00:56 It’s just waiting for the right time to make the leap.
0:01:00 And the truth is timing is never gonna be perfect
0:01:02 and that the leap is gonna be scary
0:01:04 even with a proven side hustle,
0:01:06 even once you’ve answered the questions from this episode.
0:01:09 Yes, you can prepare, you can make that cliff a little shorter.
0:01:11 You probably heard that line from Reed Hoffman,
0:01:13 an entrepreneur, someone who will jump off the cliff
0:01:16 and figure out how to assemble the airplane on the way down.
0:01:18 And in a way, that’s what this show is all about.
0:01:20 It’s about shortening your cliff.
0:01:23 It’s about building the airplane before you leap.
0:01:26 But for me, quitting my job wasn’t this spur of the moment
0:01:29 decision, it wasn’t the triumph and flip everyone off in the office
0:01:33 and make a dramatic exit and slam the door on the way out.
0:01:36 It was the result of three years of nights and weekends
0:01:38 to build it up to where that was even an option.
0:01:39 That was even on the table.
0:01:42 But I’ve been thinking about it for at least a year
0:01:46 and it felt amazing when I finally got up the nerve to tell my boss
0:01:48 we were out to dinner in Eureka, California.
0:01:52 And the next day for the full six hour drive back to the Bay Area,
0:01:56 I got to be excited that, yes, this is real, this is happening.
0:01:57 I’m doing it.
0:01:59 And of course, that was really just
0:02:01 the beginning of the entrepreneurial roller coaster,
0:02:04 but it still felt like an important milestone.
0:02:06 So without further ado, seven questions
0:02:08 to ask before you quit your job.
0:02:12 Number one is, are you quitting to something or from something?
0:02:15 Now, even if your job is miserable
0:02:19 and the very thought of another day in your cubicle
0:02:20 makes you want to gouge out your eyes,
0:02:25 quitting purely to escape isn’t going to solve all your problems.
0:02:28 Now, thankfully, this is where your side hustle comes in.
0:02:31 Quitting to work on your business is a lot different than quitting
0:02:34 just to get away from a dissatisfying work situation without a plan.
0:02:36 And it’s the same thing for retirement.
0:02:39 I think it’s something that keeps a lot of people working.
0:02:42 A lot of would be early retirees still punching the clock.
0:02:45 The work has become a part of their identity.
0:02:47 They’re not sure what they would do without it,
0:02:50 even if they don’t mathematically, statistically need the income anymore.
0:02:53 And then you hear about the stories of people dying in the weeks
0:02:56 immediately following their retirement.
0:02:59 Their work had become such a deep part of them,
0:03:02 they literally couldn’t exist without it.
0:03:03 But for the case of most side hustlers,
0:03:06 you’re probably quitting to pursue your own business
0:03:10 and hopefully a lifestyle that allows more time freedom and more earning power.
0:03:13 In my case, I wasn’t quitting a job that I hated.
0:03:17 I was quitting instead to pursue a business that I enjoyed more
0:03:22 and one importantly that I thought had a lot more upside potential.
0:03:23 And maybe it’s two birds with one stone.
0:03:26 Maybe it’s getting out of that toxic work environment
0:03:28 and moving toward something better.
0:03:32 But if you can’t imagine what you’re going to be spending your time doing
0:03:34 after quitting other than just not working anymore,
0:03:37 you’re probably not ready to quit yet.
0:03:43 That’s question one, are you quitting to something or from something or both?
0:03:47 Question number two, how much is your side hustle earning?
0:03:51 Before you quit, you got to make sure your side hustle is validated with real dollars.
0:03:54 This isn’t going to come as a surprise to anyone,
0:03:58 but the only real validation is in terms of actual sales.
0:04:00 People giving you money for your thing.
0:04:02 Now, some side hustlers are a lot more aggressive than I am,
0:04:06 but I wanted to see several months or even a year of my side business
0:04:09 earning enough to cover my expenses before I quit.
0:04:11 And that’s an important point.
0:04:14 You don’t need to fully replace your day job salary
0:04:16 provided you’re living below your means.
0:04:19 But I do think it’s nice to have a track record, a profit
0:04:22 that’s at least covering your fixed expenses.
0:04:25 The reason for that is then you’re in the same position that I was
0:04:29 where my entire day job salary was gravy.
0:04:31 And I remember the first month where that really hit me
0:04:36 and it was this empowering moment of, I don’t need this job anymore.
0:04:38 I’m not desperate for this paycheck.
0:04:42 And it’s another point in favor of keeping your expenses low
0:04:46 because that means it’s a lower hurdle to clear talking about lowering that cliff.
0:04:49 Now, some people like Shannon Weinstein built her side hustle
0:04:53 up to a multi-six figure level before giving her notice at work.
0:04:54 I was especially kind.
0:04:58 I gave about four weeks notice because I couldn’t wait to tell them I was leaving.
0:04:59 I broke the news to my team.
0:05:01 They said, what are you going to do?
0:05:02 That’s the first question they always ask you, right?
0:05:04 Like, so what are you going to do?
0:05:07 As though this is the end all be all of careers that you could choose.
0:05:08 Like, what are you going to do other than this?
0:05:12 And I was like, well, almost literally anything else would make me happier.
0:05:16 But and if you’re there, I feel you.
0:05:20 So what happened was I told them, by the way, I’m starting my own business.
0:05:22 I’m going to go do my own business full time.
0:05:24 And they’re like, what type of business are you going to start?
0:05:27 Well, I was like, well, I actually have a multi-six figure CFO practice
0:05:31 and a top 100 entrepreneurship podcast already.
0:05:33 And they were like, wait, what?
0:05:35 They were like, wait a second, what are you talking about?
0:05:38 And I said, none of y’all have Googled me over the last two years, luckily.
0:05:42 But if you Google me, that is what will come up on LinkedIn, on Facebook.
0:05:46 I was super quiet, but on Instagram and on other platforms, I was building.
0:05:49 So I knew my coworkers were not on these platforms.
0:05:52 So I was freely able to build these types of things.
0:05:55 And I was able to show up and deliver value and teach.
0:05:58 Here’s the brilliant part, though, about that is I was showing up
0:06:02 and I wasn’t like selling a ton on Instagram.
0:06:03 I wasn’t showing up and selling.
0:06:05 I was delivering value over the course of two years.
0:06:08 I was not starving to sell people something.
0:06:10 I just showed up and tried to build an audience.
0:06:14 So then when I finally quit the job and I was
0:06:18 able to openly talk about my business and to promote it on all platforms,
0:06:20 I was like, and by the way, now I get something to sell you guys.
0:06:24 So it was super exciting to be able to kind of be open
0:06:27 and be out there as a business owner and be proud of it.
0:06:31 I don’t think you need to wait that long or see that level of income
0:06:32 before you take the leap.
0:06:34 But on the other side of it, you’ve got people like
0:06:40 Kevin Klein, who quit his job after the side business had earned just 50 bucks.
0:06:44 We made 50 bucks and I was at this point where I was depressed
0:06:46 and hated every job I ever had and knew that if I stayed there,
0:06:48 I would just be miserable the rest of my life.
0:06:50 Our marriage was struggling because of it.
0:06:52 And Brittany was sick and tired of me complaining.
0:06:56 So I said, hey, we didn’t just jump without having our finances ordered.
0:06:58 We still had a lot of student loan debt, but we had at least six months
0:07:01 of nest egg where we could live off of that in Brittany’s salary.
0:07:04 So I’m not having to make horrible decisions based on
0:07:07 where’s the income coming from and trying to make money quick.
0:07:10 So that was a huge blessing to have that income saved up.
0:07:12 And then I just had confidence in myself.
0:07:14 I’ve had a bunch of businesses.
0:07:17 I did dropshipping in college and so I’ve made money online.
0:07:22 But that $50 was like a is just a signal of like go all in and you can find
0:07:24 freelance work with digital marketing because you’ve been doing it.
0:07:28 And within two months, I replaced my income with freelancing in our blog.
0:07:32 You can check out those full episodes with Shannon and Kellen for more.
0:07:37 Those are number 553 and 605 in your archives.
0:07:40 You want to scroll back in your app to find those in Shannon’s case.
0:07:45 We talked about her using Instagram and her podcasts to build an audience,
0:07:47 build relationships with potential customers.
0:07:52 And with Kellen, it was how an online business can thrive in a post HCU world,
0:07:54 a post helpful content update world.
0:07:58 Now, if your business is seasonal, another consideration is, well,
0:08:01 I want to make it through a whole cycle so I can kind of get a full picture of
0:08:04 what this is going to look like, hopefully for the next 12 months.
0:08:08 But still, it’s a big responsibility to write your own paycheck every month
0:08:12 and having a track record of doing that before you leave your job.
0:08:15 I think we’ll ease that anxiety in a big way.
0:08:19 We have more questions to ask before you quit your job right after this.
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0:09:29 So question two is how much is your side hustle earning?
0:09:32 Question three is what’s your runway?
0:09:35 And Kellen alluded to this just a moment ago.
0:09:39 Like, well, we had a little bit of savings cushion and I think it’s really,
0:09:43 really important to have that. So your runway or your cash cushion,
0:09:46 this is the amount of cash you have socked away to be able to cover your
0:09:50 living expenses while you’re working on building up your business.
0:09:53 And it’s usually measured in the number of months, right?
0:09:56 So some people will say, oh, you need at least three months of living expenses
0:10:01 saved up in your emergency fund or six months. I’m more conservative.
0:10:03 Income can be unpredictable.
0:10:05 I like to have 12 months of living expenses.
0:10:08 Other people think that’s insane. You don’t need that much,
0:10:10 but in a moment of high cash yields, like we’re recording right now,
0:10:12 it’s like, well, that’s totally fine.
0:10:15 But the way you can calculate that is to add up all your monthly expenses
0:10:20 and multiply by however many months of a runway or cushion would feel comfortable.
0:10:23 If income, for whatever reason, went to zero,
0:10:26 which was pretty much what happened to me right after I quit my job.
0:10:31 This was when Google decided they didn’t like my little shoe site very much anymore
0:10:34 and they wouldn’t take my advertising dollars for three months.
0:10:40 With that ad account shutdown, the traffic, the income took probably an 80%
0:10:44 hit in an instant and it took three months of literally pulling out my hair.
0:10:48 Like I had hair at this point to come back and eventually they came back three months later.
0:10:50 They said, look, we made an error. You’re good to go.
0:10:54 And while that was a stressful time, it would have been way more stressful
0:10:57 if I didn’t have that financial runway or cash cushion.
0:11:00 Now, if you’re not sure where you’re at in terms of runway,
0:11:05 I have a listen to the 30-day money cleanse episode that we did with Rachel
0:11:09 Jimenez earlier this year on just kind of a step-by-step checklist or playbook
0:11:12 to kind of get your personal finances in order there.
0:11:15 That’s question number three. Have a look at your cash runway.
0:11:19 What kind of living expenses or emergency fund have you got there?
0:11:22 And another call to keep your expenses low because that means
0:11:25 that’s less you’re going to have to save up for that runway.
0:11:30 The question four is what does your sales pipeline look like?
0:11:32 And this could be for service providers.
0:11:34 This could be for online business owners,
0:11:38 website owners, like do you have clients and sales in the pipeline?
0:11:40 And maybe they’re not closed yet.
0:11:43 Maybe they’re not fully like in that receivables column yet.
0:11:47 But do you have a process to acquire the next customer?
0:11:49 We’ve seen people. I started a consulting business.
0:11:53 I landed one client and then that gave me the confidence to quit my job.
0:11:55 But then the next month, it’s kind of this feast or famine.
0:11:59 Oh, well, now I shoot that job dried up and now I got to go find another client.
0:12:02 Right. So what is the sales pipeline look like?
0:12:06 And I think that’s essential to get a pulse on before you take the leap.
0:12:09 This is the only way to secure that you have a viable business
0:12:12 and that you didn’t just get lucky with a referral client or two.
0:12:14 Right. What’s the repeatable system here?
0:12:18 In my case, I had a system for building out advertising campaigns
0:12:21 for the shoe site, and I could see how if I just had more time
0:12:24 to dedicate to it, the business would grow.
0:12:26 It was proven. It was repeatable.
0:12:27 It just needed more time and attention.
0:12:31 So that’s question for what is your sales pipeline look like?
0:12:37 Number five is is your full time job preventing you from growing your side hustle,
0:12:39 which in my case, it absolutely was.
0:12:41 It’s easy to sit back and imagine all the great stuff you could do
0:12:45 if you just freed up an extra 40, 50 hours a week
0:12:48 that you’re pouring into your day job or more, if you count commute time.
0:12:52 And that’s what it was in my case, where there was a clear and direct path
0:12:56 of the day job is preventing the side hustle from going.
0:12:59 Nate Jackson put it this way in episode three ninety nine.
0:13:02 When I was running the numbers for myself, yeah,
0:13:06 it was costing me money to go to my job because like,
0:13:09 if I’m not working on my business, if I’m not sourcing, I’m not packing things.
0:13:14 I know what my hourly wage is for my business based on my numbers.
0:13:18 So then I was going to work like, OK, well, I’m making like 25 bucks an hour at work.
0:13:21 I’m making 100 bucks an hour working on my business with 200 bucks an hour.
0:13:25 Like I need to stop going to work because this is costing a lot of money.
0:13:27 Yeah, yeah, that’s awesome to get to that point.
0:13:28 Isn’t that an interesting way to frame it?
0:13:31 My day job is costing me money
0:13:34 because there’s always an opportunity cost on where we spend our time.
0:13:38 Now, the flip side of that is have you exhausted all the side hustle growth potential?
0:13:40 You can’t in the limited hours that you have.
0:13:42 Is time really the bottleneck?
0:13:45 Is the day job really the thing that’s preventing you from growing it?
0:13:47 Or with a little creativity?
0:13:50 Could you get more leverage out of the hours you do have?
0:13:51 I think it’s probably worth the thought
0:13:53 exercise to ask yourself that question as well.
0:13:54 That’s number five.
0:13:58 Is your full time job preventing you from growing your side hustle?
0:14:04 Number six is how are your costs going to increase or decrease after you quit?
0:14:07 Because becoming a full time entrepreneur is going to impact your budget.
0:14:10 Probably both positively and negatively.
0:14:14 For example, if you plan to work from home, your commuting costs might go down,
0:14:19 but your energy bill might go up when I turned in the keys to my company car,
0:14:22 which was seriously one of the best perks of my old job.
0:14:24 It was for a car company, so it made sense.
0:14:25 They’re giving people company cars.
0:14:26 So I had to go get a new set of wheels.
0:14:29 I had to start paying for car insurance, the vehicle purchase.
0:14:31 OK, that’s a one time expense.
0:14:34 But the insurance, that was a new recurring expense.
0:14:37 Now, if your business is location independent,
0:14:40 you might actually be able to recognize a huge cost savings
0:14:45 by relocating to a lower cost of living area or an area with lower taxes,
0:14:49 which was one of the side benefits of us moving back to Washington
0:14:54 and no income tax state from California, a notoriously high income tax state.
0:14:57 But it could also mean an opportunity to explore other parts of the world,
0:15:01 run your business from the road, play that digital nomad lifestyle for a little bit,
0:15:05 keep those expenses low, which may be one way that your costs increase or decrease
0:15:08 after you quit. I think the biggest wildcard expense
0:15:13 for the newly self-employed in the US, at least, is health insurance.
0:15:14 This is significant.
0:15:17 This is potential put a kink in your plans to quit your job
0:15:20 because this expense can be so big and someone that you definitely have
0:15:23 to account for before you make the leap.
0:15:26 You can shop around on your local state exchange,
0:15:31 but unfortunately, the options aren’t going to be great no matter where you live.
0:15:34 Robert Farrington described it in this way on our episode
0:15:37 on 10 rules to build wealth.
0:15:40 That was one of the scariest questions before making the leap
0:15:42 to first like being self-employed.
0:15:44 It’s like, what are we going to do for health insurance?
0:15:45 And it’s like a common one.
0:15:49 And honestly, we just went to the Covered California ACA exchange
0:15:51 and bought health insurance policy.
0:15:55 My wife and I joke that it is not health insurance, it’s bankruptcy insurance,
0:16:00 because we have the privilege of paying $1,500 a month for our family of four.
0:16:03 And that is for a high deductible plan.
0:16:05 So every time we go to the doctor,
0:16:09 we pay out of pocket until like I think $12,000 to you guys.
0:16:10 So you pay your premium every month.
0:16:15 So $18,000 a year and you’re going to pay another 12 grand
0:16:16 before you see any benefit from this plan.
0:16:21 Yeah. And granted, the benefit is that my cash pay price is a negotiated cash.
0:16:22 That’s so nice of them.
0:16:24 It’s so nice of them.
0:16:28 But on the flip side, it does protect you if you are in like a catastrophic
0:16:31 like where you’re really getting the benefit of this insurance is theoretically
0:16:33 if you had a really bad medical problem, right?
0:16:35 And then like millions of dollars in bills.
0:16:39 But for it really sucks on the day to day where a healthy family knock on wood
0:16:43 and like we pay a lot for not much.
0:16:45 That’s question six.
0:16:48 Get an understanding of how your costs are going to increase or decrease
0:16:50 after you quit your job.
0:16:55 Number seven is what is your realistic worst case scenario?
0:16:59 If everything suddenly comes crashing down around you, what happens?
0:17:02 How does that impact your life, your business, your livelihood?
0:17:05 I know this is kind of scary to think about it.
0:17:08 Tim Ferriss calls it fear setting, but it’s an empowering question
0:17:13 because when we really dig into it, the realistic worst case scenario
0:17:15 probably isn’t life threatening.
0:17:18 I mean, we tend to make things a bigger deal than they are.
0:17:19 People quit their jobs all the time.
0:17:21 The world keeps spinning.
0:17:24 People do it who are far less prepared than you are.
0:17:25 So you got to be honest.
0:17:26 What’s your worst case scenario?
0:17:28 You’re going to have to change your business model.
0:17:30 You’re going to have to swallow your pride, go find another job.
0:17:31 It’s not the end of the world.
0:17:34 You’re going to have to crash in mom’s basement for a little bit.
0:17:34 It’s not the end of the world.
0:17:37 This bruise to the ego, for sure.
0:17:41 But it’s all temporary and same same with success.
0:17:41 It’s all temporary, right?
0:17:43 You never know where it’s going to last.
0:17:47 My guess is you’re going to be happier having taken the chance
0:17:50 than to stay the course and wonder what if.
0:17:54 Remember, this is one of the top five regrets of people on their deathbeds.
0:17:56 There was a whole book on this topic.
0:18:00 It was I wish I’d had the courage to live a life true to myself,
0:18:03 not the life others expected of me.
0:18:06 And so that is question number seven, kind of itemizing out.
0:18:08 Well, what’s your realistic worst case scenario?
0:18:11 If this goes to zero, what am I going to do?
0:18:15 And kind of having that back in case of emergency, break glass, kind of a plan
0:18:20 there will help you be more comfortable and confident quitting your job.
0:18:25 So to summarize in this episode, number one, are you quitting to something
0:18:26 or from something?
0:18:29 I advise having something to quit to.
0:18:32 And obviously, if you’re listening to the side hustle show, my guess is that
0:18:33 it’s a profitable side hustle.
0:18:36 Number two is how much is your side hustle earning?
0:18:40 Got to validate that with real dollars before you make the leap.
0:18:44 And hopefully you have a track record where it is at least covering your fixed
0:18:48 expenses. And of course, we’ve seen some exceptions to that rule.
0:18:51 Some people quitting their job very early on that spectrum and other people
0:18:56 waiting until it was already a super, super profitable business more than even
0:18:58 sometimes my day job was making.
0:19:00 But that’s question two, how much is your side hustle earning?
0:19:02 Three, what’s your runway?
0:19:04 How many months of living expenses do you have saved up?
0:19:07 Other people will call this what’s your emergency fund?
0:19:09 But have that on lockdown.
0:19:10 Make sure you know what that number is.
0:19:15 And if you have to tap into that emergency fund that you’re going to be OK.
0:19:18 Number four is what is your sales pipeline look like?
0:19:20 Sure, you had sales coming in today.
0:19:21 Sure, you had customers today.
0:19:25 What’s next two, three, four months down the road?
0:19:27 Do you have a prediction of what revenue is going to be like there?
0:19:31 Number five is is your full time job preventing you from growing your side
0:19:34 hustle or with a little creativity?
0:19:38 Is there a way you can get more leverage out of the hours that you do have,
0:19:39 the limited hours that you do have?
0:19:43 Number six is understand how your costs are going to increase or decrease.
0:19:45 Remember, some may go up, some may go down.
0:19:49 You may recognize a huge savings if you change locations to a lower
0:19:52 cost of living area, but you may have to go plunk down for health insurance
0:19:55 that you didn’t used to have if that was covered by your employer.
0:19:59 And finally, number seven is what’s your realistic worst case scenario?
0:20:03 Being honest with yourself about what’s the worst thing that could happen.
0:20:07 And hopefully we’ll give you a little bit more freedom and confidence
0:20:10 to take that leap because remember, you’re more likely to regret
0:20:13 the chances that you didn’t take than playing the conservative route the whole time.
0:20:15 So that is it for me.
0:20:18 Thank you so much for tuning in until next time.
0:20:20 Let’s go out there and make something happen.
0:20:24 And I’ll catch you in the next edition of the side hustle show hustle on.
0:20:28 As a side hustle show listener, I know you’re driven.
0:20:29 Otherwise, you wouldn’t be here.
0:20:34 But I also know you can end up hustling and driving yourself into exhaustion,
0:20:38 overwhelm and even burnout if you don’t stay anchored to why you’re doing it.
0:20:42 That’s why I want to recommend another podcast that will massively
0:20:43 support your side hustle.
0:20:46 It’s called What Drives You with host Kevin Miller.
0:20:48 Kevin’s a former pro athlete.
0:20:51 He’s a lifelong entrepreneur who started 19 different businesses.
0:20:56 He’s a father of nine kids, an author and a mountain adventurer as well.
0:21:00 He knows both the glory and the dark side of drive and has devoted his life
0:21:03 to helping people who want to drive further, faster,
0:21:06 but also enjoy the ride every single day.
0:21:09 He brings on today’s most influential people in personal and business development
0:21:13 to see what drives them and get their guidance on the key ingredients
0:21:15 that power our own drive.
0:21:18 If you want to fully harness your drive and find peace and fulfillment in the
0:21:23 process, go find What Drives You with Kevin Miller, wherever you listen to podcasts.