Before You Quit Your 9-to-5 for Self-Employment, Do This First
At some point, almost everyone has imagined telling their boss off and walking away for good. When I was stuck in cubicle jail, I pondered this daily. You imagine waking up Monday morning, the sun beaming in the window, the kids making breakfast and pure bliss. You fantasize on being your own boss, no crazy co-workers with weird hygiene habits to deal with, no water cooler drama, no traffic jams that make you want to cut yourself, no "Monday Motivation" meetings that always start with awkward introductions and culminate in sweaty armpits. Freedom.
Then there is reality. You officially have no income. Unless of course your spouse works, or you have your Asset Army producing passive income. Even if both of these cases are true (which for 99% will not be the case), I still recommend completing the below activity.
Activity #1
How much money do I have in monthly expenses? Include everything and add 10%.
Activity #2
Assuming you have a business idea (and hopefully a well thought out business plan), how much revenue does my business need to generate to cover my monthly expenses? Break this revenue down into specific packages/services/product sales.
Example: You are going to clean houses
Your average client pays $250/month, and you have $4,000/month in basic living expenses. You have a 70% net profit with your business. (meaning after all business expenses are paid, you take home 70% of the remaining money)
Basic Math:
36 clients pay you $250/month = $9,000 in monthly gross revenue.
70% of that is profit = $6,300
After the 30% tax man takes his share (rough estimate) = $4,410
Personal monthly expenses = $4,000
10% "opps" fund = $400
$4,410 business profit, minus $4,400 personal expenses = close enough, you get the point.
These two steps are critical to complete before texting your entire office the date you are cleaning your desk off for good. Self-employment, or even better, owning a business, has many blessings but is by no means easier than working for the boss in a 9-5 role. Entrepreneurship is for 1 out of 10 (at most) people. If that's you, make the jump once your numbers are in order.