I’ve been running City Girl Savings since 2014. We officially launched on 1/1/2015, but there was a lot of work to be done prior to launching.
While I started the business nearly 8 years ago, I only became full-time in May of 2021. That’s right: it took me 6 years to finally take my business full-time.
To be honest, though, when I started City Girl Savings, I hadn’t thought about taking it full-time…at least right away. I’ll share more about that later!
If you’re thinking about quitting your job and taking your business full-time, keep reading. I’m sharing what you should save before becoming a full-time business owner.
My Full-Time Business Owner Journey
As I mentioned above, when I first launched City Girl Savings, I hadn’t thought about taking it full-time. I was making money working from home with another company, so I just wanted to focus on growing City Girl Savings.
I started the company with a loan from my own personal savings. I was constantly feeding money into the business to cover expenses.
I was making good money elsewhere, so it wasn’t straining to constantly put money into the business. I eventually got a business credit card and maxed it out with social media marketing.
I was spending so much money on paid traffic and not seeing a financial return. I didn’t start making consistent money in my business until year 3, and even then, I was still in the red.
I was spending more than I had coming in.
Finally, in year 4, I made the decision that I wanted to take City Girl Savings full-time. I was nowhere near where I wanted to be financially to do that, though.
From a personal perspective, I had some debts that I paid off and some investments I was focused on. My emergency fund wasn’t where it needed to be. I also hadn’t hit a net profit in my business.
When I made the decision to take City Girl Savings full-time, I completely reevaluated my situation. My boyfriend and I had purchased our condo, so my monthly expenses had gone up.
I needed to have a safe number in savings before I could even dream of quitting my job.
My safe number ended up being 15-months worth of expenses. I’m not saying that’s the amount you need to have saved before taking your business full-time.
It’s the number I felt comfortable with based on my current situation – personal and business.
It took nearly 3 years to hit this number and make sure everything else was tightened up (no debt, business generating what it needed, etc.), but I eventually got there.
My last day in corporate was 5/13/2021 and the next day my boyfriend and I went to Hawaii to celebrate. I’m happier than I’ve ever been, but it’s been a journey!
There’s something different about knowing you no longer have a steady paycheck.
I certainly prefer the stability, but the time-freedom that comes with running your own business and working on what you want to work on is worth the instability of not having a steady pay cycle!
What You Should Save Before Becoming a Full-Time Business Owner
Now that you’ve heard my story, let’s talk about what you should save before becoming a full-time business owner!
Let’s start with your monthly business expenses. How much does your business spending monthly to stay operational?
You’ll want to have 3 months’ worth of this number saved in your business bank account. That way, when you do go full-time, you won’t be worried about your business having enough money to cover what it needs to.
Once your business savings is taken care of, it’s time to think about your personal situation. You should be budgeting your money on a regular basis. In doing so, you’ll be able to determine how much you need to make to survive.
What are your monthly bills and expenses? I recommend having six months’ worth of this number saved in your personal savings account.
Next, think about your personal goals and wants. Are there things you’re saving for currently that you’d want to continue saving for when running your business full-time?
What about your normal life? Do you have certain non-necessary expenses you wouldn’t want to get rid of?
The point is to think about what you have going to savings and fun monthly and decide if you want that to continue when running your business full-time. If so, have three to six months’ worth of this number saved as well.
All Things Point to Business Revenue
Once you have your business and personal expenses saved, it’s time to focus on getting your business revenue to a place that covers your personal and business expenses each month.
If your business expenses are $2000 a month and your personal expenses are $4000 a month, your goal is to get your business to make $6000 a month.
If you can do that before quitting your job, you should never have to touch all the savings you have before running your business full-time.
Now, things never go 100% according to plan, but if you know your business can make what it needs to (because it has before), then you should feel confident that it can do it again.
Before wrapping up, let me just say that this article is solely based on my own opinion and experiences.
I took a more conservative approach before leaving my corporate job, and that’s because I have a certain lifestyle I like to live. I also have other people who depend on me to do my part, and I never want to feel like I can’t cover what I need to.
I gave myself 15 months’ worth of time to find other revenue, if my business couldn’t generate what it needs to. That’s a comforting feeling.
You don’t have to do it how I did it, but the more security you give yourself, the better you feel. Not to mention, you don’t want your business functioning from a scarcity perspective!
Are you thinking of taking your business full-time? How much do you want to have saved? If you’re a full-time business owner, what was your journey to entrepreneurship like? Post a comment below to share!