Have you ever fantasized about walking into your boss’s office and telling her to take this job and shove it?  In a recent segment on CNBC’s “the Big Idea with Donny Deutch,” Suze Orman debated Donny about the pros and cons of throwing caution to the wind and “realizing your dreams” by starting your own business. This was one of Donny’s more interesting segments in recent memory.  Usually, he has guests on the show that are ra, ra, ra, I started the business with $40 in the bank, maxed out my credit cards, and lived on wheat germ for three years before selling out to Google for a jillion dollars.  Suze had a bit more practical advice for all us budding entrepreneurs.  I won’t go into it in detail here, but suffice it to say that her bottom line was make a plan and save a bunch of money before you take the proverbial leap off the cliff.  What should you do before quitting your day job to start your own piece of utopia?  Here are my two cents. 

1. While you are still employed, put 12 months of expenses in cold hard cash away in in a boring savings account (no high-flying stocks please).  Consider stashing the cash in a savings account at online banks like INGdirect, which is offering a decent interest rate of 3%.  To save that much case, you probably will have to seriously scale back your standard of living now.  But trust me, you will be grateful for it during those cash-sucking first months, or maybe even years, as you get your business off the ground.  Businesses always need more capital than your best guesstimate.
2. Pay off all of your discretionary debt, before putting in your notice.  This includes credit cards, auto loans, home equity lines of credit, student loans, etc.  You want to wipe out as much debt as possible before you go out on your own because those loans amount to anchors around your neck when you no longer have the steady paycheck to tap.
3. Secure some source of capital, like a home equity line of credit that you can access to fund your business when customers are slow to pay.
4. Have a business plan detailing how you plan to generate revenue for the business and how you are going to make a profit.
5. Live like a pauper in the months before you plan to quit your job.  Even if you have sufficient cash tucked away, you want to get used to the fact that starting a business requires considerable sacrifice to ensure long-term success.

Speaking of living like a pauper, I do feel a little guilt-ridden about splurging this weekend on some books at Barnes and Noble and clothes from Nordstrom Rack (still cheaper than the mother lode).  Oh no!!! False alarm.  I decided that it was OK to treat myself because we have been living quite frugally in recent months and have made significant headway towards our financial goals.  Obviously, you and I are only human, and just like dieting, there are days where we will fall off the wagon.  But, although I struggle sometimes, I’ve found that, over time, it has become easier to defer instant gratification, i.e., buying more stuff.

Here’s a neat trick that works most of the time.  Whenever you feel tempted to spend some serious cash on something like the Wii Fit, recall in your head the day that your boss chewed you out for forgetting to staple your report on the top left side of the page.  Practice makes (almost) perfect.  Yey!