This article will explain how preparing and giving yourself a plan B in case of layoff, can dramatically increase your chances of bootstrapping success in your small business. If you still have a day job as you are trying to build your entrepreneurial empire, this article is for you.
We live in such an uncertain job market now that no one is safe in any position at any job. It is a sad fact, but it is a fact. Even the government is cutting back and laying people off. Since you know this in advance, it is critical to live as though you know your date of termination, even if it hasn’t happened.
This sounds far-fetched, but most people just run from emergency to emergency without planning for them to come. Pick a date of your virtual “lay-off.” Give yourself at least 6 months. Now is the time to scale back and sock away some extra living expenses.
How can you reduce your day-to-day consumption so that your dollar will go as far as possible? You should try and save 3-6 months of living expenses in an emergency account. This may not be possible, but try to save at least 2 months in the 6 month window you have given yourself. Then, when you don’t actually get laid off in 6 months, you will able to keep on saving.
Now that you have established a more frugal lifestyle situation, you need to also budget part of your income for bootstrapping your business. The money has to come from somewhere, since you do not have any sales yet. It will have to come from your day job. Allocate a part of your monthly income beyond your rainy day fund, to building your business.
If there are start-up costs, such as purchasing a computer, web fees, software, etc, then you will figure out that number and budget towards it.
Now here comes the exciting part. You are going to pick your retirement date from your job. That date is going to be the same day that you picked for being laid-off, since you don’t ever want another day job right? Divide your fees by the number of months you gave yourself, and when that date hits, you will be able to quit with a monthly cushion to get you started before you make a profit.
It is up to you whether you quit on that date or not, but if you plan and put yourself in a position ti where you “allow” yourself to be laid off, then your business won’t have such a rocky time getting off the ground.