3 Essential Steps Before Resigning and Launching Your Business

Many people wonder about the budget and necessary procedures before resigning from their jobs and starting a consulting business.

While there is no guaranteed formula for success during this career transition, the outcomes often depend on personal circumstances and the willingness to embrace risk.

3 steps before resigning and launching your consulting business

Here are 3 critical steps to consider before resigning from your job and launching your consulting business:

1. Clarify Personal Motives

First, clarify your incentives, values, and underlying motives for deciding to resign and pursue freelance work. Understanding these elements is vital for persisting during challenging times. Your work should fulfill your life goals, not the other way around. Thus, you have to define the ideal life and build your business around that vision.

Identifying your motives is crucial, as the likelihood of giving up increases at the first obstacle if you lack conviction in your goals.

Therefore, consider the following questions:

• What draws you to freelance work?
• What bothers you about your current job?
• What qualities define your ideal life? What changes do you want to make?
• How will your independent project further you toward your goals?

Defining your life goals and understanding how your freelance project can help you achieve them provides the determination and commitment needed to persevere, regardless of external challenges.

2. Assess Financial Preparedness

Two key factors are essential for evaluating your financial readiness to embark on an independent project:

2.1. Living Expenses

The financial calculations for freelance work differ from those in traditional employment, where employees typically focus on income, salary negotiations, and earnings assessments.

Conversely, expense calculations take priority in freelancing.

Consequently, financial assessments for independent projects focus more on living expenses than on revenues. This approach eliminates the need to analyze average salaries or pay ranges in the market.

The financial assessments for freelancing focus on estimating family support costs and exploring strategies to minimize them.

Personal projects are more likely to succeed with a minimum family support budget.

Budget assessments alleviate significant stress when launching an independent venture.

Therefore, it is essential to calculate actual weekly, monthly, and annual expenses accurately rather than estimates, which can lead to inaccuracies. Analyzing bank statements or using financial management software like PocketSmith can help track expenses over a full year.

2.2. Financial Safety Net

It is recommended to save an amount sufficient to support yourself in case you experience frustration with your job and decide to resign unexpectedly.

Aim to have enough savings to sustain yourself for 3-6 months, depending on your resilience and risk tolerance. Some may feel comfortable saving just one month's expenses in their bank account, while others may need enough funds for six months before considering resignation.

This step requires determining the amount that provides you with financial security, preventing you from delaying your resignation in pursuit of new goals, performance evaluations, or promotions, leading to prolonged dissatisfaction in your current role.

Track your financial accounts for at least one or two years, and do the following calculations:

• Expenses: Assess your cost of living.
• Financial Safety Net: The amount available in your bank account.
• Financial Performance Rate: How long you can support yourself after resigning.

3. Maintain Professional Relationships

While it may not be essential to maintain a positive relationship with your former manager—particularly if you are leaving due to a toxic work environment—professional relationships encompass a broader network. This includes colleagues, clients, stakeholders, and any organizations or agencies with which you have previously interacted.

Before submitting your resignation, ensure you exchange contact information with key individuals in your network and commit to periodic check-ins. These connections will be invaluable as you seek clients during the initial stages of your consulting business.

Your former employer could likely become one of your first clients, as they may recognize your expertise and value after your departure. They may require your specialized knowledge, providing an opportunity for you to offer your services at a competitive rate to address the gap left by your resignation.

Here are 4 steps to build a professional network:

• Build a professional network on LinkedIn.
• Create and regularly update a list of contacts you can reach out to as needed.
• Maintain connections with individuals you meet through work or conferences.
• Reach out via email or schedule meetings with those you haven't spoken to in some time.

Conclusion

There is no universally perfect time or set of circumstances for resigning from a job. However, the steps outlined in this article can facilitate a smoother transition into independent work. By committing to understanding your motives, conducting essential financial assessments, and building a robust professional network, you will enhance your chances of success in the freelance arena.