Anyone who starts a small, side business probably wonders when they should quit their day job. They might even wonder when they’ll know when to quit a day job. We’ll answer that question by taking a look at Anthony Zambai of Bullet Bouquets, who had to answer just that question as his business took off.
Anthony Zambai created a business, Bullet Bouquets, that would propel him to quit his day job and replace his full time income as an engineer.
Read our full story of how Zambai used Reddit to launch his business by clicking right here.
One of the biggest decisions Zambai had to make was whether to quit his day job, and if so, when.
How Does a Business Owner Know When to Quit a Day Job?
- Business income must provide 50% of full time income.
- Business income must provide 75% of full time income.
- Business income must fully replace full time income.
- Business income must fully replace full time income for three months.
- Business income must fully replace full time income for six months.
- Business income must fully replace full time income for one year.
Anthony Zambai of Bullet Bouquets set up a few metrics to help him decide when to quit his day job. In the end, his business grew so rapidly he knew he would have to make a choice. If he stuck by those metrics, his business would crash from inattention. So he took a calculated risk.
Metric #1: Six Months of Decent Income
The first metric Zambai set for his business was, if he could earn six months of steady, decent income, he could quit his day job.
“My wife and I had stayed up late talking about some milestones or things that should be accomplished before I decided to quit my day job. We decided I could wait until I achieved six months of parity. So if my business income was at or above my engineering income for six months then it would be totally safe for me to quit. In that case I could quit without any drop in our standard of living. But that’s probably not the best time to do it. There’s probably a more efficient point at which you make the most amount of money and you put yourself at a more manageable amount of risk by quitting. So you could quit when you’ve sustained a year of strong sales, or six months or three months or whatever. So you set that metric.”
Metric #2: 50% of Regular Income During Down Times
The second metric Zambai set was that he would have to earn at least half of his regular income even during down times before he could quit his business.
“For me, Mother’s Day, Father’s Day, Valentine’s Day, Christmas, those are the big seasons, so if I could weather a storm in between all of those, keeping my income up, then I would feel pretty comfortable that I would be able to quit the day job without a whole lot of risk. If I could maintain sales through a dry spell like that, then what am I doing at my day job? I should go ahead and get out. So if you can prove that sort of thing then go ahead and get out, and get out safely.”
Zambai’s metric for down times was that he would have to continue to make 50% of his regular income during those periods.
Metric #3: Make Sure the Business Can Diversify
Another metric business owners can use to know when to quit a day job is diversification. A business that gets income from only one product or only one outlet, such as online sales, has limitations that can lead to a stoppage of income flow.
Zambai wanted to make sure he could grow his product line and grow his sales outlets beyond the internet alone. The biggest reason for Zambai to diversify his business was that his initial sales came from viral internet success. Eventually he knew that viral interest would go away. He therefore needed some kind of assurance sales would continue once the viral phase had ended.
“I did feel like my business was kind of trendy,” says Zambai, “and if it’s a fad and people just lose interest in it after two years or one year, then indeed I’d better know if it’s going to diversify on its own or if there are some other opportunities out there. You want to feel those opportunities out to a certain extent and verify that there’s a little bit of success in those opportunities before you put time and effort into them.”
One way Zambai realized his business could diversify was through brick and mortar stores.
“I wanted to start selling wholesale to dealerships. I knew customers bought my products from my website just fine, but I wanted to make sure customers would buy them from a brick and mortar store. And also, was it an easy sell for me to pick up new dealerships? That was something I wanted to verify before I quit my day job.”
Zambai also diversified his product line, eventually selling not just Bullet Bouquets in flowerpots but also tie tacks, cufflinks, hair clips, laser-etched bouquets and other items.
When to Ignore the Metrics
Although Zambai went to great pains to set up a list of metrics that would allow him to know the right time to quit his day job, he ended up ignoring all of them because he realized he had to make a choice. He could either stick to his metrics or crash his booming business very early on.
“What’s kind of ironic is, I talk about all these metrics, but I quit my job after six weeks,” Zambai says. “I put in my two week notice four weeks after I started my business. So I talk about all these metrics, but in the end, I didn’t really use any of them. I was absolutely swamped. I had two employees working for me the very first week the business opened. You can be scientific about it, but in my case that really wasn’t it. It was, your life is totally insane right now. In order to get some sanity back and also to take advantage of a lot of these opportunities you see in front of you, new product ideas, marketing ideas and so on, you have to get that eight hours a day back.”
Bullet Bouquets got so big, so fast that Zambai realized if he didn’t quit his day job, he would lose control of it.