Whether running a store, an online business, a photography business, consulting business, etc or working as a freelancer, many entrepreneurs start their businesses as a “side hustle” while still working full- or part-time jobs. It’s a smart way to test the waters before pursuing entrepreneurship full-time.

If you’re one of these people, the time will come when that side business grows large enough for you to consider ditching your day job altogether. And how you go about making the leap is every bit as important as the steps you take to get to that point. If you don’t plan your transition properly, you could find yourself sheepishly returning to a day job because you leapt before you were ready.

To make sure your transition goes smoothly and that you set yourself up for success, take these steps:

1. Build Up a Savings Fund

The standard advice given to those considering the leap is to save up six months’ worth of living expenses before calling it quits. Entrepreneurship is naturally a feast-and-famine cycle, as your projects or orders can fluctuate from month to month. Having a little something in reserve can carry you through the leaner months. It’s also important when you first make the switch to full-time self-employment, as this is often a time when you’re still building and expanding your client base and may have some gap between your income and your budget.

Having some money put aside will do more for you than making sure your budget stays in the black each month—it will also give you the freedom to build your business on your own terms. When you’re struggling to make ends meet, you can find yourself accepting clients and projects with terms you know aren’t the best. Some extra bucks in the bank gives you the freedom to say “no” to projects you know aren’t worth your time.

3. Know How Much Income you’ll Need to Quit

In addition to building up your cash reserve, you’ll also want to have a clear handle on how much income you’ll need to bring in monthly to reasonably clear your expenses as an entrepreneur. This will give you a better idea of when your business gets large enough that you can feasibly “afford” to quit.

Keep in mind that once you’re no longer working for an employer, your expenses can change. If you’ll be working for home, for instance, you can deduct commuting expenses like gas, parking, and tolls. However, you may need to pay extra in other areas, like heating and cooling your house now that you’ll be home eight more hours a day, or boosting your Internet package so you can work more efficiently. Put together a budget for your projected monthly expenses so you know how much you’ll need to bring in to make the leap.

3. Know Your Potential to Scale

Once you know how much you’ll need to quit your day job, it’s time to tally that amount against what you’re currently bringing in from your side hustle and what you can expect to bring in once you’re doing it full-time. You may decide to wait until you’re bringing in exactly what you’ll need, or you may decide to leap with the faith that having more time to devote to your business will enable you to quickly scale to reach that amount.

Making the leap from side hustler to full-time entrepreneur is always a bit of a risk, but by making it a calculated one, you can better ensure your success.

This is a good piece and great advise for us would be entrepreneurs. Sometimes your side business might not be making much because you've not been giving it time. Very few businesses will flourish without attention to say the least.
I believe that the most important thing is to continue improving your competencies and also increase your client base. For salary earners it could be very risky doing something else because of bosses and nosy colleagues. However if you know you have stuff in you and yet are scared because you don't want to do the time,then that would be more risky. Great piece once again. I really got fired up.

I totally agree with you

Well analyzed.