Before You Quit Your 9-5

What to Have in Place Before You Leap Into Consulting

A friend texted me this afternoon with a question that felt so simple at first:
“Where do you get your insurance from?”

She’s considering leaving her full-time job to become a consultant, and she’s the sole income earner in her household. Like a lot of people in that position, things like dental and prescription coverage for her kids are non-negotiable. So before she could even start dreaming about independence, she needed a real plan…and that meant understanding the benefits she’d be giving up (or having to pay for herself).

I pointed her to the group benefits plan available through our local Chamber of Commerce, which is part of a larger network of Chambers across the country. It offers surprisingly competitive rates for excellent coverage and is one of the best-kept secrets for self-employed folks in Canada.

But her question cracked open a little wormhole in my mind. It reminded me that if you’re lucky enough to make a planned departure from your job into consulting, there are a few things you absolutely want to line up before you hand in your notice.

FYI my own leap was anything but planned. I lost my senior executive role suddenly, received a generous severance package, and found myself staring at two doors: go back into another corporate role or finally try this thing I’d always wondered about - small business ownership. That story is for another day, but obvious spoiler: I took the second door.

If you’re planning your exit, and especially if you have time to think and prepare, here’s what I’d recommend you line up before you leave your job.

1. Money (a.k.a. Cash Flow)

This is the big one. If you’re leaving a salaried job without a severance or a guaranteed project in hand, you’re going to need to float yourself for a while.

Consulting work doesn’t always come in fast. Sometimes a contract falls into place in a couple of days or weeks. But more often, it takes months of relationship-building, scoping conversations, revisions, and approvals before a final contract is in place. And that’s for an organization that doesn’t have to run through a ton of procurement processes and legal hoops.

In your first year especially, cash flow is probably going to feel tight, even if you're doing everything right. Why? Because you're new, you're learning, and you're going to make mistakes. That’s part of it.

The most common mistake new consultants make is low-balling your scope and fees. Until you’ve gone through a couple of projects, you’re just guessing how many meetings you’ll need to have with the client, how long it will take to prepare material for them, and how much you’ll need to stay on top of things so that they give you the input you need so you can deliver on the project. Even now, in my fourth year of doing this exclusively, I don’t always get it right. But now I have processes and templates in place that mean getting it wrong isn’t a total financial disaster.

One of other my early mistakes was agreeing to terrible payment terms. In one of my first projects, I didn’t even think to negotiate the payment terms. The project was supposed to be over in less than 4 weeks, and so full payment for a $15K project that wasn’t due until after I had submitted the final deliverables didn’t seem like it was worth pushing back on. Unfortunately, that 4 week project was paused and then extended to 16 weeks because of a leadership change in the client’s organization. In the meantime, I had zero income for 4 months. Please don’t do that.

It is absolutely standard practice to request some upfront payment as part of your contract discussions; in fact, to make it easy, I put my preferred terms right into my proposals. They can be tied to project phases, deliverables, or simply spaced out over a specific timeline. But I always ensure I’m getting paid throughout, and not just at the end. Especially these days, when my projects are longer and I’m paying more talented sub-contractors to help me with my projects - if I’m not structuring the invoicing appropriately, I either pay my sub-contractors out of pocket or make them wait for the client to pay me. Neither of those feel great - especially if they include extra costs like flights and hotel rooms.

Also, it’s really important to remember that when you put net 30 terms on your invoice (which is pretty standard in corporate environments), that means your client has 30 days after receiving your invoice to pay it. If they pay by cheque (and yes, many still do in that charming old-school way), tack on another 5–7 days for the cheque to clear your bank. If you’re not paying attention, you can easily find yourself floating thousands of dollars in work while waiting to get paid. And unfortunately your credit card company doesn’t care that a client owes you a big fat cheque.

So, if you’re planning your departure from your 9-5, make sure you have savings to cover 3–6 months of expenses. And ideally, try to secure at least one contract that can start within a couple of weeks of your last day at work. Having that first income source lined up will buy you the time you need to build out other aspects of your business.

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2. Insurance (Health, Life, and Business)

This is where my friend’s question started, and it’s a crucial one - especially if you have people depending on you.

Health benefits: If you or your family rely on prescription coverage, dental, vision, or mental health benefits, make sure you have a plan in place before you lose your current coverage. The Chamber of Commerce plans I mentioned earlier are solid and flexible. Shop around, compare options, and factor the monthly premium into your budget.

Life insurance: The same goes for making sure that if something happened to you, your family would be taken care of. Your employer’s life insurance probably ceases on the last day of your employment, so make sure you have this piece lined sooner rather than later.

Business insurance: This is the one people forget. Once you’re on your own, you’ll be responsible for protecting your business, and many contracts will require that you carry liability insurance. For the kind of work I do, $2 million in general liability is pretty standard.

I also carry errors and omissions (E&O) insurance—and if you’re in a knowledge-based or advisory profession, you’ll probably need it too. This covers you if a client believes you made a mistake (even unintentionally) that led to a bad outcome. No one wants to think about being sued, but you’ll sleep better knowing you're covered.

It’s a small monthly investment for a massive amount of peace of mind—and it also keeps you eligible for higher-value contracts that require proof of coverage.

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3. Your Mortgage (Yes, Really)

Here’s one I learned the hard way…and it’s a detail that can seriously mess with your long-term financial plans if you don’t time it right.

If you’re in a sole-income household or your income is part of your mortgage qualification, talk to your broker before you quit. If your mortgage is up for renewal in the next year or two, it may be worth locking in a new term while you still have a T4 job and biweekly pay stubs.

Why? Because self-employment changes the game. Once you’re on your own, lenders will want to see two years of self-employment income before they’ll treat your revenue as stable. If you leave your job and then try to renew six months later, you won’t have the documentation they want, and that can limit your options or lead to higher rates.

It’s not that consulting income isn’t legitimate (I make far more now than I did in my previous job) it’s just that lenders want predictability, and your first year of business rarely looks predictable on paper.

Final Thoughts

If you’re planning to leave your job and start consulting, I’m cheering for you. In fact, that’s exactly why I started writing this blog; I’d love to help you NOT make the mistakes I made in my first few years of business.

There’s so much joy and freedom in running your own tiny empire, but it’s a transition that requires skills, heart, and planning.

Set yourself up for success by taking care of these three things first:

• Get your money situation stable.

• Line up your insurance, both personal and professional.

• And don’t forget about your mortgage; timing matters.

Once your foundation is solid, you can start building your new business with a clear head and a strong heart.