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After some time, your business will begin to generate income for you. As you start generating more income, you will begin to turn your mind to deciding at what point it becomes uneconomic to continue your day job. This is because, at a certain point, your business will reach 'critical mass', level at which it becomes uneconomic to continue your day job because return you get for your time and effort is greater from your home business. This is because your salary doesn't vary according to effort and results (at least not directly), but your home business income does.
As a general rule, you will need to wait until your business is consistently generating same level of income on a proportionate basis to time you spend on it before you start seriously considering quitting your day job. Once you get to that point, test elasticity of your income. If you double number of hours a week you spend on your business does your income increase commensurately? If so, your income is elastic. If you double your time input but your income only increases by half, then your income is somewhat inelastic. You need to calculate how much time and effort you need to expend to generate in form of business income what you are currently generating from your paid job. If this is 'reasonable' by your standards then you can begin to seriously consider quitting your day job. If not, you need to find ways to leverage your business so you can generate more income from a more acceptable commitment of time and effort.
Only when you have satisfied yourself that you can generate from your business sufficient income on a CONTINUOUS and REGULAR basis, should you consider quitting your day job.
That's only threshhold question, though. Behind it are a whole host of other issues to think about before making break. For example, how will you fund time off? As a self-employed person you can forget about paid vacations.
Even if this doesn't concern you financially, consider what will happen to your business if you're not around for two weeks. Also, as a corporate employee, you probably enjoyed comprehensive medical benefits at your employer's expense. Again, these are gone. Be sure you take out your own insurance and think about income protection insurance as well. If you contract an illness that puts you out of action for a month, again, what happens to your business? You will need to take out normal business insurances as well such as public risk. Consider here whether clients will be visiting you at home. If so, ensure your insurances cover injuries to business clients. This is something that probably won't be covered under your general homeowner's policy.
Build up a network of contacts before you quit your day job. Not only will they be an important asset to your business in longer term, they can also help alleviate feelings of isolation that you can expect to experience early in your home-based career. Something else to do before you quit your day job is to prepare yourself mentally for realities of working from home such as need for self- discipline, feelings of isolation, your tendency to procrastinate to name a few. Educate yourself by reading about what running a home business is REALLY like to minimize culture shock when it happens to you.
Prepare your family too for changes that they can expect. They need to understand that although you are at home, you are still working and they need to respect your limits during worktime. Of course, set up your home office as if it were a corporate office. Make sure you have two telephone lines and dedicate one to your business telephone and other to your fax/internet connection.
And one final piece of advice, when you first start working from home, establish a "going to work" routine, at least to start. This will get you into routine of working even though you are not leaving house and you won't develop bad habits (such as procrastination or lack of direction) that will be difficult to break later on.
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Elena Fawkner is editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions for work-from-home entrepreneur. http://www.ahbbo.com
Elena Fawkner is editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions for the work-from-home entrepreneur. http://www.ahbbo.com