Should I Quit My Day Job?

Q. Dear Michael,

I am currently making $80,000 per year as a systems consultant. I have saved up over $50,000 to start my own business, which is something I have wanted to do forever.

The business I am going to start is a PR firm and I will be starting it with my wife. She worked in PR for many years, so she knows a lot about that business. She has been at home with the kids but now they are old enough that she can work 30 hours per week.

Do you think I should quit my job as a systems consultant or should I let my wife start the business alone and join her once she builds it to a certain level?

A. Dear Ron,

Making the leap from employee to business owner is a big deal. We’ve all heard the statistics about the number of small business start-ups that fail within the first year. That alone should be enough to convince any would-be business owner to think twice about the consequences of quitting his/her day job.

There are a number of factors that need to be considered before starting a small business. Most successful business start-ups are launched by people who already have a certain level of expertise in the field. Your wife’s background in PR is definitely to your advantage. She not only knows what it takes to run a successful PR firm, but probably also has contacts in the industry that will be invaluable during the start-up phase.

You’ve also considered the stage of life you are in, deciding that the kids are old enough for your wife to dedicate a significant portion of her time to the new business. Just be aware that the demands of small business ownership won’t always accommodate your time schedule. There’s a good chance she will end up doing more than 30 hours of work each week — regardless of how much time you are able to dedicate to the new business.

The other big advantage you have is that you have been planning toward small business ownership for awhile now, and you have saved a decent amount of cash to get started. Ultimately, $50,000 may not be enough to launch the business and enable you to quit your job, but it’s a start.

My advice is to wait until the business gets off the ground before leaving your job. There are still too many variables to determine whether or not the business will be a success. One variable is whether your new company will be able to generate enough business to make up for the $80,000 salary your job now pays. Chances are it won’t — at least not during the first couple of years.

You also have to take into account the hidden income you would lose by quitting your job now. You would need to find a way to pay for your own fringe benefits such as health insurance, unemployment insurance and retirement.

You would need to find a way to pay for your own fringe benefits lost by quitting your job now.

Building a productive client base takes time. Since your wife has expertise and time, you can begin building your client base without losing the income from your job, at least during the critical start-up phase.

The time to make the leap will come once your company is established and you have more business than your wife can handle by herself. You can still be involved in the business now, but wait to go full-time until it is financially feasible for you and your business.

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