Hug the Boss or Risk the Loss?

July 25, 2007 4:05 PM

Should I quit my full-time job to run my side business?

I have a full-time job. It pays the bills. In addition, I have a side business that's more art-related. I never expected it to make a huge profit. I started it to keep my sanity while I made a profit at my boring desk job.

Suddenly, the side business is taking off. It's going beyond any of my expectations. Orders are coming in from everywhere, and we may even be featured in the newspaper in the coming weeks.

It's starting to take up time at my desk job, too, and I can sense the boss is getting frustrated about it. I don't have a huge amount of savings, so the side business would have to stay reliably profitable from month to month. No guarantees that it will. But I feel like I have to take the chance and go for it, rather than wonder what would happen if only I had the guts to make the move.

What would you do?

posted by anonymous to work & money (14 comments total)

Sit down and cost things out. Know exactly how much I need to live on and to cover the expenses of the business. Write a business plan that set goals for the next 3, 6, 12 months, and have a backup plan for what to do if I fell short of goal. Consider my financial responsibilities (house? car note? debt payments? spouse? children?) and factor in any risk to them. Look into the cost of self-funded health insurance and include that in my operating budget. Talk to an accountant. Talk to someone from SCORE. Talk personally to anyone you may know who's started a business and successfully transitioned to full time - or didn't, and will tell you why it failed.

But certainly, take steps to move forward if this is such a strong success. You have a job now and income on the side; can you hire a friend part-time to help you through the present crunch and buy you some time to look at the business side of things?

And congratulations!
posted by Miko at 4:11 PM on July 25, 2007

What about finding someone to take care of business matters (bookkeeping, customer service, packing orders, etc.) for a few bucks an hour to take some of the load off of you, and continue to keep the security of your full time job until you've built up some savings?

Ex: I'm a computer programmer. I don't do bookeeping and filing and admin stuff that well, so I employ a secretary from my school on a 1099 basis for $12/hr. She comes over, files all of my paperwork (business AND personal), figures out which bills I need to pay, invoices my clients, makes sure I'm caught up with everything, takes my dry cleaning, and leaves. The next weekend, she shows up again, drops off the previous dry cleaning, so on so forth...

That way you can do the creative parts of your job and farm out the rest.
posted by SpecialK at 4:25 PM on July 25, 2007 [1 favorite]

What would you do?

Me? I'd do it. But then I have done it enough times to not even think about it. Never regretted it.

Should you? Answer this question:

If one of them (your day job or your side project) disappeared without a trace tomorrow, which would you regret losing more? That's the one you should stick with.
posted by Ookseer at 4:45 PM on July 25, 2007

Could you shift into being part-time? Or leave but more or less stay on as a part-time consultant? For the month-to-month stability stuff, having a few sources of income (including consulting along the lines of what you're doing now) might help.
posted by salvia at 5:11 PM on July 25, 2007

Go for it. Most small businesses start out in enormous debt. Just having a profit from the get-go puts you way ahead of the game. Unless there's something to your story I'm not considering, if worse comes to worst and your business doesn't pan out then you'll face a couple lean and unpleasant months as you find another job. And if it does take off, you'll be self-employed doing something you love, which is an incomparable feeling.
posted by L. Fitzgerald Sjoberg at 5:19 PM on July 25, 2007

I think you should go for it. Alternatively, see if you can work out an arrangement with your boss at work, where you work half-time for a while. Be up-front that you want to pursue this side business and eventually turn it in to a full-time thing. If you're valuable at your office job, your boss might be able to work with you (although obviously, some jobs don't work part-time and your employer may not want to be flexible with you when your stated goal is getting the hell out of there ;-)

Best of luck!
posted by Happydaz at 5:31 PM on July 25, 2007

What would I do? Either scale back to part-time at my boring desk job, or find a different part-time boring job that pays (some of) the bills. Hopefully your boss will go for it if he/she likes you and wants to keep you, but if not, I'm sure you can find other options (maybe even some where you'll have downtime on-the-job to keep working on stuff for for your business).

Going from a full-time job to only counting on unpredictable business income would be too much of a leap for me (at least without a hefty savings cushion), but your risk tolerance may vary.

Regardless, it sounds like "stay at my boring job full-time, work on my business from work and get the boss frustrated, and limit what I can do with my business because I don't have enough hours in the day" isn't going to work for you. If you let that drag on, not only will you feel unhappy and unsatisfied, but you'll lose your boss's goodwill to be accomodating if you change your mind, and you may compromise the success of your business. You need to change something.
posted by EmilyClimbs at 5:33 PM on July 25, 2007

Oh, and ... Don't forget health insurance, and don't forget calculating legal fees in to structure your business entity properly and also an accountant to get your tax picture set up well.
posted by SpecialK at 5:44 PM on July 25, 2007

I'd say go for it on one condition. Is your current full-time job the sort of job that is easy to come by and constantly advertised for? If so, it should be fairly easy to jump back into the working world in a few months if the business doesn't meet your financial needs. But if it's a position that you've slowly worked your way up to, in an obscure field, then I'd be more leery about leaving it until the business has taken off more.
posted by saffry at 5:46 PM on July 25, 2007

If you have achieved this much while still working full time at another job, how much more successful do you think your side business would be if you were to work on it full time?

If you think it would be workable, is it sustainable?
posted by bh at 6:08 PM on July 25, 2007

some good answers here, but i can' t stress enough the importance of some savings both for your personal well being and for the stability of your business

if you go with this and there are problems, it's obvious on both counts why it would be essential to having some savings

So ride as much of the biz as you can right now and start making a savings, pay someone part time, and do only as much as you can, turn the rest away politely.

one of the biggest problems in business is growing too fast, too soon, and you'd hate to ruin current biz relationships by trying to pile in a whole bunch of new ones

finally, this big run up in your biz certainly is no automatic indicator that the revenue stream will keep up like this forever, it could dip again before picking up sometime later...so i say work your day job, get it in balance with your side biz - no benefit comes from getting fired....you want to go on your terms and at the right time

hope this helps
posted by Salvatorparadise at 6:39 PM on July 25, 2007

This month's Money magazine has an article about entrepreneurship, when to make the leap, etc. It's worth the trip to your local library to read it.
I'm afraid I only gave it a cursory looking-over, but it sounds like generally speaking this is a good time for taking the plunge.
posted by willpie at 7:24 PM on July 25, 2007

The answer to this question depends on so many factors:
- Projected earnings
- Your financial responsibilities
- Your ability to cope with uncertainty
etc.
A lot of art-related businesses don't pay well and don't scale well, meaning one person working hard can just about make a living, but they can't easily take it further and it'll always be a struggle. Make sure you look at the figures and are OK with any limitations.

Ideally you'd have enough saved to cover your bills for at least a few months (I highly recommend everyone trying to do that, it's great going into work knowing you could afford to quit any time), so you might have to investigate credit in advance.

"It's starting to take up time at my desk job, too, and I can sense the boss is getting frustrated about it"
I don't blame them; you shouldn't be letting it visibly interfere, any calls or emails should be discreet.
posted by malevolent at 12:44 AM on July 26, 2007

You need to build up your savings before you cut ties with your regular paycheck. Your business will probably have good months, and bad months -- without a cushion of savings a few bad months can put you out of business.

In comparing profit v.s. paycheck, be sure to account for your self employment tax and how much it will cost you to buy your own health insurance. If you are applying for any credit cards or loans do it while you still have a job. Keep in mind that these might come in handy later.

In the meantime, you need to keep your side biz from affecting your paid job. You might need to hire someone to help in your side business, possibly doing your books or shipping. If you need to keep the biz phone answered during the day get a service. Get some help for your regular tasks like cleaning house or having groceries delivered to take some of the pressure off. If you make $x per hour, and you can hire any task out for <=$x, do it.
posted by yohko at 7:44 AM on July 26, 2007