Before you quit: what to have in place

Most people go out on their own the same way — they get angry on a Tuesday, quit on a Wednesday, and figure the rest out from the truck.

Some of them do fine. The ones who do fine almost always had two things the angry version does not: money in the bank and work already lined up. Everything else can be sorted out as you go.

This is about the version where you decide the date instead of the date deciding you.

The honest question first

Going out on your own is not a promotion from being a good tradesman. It is a change of job.

You are still going to do the work — probably more of it, and often at night. But you are also now doing quoting, invoicing, chasing money, buying material, answering the phone while you are under a sink, and finding the next job while you are still on this one.

People who love the craft and hate the admin can absolutely make this work. But it is worth knowing before you leave that roughly a third of your week is about to become something other than the thing you are good at. The people who struggle are usually not bad at the trade. They are people who assumed the trade was the job.

The three numbers

Before a date goes on the calendar, work these out. They take an evening.

One: your floor. What your household actually costs for a month — housing, truck, food, insurance, the kids, everything. Not the lean version you could survive on for two weeks. The real one. Say it comes to $6,000 a month.

Two: your runway. How many months of that you have saved, separate from the business. The number people land on when they are being honest with themselves is usually three to six months. Three is tight. Six lets you turn down a bad job, which is worth more than it sounds.

At $6,000 a month, six months is $36,000 sitting still. That number stops a lot of people. It should. You can start with less. But then every decision in your first year gets made under pressure, and pressure is what makes people take the job they should have walked away from.

Three: your startup cost. Not the dream truck. What you cannot begin without. For most trades: a vehicle you own outright or can afford the payment on, your own tools rather than the shop's, general liability insurance, licensing and registration, and enough float to buy material for the first two or three jobs before anybody pays you. For a lot of solo trades that lands somewhere between $8,000 and $25,000 depending on the vehicle.

Add runway and startup together. That is the real number, and it is almost always bigger than the one in people's heads.

Line up work before you leave, carefully

The single best predictor of a good first ninety days is having work already promised.

The awkward part is that the obvious source — your current employer's customers — is the one place you must be careful. If you signed something with a non-solicitation clause in it, read it before you do anything. If you did not, there is still a difference between customers who find you and customers you actively poach on your way out the door, and that difference will follow you around a small town for years.

Safer ground, and usually more productive:

• Other trades you already work alongside. The electrician who is tired of unreliable plumbers is worth more than any advertising you could buy. These people already know whether you are any good.
• Builders and GCs who know your work from job sites, not from your old boss's contract.
• Suppliers. The counter staff at your supply house know who's looking for who. They talk to everybody all day.
• People who have asked you privately. Most tradesmen have been asked to do side work. Those are customers waiting.

You are looking for a handful of specific people who will say yes, call me when you're out. Not a vague sense that there is demand.

What to have before day one

Not everything. These.

A way to get paid. A business account, separate from personal, from the first dollar. Mixing them is the single most expensive habit in small business. Not because it's wrong. Because come tax time nobody can tell what was what, and you'll either pay somebody to untangle it or pay too much tax because you can't prove what you spent.

Insurance that matches the work you will actually take. General liability at the level your customers and any GC will require. Find out what number the builders in your area ask for before you buy the cheapest policy.

Your licensing and registration in order. Whatever your trade and state require, in your name, not your old employer's.

A way to quote that does not take an hour. One template, with your inclusions and exclusions written once. You will use it on day two.

An accountant, found before you need one. Not at tax time. Now, so that somebody who understands your state and your trade can tell you how to set things up and what to keep. This is the conversation to have with a professional rather than a forum — the right structure depends on your situation, and guessing at it is expensive.

The mistakes that repeat

Pricing off your old wage. You were paid $32 an hour, so $60 feels generous. It is not — it is below cost once you carry a truck, insurance and a slow month. Do the build-up properly before you quote anything.

Taking every job in month one. The bad customer who calls first will eat the time you needed for the three good ones who called in week three.

Buying the truck first. The vehicle is the most visible part of being in business and one of the least urgent. It is very easy to spend your runway on a wrap and a rack.

No deposits, because you are grateful for the work. This is how new businesses end up financing customers on a credit card in month two.

What to do this month

1. Work out your floor — one honest month of household costs.
2. Multiply by six. That is the runway target. Decide now whether you are prepared to start at less, and with your eyes open.
3. List your startup costs — vehicle, tools, insurance, licensing, material float. Total it.
4. Have five specific conversations with trades, builders or suppliers who know your work, and find out who would actually use you.
5. Open the business account and talk to an accountant before you need either.
6. Then pick the date — and pick it when the numbers say so, not when a bad Tuesday says so.

The goal is not to remove the risk. It's to choose the risk with a calculator on a calm evening, instead of backing into it.