So the very fact you are reading this article tells me that the entrepreneurial bug has bitten you, and having myself transitioned from a full time corporate job to my own practice, I can very well understand and relate to your situation. A business means taking a good amount of risk, and given that the safety of a regular pay check will not be there, the thought itself leads to a lot of uncalled for anxiety. In that context, below I have tried to present some tips to help you be on a much better footing as you as you set your foot on the rough road of entrepreneurship:
Give space between the idea & actual start of business:
Many a time, quitting is a “reaction” to a short-of-expectation appraisal, argument with people at workplace etc. There is an instant high but one later realises that it was a hasty decision. So, from the day the idea takes seed, give it some time (may be 6 months, maybe some years depending on your comfort level) to let it germinate in you. It is in this period that you should research the market, your competition, applicable regulations if any, gestation period, probable funding sources, building the requisite contacts around your future business (consider joining forums like Headstart and TiE) & preparing financially for the uncertain few years ahead. Once you do all this, you will be mentally more confident in taking the leap forward.
Take family into confidence & make necessary lifestyle changes:
Taking your family's buy-in is crucial & in the initial years of a start up, it's the family that proves to be the biggest pillar of support. So, have honest conversations with ALL family members & tell them of your decision. Also, to ensure that quitting the job does not come as a shock as far as lifestyle is concerned, start becoming more aware and responsible towards your household expenses: Critically examine unnecessary expenses and systematically reduce them to acceptable levels. Minimise dependence on credit cards.
Purchase the right insurance covers:
Remember: till you are in your job, you may be covered by the safety net of your employer in terms of life, medical and accident covers but the moment you put in your papers, that safety net is gone. So be wise, assess your family's insurance requirements and purchase certain must-have covers like life, mediclaim, personal accident insurance before quitting your job. Also note that something like a term life insurance calls in for financial underwriting: in case you quit your job & and then go around buying it, you may not be able to purchase a policy for desired sum assured given the reduced income levels you will have at that point.
Plan for the lump sum receipt of employee benefits & savings:
In most of the cases, people quitting the job plan to live off on the lump sum employee benefits like employee provident fund accumulations, gratuity etc. to fund their household expenses in the initial few years.
Firstly, set aside say six times your monthly household expenses: invest in the growth plan of a good liquid debt fund and earmark it as your contingency fund. Secondly, close any open loans or credit card outstanding that you have. With the remaining fund you can decide on putting the money in growth option of a couple of top performing short term debt funds. Given the fact that funds will be required in the next 3-4 years this should be a preferred option. Debt funds enjoy a significant tax deferral advantage over plain fixed deposits and avoid exposure to short term volatility which might come with equity. Household expenses can be met through periodic redemptions from this fund or you can also activate Systematic Withdrawal Plan (SWP). You need to be mindful of tax & exit load implication while taking the decision. If you think all this becomes too onerous for you to understand, don't hesitate to consult a Registered Investment Advisor to guide you on the financial aspects.
Have a Plan B in place:
Try as much as you want, things may not always go as expected. Ask yourself: if it does not work as planned, do I have a plan B If even plan B does not work, do I have a plan C How will you bridge the income gap in the initial few years where cash flows will be very minimal Prepare some kind of projections for coming years: take different scenarios (e.g. optimistic, likely one, and pessimistic) to get a better clarity and hold on your future cash flows. This kind of critical thinking and brace up act will help you firm up for any eventuality as you move ahead.
Take care of your health:
In all the rush of planning for your venture along with working in a full time job, person gets so consumed with work that taking time out for fitness takes a backseat. Don't let that happen because after a few years once you are full time in business and it needs your time, you will realise your mistake and will have to spend double the time regaining that lost fitness. So, better have a healthy lifestyle now so that your body and mind are prepared to work at their best when your business needs you the most.
Business is a completely different ball game than a salaried job and comes with its initial share of challenges, not only financial but also physical and emotional. If you take a conscious decision to take action and implement these tips, it will hopefully go a long way helping you manage the transition in a much better way & succeed in your planned venture with flying colours.