April 5, 2023

“All in” or “slow build”?

If you’re working in-house somewhere and dreaming of going out on your own someday, there are two common approaches that people seem to consider:

Quit your job and go “all in” on day one
Slowly build up a side hustle while you’re still employed

Each has pros and cons. Which one is right for you depends on a variety of factors.

Here are nine off the top of my head:

Your employment agreement
How demanding your current day job is
Your experience running a business
The size of your network
How much access you have to your ideal buyers
The strength of your planned offer
Your monthly expenses
Your cash reserves
Your risk tolerance

If you have high risk tolerance, a restrictive employment agreement, twelve months of cash in the bank, access to a large network of your ideal buyers, and an offer that they find irresistible, then quitting cold turkey might be the way to go.

If you have low risk tolerance, a permissive employment agreement, one month of cash in the bank, you don’t know where your ideal buyers hang out (or who they even are), and no demonstrable demand for what you plan to offer, then building up a side hustle might be the way to go.

Here’s the thing...

When you do finally pull the trigger and hang out your own shingle - regardless of what approach you take - cash flow is going to be the key metric to keep your eye on.

If cash flow gets tight and you start wondering where your next mortgage payment is coming from, you will be strongly incentivized to make a bunch of bad short-term decisions like taking on expensive debt, working with awful clients, dropping your prices, etc.

These short-term fixes create a downward spiral that’s hard to pull out of.

Lower revenue, higher expenses, less profit, more stress.

Yuck.

Yours,

—J