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How to quit your job while you’re flat broke (even when your wife is scared shitless)

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(Today’s post is from my friend Chris Johnson and is quite fitting as we continue discussing taking big risks and doing the scary stuff.)

Waiting for a set amount of money before you quit your day job is as smart as waiting to beat cancer before you start chemo. Many people dream of starting a business of their own, but there is always some excuse (usually financial) keeping them from starting. The financial excuse is insignificant. This post shows how I had more security, day one, when I started my business.

I had less than Naomi Dunford’s famous “borrowed $400” when I started. I am not wired to “gradually quit” like others are. I had to leave even though I had:

  • $120k-plus in IRS debt (those “tax relief” 800-numbers are a scam).
  • Garnished wages from said debt.
  • Levied bank accounts that were overdrawn because of said debt.
  • Student loans that went sideways.
  • A post-partum, stressed-out wife looking at a bleak future, with fights each day.
  • A 3-year old and a 2-month old.

The problems in the above bullet points were the symptoms of having a day job. Not the symptoms of a failed life, but of a failed premise.

I was, for a long time, a (low) six-figure whore– one of those contemptible, arrogant schmucks who acted too good for the job he had. Because I knew that once I saved a couple bucks, I’d blow this joint and become an entrepreneur. I was delusional, living off unearned laurels.

The instant the baby was born, I left the nest. The road was bumpy. It was also free, exhilarating. I eliminated some of the problems above (2, 3, and 5) early, and I took care of 1 and 4 within a few months. My marriage got better and my life improved. Yours could, too.

Step #1: Have a cash register – be ready to take payments. I’m told this is horrific outside of the US, so get started immediately. The first thing to do is to make it as easy as possible for others to pay you. No hoops. Get a merchant account. I use Paypal‘s; it’s terrible, but they pretty much all stink. If you can’t get one, try and make arrangements with someone to take credit cards.

This will cost you $30-60 a month, but you have to do it. Sales tip: never mention a preferred method of payment. Never mention fees. Your preferred method of payment should be a credit card because it’s “now”. You should be able to say to customers, “Do you want to go ahead and give me your credit card so I can get this done for you?” Client mood changes, risk, and more are gone with a credit card. Don’t make it remotely difficult to pay you. I’d estimate that I lost $5,000 early on by not wanting to pay $60 a month.

Don’t let anyone–anyone–talk you out of a virtual terminal. Processing a credit card over the phone like a pro gives you a charge in more ways than one. And never, ever, ever let fees cross your mind. That’s scarcity thinking, and the fees always take care of themselves. Charge enough to pay the fees and be done with it.

Step #2: Have a product or service to sell – and be flexible. You might have a dream of creating a series of info-products for people; you might want to create a turnkey website service. Let your contacts and the market know what you offer. And when a job is outside of your wheelhouse but pays tomorrow, do the job. This isn’t an invitation to take bad business or allow crazy assholes to dominate you. This is business reality.

About a year ago, Johnny B. Truant subcontracted some work from me even though it wasn’t his long term “thing”. I got the benefit of a stellar and conscientious dude kicking ass on my stuff, he got money before he was making his vaunted five figures a month. Full of win all around. Be flexible.

Step 3: Know your due dates and burn rates.
In the beginning, you measure things in days: How many days ’til it hits the fan. This is the true measure of your wealth. How much you have on hand is less important than “what’s due” and “what happens.” Having $1500 in the bank and one day before it goes to hell, is worse than having $100 in the bank, but 40 days. Measure in days.

Know how much your non-negotiable personals (housing/heat/food) are, and hit them first. First. Before you upgrade your business. Before you pay your vendors. Be ruthless about building a cushion of days. You’ll go insane without it. Your wife won’t put out.

Stay a month ahead of the spider – always. Live in reality. When (and it’s a when at this point, not an if, right?) you quit your job, do it at the beginning or end of the month with the next month’s bills paid. Do it next month. Seriously. If you’re reading this and stuck whoring yourself out, you’re going to go crazy.

Step 4: Renegotiate everything you spend:
You now know your burn rate, I hope. Now lower it. Cut to the bone, and then make the bone itself anxious. Your $70 cable bill? Gone. Your Starbucks habit? Cut it. Go on an ultra-tight but still realistic budget. Do this, and you’ll be adding those things back in months. Don’t do this, and your business will fail because you had too many mochas.

How far did we go? We cut our family dog out of the budget. That’s what it takes. Our dog averaged $80 a month for food and vet bills. I love the dog, but love has limits. A nice family we knew got to love her. Negotiate EVERYTHING, because it takes intensity to escape.

We trimmed $1900 from our monthly personals, and that allowed me to make less at first–while still having some money to attack our debts.

Step 5: Sell every day. I had to find customers right away. I only had 15 days to get $1,000 when I started. I started on search.twitter.com and did what I said I did in this TwitTip post. Finding people that are bitching about WordPress is an easy way to get business.

Now: When I say sell, I mean find people who need what you have. Locate. Hunt. If there’s someone who needs what you do, ask. Use keywords like “recommend+WordPress” in social media searches.

Give first. Nobody ever buys when you have the funk of failure about you. So be kind and generous. They buy faster from that. Make as many contacts as you can with the “how can I help” ethos. Make it painless and drama-free to complete the business arrangements (see point #1).

Remember: This won’t be the final form of your business. This is what you do when you ante up and quit. This starts the euphoria and dementia cycle that we all talk about. There’s something sacred about being your own person, and doing the things you want to do.

Do you really want to start a business? If it’s something that you’ve always longed for, take the leap. Print this out, share it with your spouse. I was never any less secure than when I was broke AND working for another person. Security increases when you control your destiny.

I’ve paid my debt down to under $30,000. I’m current on my taxes. I don’t overdraw my account. I moved across the country. I have great clients and a life that’s more interesting. It’s easier to love my family because I’m so happy. There are no big fights anymore with my wife, and I know, God willing, where I’m going.

I still make mistakes, litter the Internet with anti-marketing, and I probably will in three years. But I’m free, and if I’m going down, it’s my fault. I drive the car, I run my show, and you can too (and get more security)–day one–by quitting your job. Quit. You’ll thank me soon.

When not quitting jobs, Genuine Chris Johnson specializes in small business websites at FlatRateBiz.com

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