Walking your own path...shift from a "job" to business

[Mr. Fabulous]

I'm currently in the planning stages of setting something up, in the same profession as I am in now. It was something I had at the back of my mind for a while, when I initially entered the field, then put on the backburner.

A little over a year ago, I was approached to look at setting something up and it reignited my desire to do something. However, at that time it didn't feel like the right time. A couple of months ago, I decided the time was right and have been working towards getting things up and running.

I have had a small business before, which didn't work out, but it was a lot of fun and I learned a lot. I'm really looking forward to getting into something again, primarily because I enjoy what I do now and the level of service in my industry is so pathetic, that standing out as a quality provider of said service wont be difficult.

 

[BayView]

I think leaving PAYG is the wrong choice particularly if your PAYG is high paid.

Work your *** off and do both and once you are taking home more in your business than your PAYG in a stable fashion you can leave.

This is more the common sense way to do things - if you are highly paid.

It amazes me how often I hear whining from folk who are in very well paid jobs about their jobs, while the majority of folk in the Country are on average wage or less - some considerably less.

Now; those folk really do have something to whine about.

Personally; I think if you are on more than $100k per year you should shut up and suck it up, and work on transitioning from your horrible job to a business gradually.

If you are on more than $200k and still whining; then first you need a slap across the head, then take a reality check on where you stand on the income ladder, think yourself damn lucky and do this property caper, or shares or whatever on the side; you've made it and all you need to do it top it up with a bit of extra funding as you go.

If it turns into a giant money-making success that overtakes the job, then well done and you can kiss the job goodbye.

If you are a low income earner; you are swimming around in the dregs at the bottom of the tank, then you have nothing to lose so may as well go for it; it's not far to fall back to where you are now.

Running businesses is a lot harder than working in a job - especially if there are staff involved. Yeah; you are your own boss and the scope to make lots of money is there and all that, but at the end of the day, a PAYE can turn off the lights, go home and there's no more commitment most times....

 

[boomtown]

Penny

To respond to your query no my employer does not know. Its in an area they do not operate and all of the work is done after hours on non company equipment. There is no conflict of interest. They are also getting their pound of flesh. Yesterday I worked until 11pm on company business and on my business between 11pm and midnight.

That being said we will give them the opportunity to joint venture with us once we have done the ground work. It will allow them access to new markets should they choose to engage.

 

[BayView]

I am not sure how to calculate how much you should be earning in a business, but would like to know what is a decent amount to justify that shift had paid off

To me, the solution is simple enough;

what your salary/wage was paying you per hour/week should be at least what you get from the business - and then some.

Why? because the risk you take and the responsibility you are burdened with (especially if you employ staff) is higher in most cases than the PAYE earner has.

Having said that; in a start-up it may not be possible to even draw a wage for the first year or more of the business. That's a significant risk.

If you buy an existing one; it has to be more than what you are earning now, otherwise why bother?

 

[geoffw]

I bought the business 7.5 years ago, getting out of a well paid job to run a Subway (building another one later).

It has been a hard slog- going from a contracting position in IT (which I enjoyed, the good pay was just a bonus) to a low paid job working long hours. I was drawing $30K pa, supplemented a little by rent income. There were days I was working 7AM to 11PM, driving half an hour home, and doing the same thing again. I've had phone calls and messages at any time of day or night- even firing somebody at 1:30 am (five minutes after he sent a message saying he couldn't do his shift- again). And I haven't had more than a weekend break the whole time- usually working 350+ days per year. Even on Christmas Day, I've had to go in to get things ready for the next day.

The reward has come at the end of the path. For all of the time I've been there the profits have been going into paying off the loan. I was 100% geared (using resi property as well as the business itself), with the business loan rates over 10%.

In one more year the loan would have been paid off and the income would have substantially increased. However, by selling, I'm able to realise the money that I've put into the businesses.

One of the stores has been sold; the other one is still in the process. The selling process can take a looong time. We had agreed on prices early in December; one settled two weeks ago and the other hasn't got to exchange yet.

I'd like to get back into employment again. I enjoyed IT- and I don't need much pay- especially now that the nest is empty. But that could be difficult given the climate in Canberra (well, literally as well as figuratively). With the store still going, I haven't had much chance to go looking.

I would really enjoy going back into a job where nights and weekends belong to me. And where I get to take time off.

But if I couldn't get a job that would be OK. I could have a modest retirement now, or there are other options I've begun looking at.

In my job I was never in a management position. I like to think that's because I was good technically- but at least now I have been able to prove to myself that I can be a manager. To two businesses with a turnover of over $1M each, and a staff of 35 Gen Y young people.

I have had reactions from some people that I have worked with that they admire somebody who can get out of the j o b and be their own boss. It's a pity that the reality is that the business has had far more control of my life than a j o b could ever do. But then, I wouldn't have been in the position I am in now without the struggle.

One thing that hasn't been mentioned so far. Because of the demands that a business can put on your time, family life can suffer. I haven't spent the time with my family that they deserve, and now the kids have left home. My marriage has been made a lot more difficult, and we still have things we are working through. Fortunately my wife has a strong will to make things work, and she has kept things together where I am sure many would not.

 

[pennyk]

One thing that hasn't been mentioned so far. Because of the demands that a business can put on your time, family life can suffer. I haven't spent the time with my family that they deserve, and now the kids have left home. My marriage has been made a lot more difficult, and we still have things we are working through. Fortunately my wife has a strong will to make things work, and she has kept things together where I am sure many would not.

Oh, I cant believe I forgot to mention that! My husband ran the IT side of the business, which was primarily contracting.... bringing in the cash. I ran the therapy business, also bringing in cash, and the medical equipment business, which was like a big black hole, consuming all cash in its path!!
he really resented working hard and seeing all his hard earned cash go down the drain.... and I became resentful of his resentfulness. Nasty....
We got through it, but every year at tax time we are reminded of this huge "losses carried forward" that we cant do anything with and which seems to have continual stings in the tail. Everytime we think we've found a way to "benefit" from it, it turns around and bites us in the butt. Emotionally and relationally it continues to hurt us.

The other big issue for me was mental health. I became very depressed, partly due to post natal depression (my maternity leave ended up being less than 24 hours!), but also having never experienced such a catastrophic failure before.. just didnt know what to do with the pain. I'd also worked so hard, in combination with having babies, that all leisure/ recreation activities had long been forgotten. Despite pulling out of the depths of despair, I was left in a 'blank" emotional state for quite a long time (which also doesnt help relationships!). In fact, I didnt fully recover until I went back to work as an employee. The combination of consistency and routine, with success brought me back to life reasonably quickly.

Interestingly, the business failure ended up being a great advantage in my job. I went from being the customer, to being the supplier. All the other customers knew that i'd been where they were.. I knew the pitfalls, and I would fight for them when the other supplier staff would claim that the customers didnt deserve their margin etc. It was definitely a key success factor for me. So, it wasnt all bad! (there were plenty of other good things as well, but its just a helluva lot of money to throw down the drain. So, I get frustrated when I hear people, like I did, just assuming its going to bring health, wealth and happiness! )

 

[pinkboy]

I can second geoffw point regarding family and friend commitments. It is a double edge sword. You think you are doing right by your family, to better the life you can't expect from a normal job, but at the same time it requires sacrificing precious time with the loved ones.

The trick is to find the balance of generating wealth and at the same time putting time aside for the more meaningful things in life! My favorite scene in Willy Wonka and the Chocolate Factory is when one of the grandpa's gives Charlie a pretty decent lecture about taking the opportunity of a lifetime by going to the factory instead of selling the ticket for 'something as common as money'.

Personally, I try my very best to time manage. When I can, I meet my wife and daughter at school some mornings to at least see her off, and sometimes an afternoon pick-up! I go to netball on weekends, and swimming lessons if I'm able to make it. We even do mini get-aways when we can, plus a decent family holiday. But there are times I am late, sometimes even get there after the event, but I always try! It is very disappointing, but you get through it! If it was easy, everyone would do it!

Kudos geoffw for effectively working for $5/hr for your family to have the life you wanted them to have, and for yourself!

pinkboy.....'are you a dummy'........love that movie!

 

[Dazz]

Nice post GeoffW.

We also went through this transition a while back.

We started thinking we could leave the job about 6 years ago, when financially we could afford to. It took 3 years of juggling a job and a sizeable business (it needs to be otherwise what's the point ??) before it was getting ridiculous.

The tipping point came when the fillet of the day (8am to 5pm) was given to the employer and I had to feed off the scraps early in the morning and late at night and on weekends......but I was earning more from the scraps than the fillet.

When that happens - it's time to pour the fillet of your day into your business and really get cracking.

People at work will not understand, even the ones who are 20 or 30 years older than you. It wasn't a pleasant day at work announcing that I was retiring from not only the job but also the industry in general.

People who have been working there longer than you have been alive don't really appreciate that type of news - it brings home to them fairly sharply that they have been stuffing around for decades getting nowhere.

The sacrifice of time to get into that position is large, and as with any sacrifice, a penalty must be paid to achieve what you think is worthwhile. Family do take a hit.....it needs to be strong, otherwise marriages do go under....as we all regularly see.

Strangely, when you do pull the pin, having all the time in the world sometimes isn't a good thing either. Being underfoot and at home ALL the time gets wearing for both parties. You need to occupy your time judiciously.

After 3 years of being retired full time, I've volunteered for another position that interests me, so that will once again get me out of the house during business hours and back to the 'normal' routine.

As with everything in life, there is no script for any of this. So many small but important details can throw your intended plan off course, and you need to constantly roll with the punches, cos they just keep on coming, whether they be family / cashflow / personality / economy / trends / disaster....the list is endless.

Good luck with your chosen path.

 

[devank]

What a great thread! There are so many real stories from real people. One thing is clear... It is not easy!

I started web development and web hosting business when I was in Uni about 15 years ago. It gave me small amount of money to get by but did not expand after graduating. Currently, it has been running on ‘cruise control’ for last ten years maintaining the existing client base. I keep the business as a ‘backup’ just in case I lose my job.

I had all required technical skills needed at that time. However, I lacked in marketing skills. I don’t think having the high technical skills alone is enough to run a business. Pinkboy seems have well-round skills to run a business, doing the right business in the right place at the right time. This might be the essential in success.

Even though I have an existing client base and learnt many new skills I'm still hesitant to go on my own simply becasue of the required time I need spend on and the impact that would have on the family!

 

[wobbycarly]

Fantastic thread! Thank you to all the contributors.

What I've enjoyed the most is the balance being provided. Agree that the Kiyosaki stuff can make people think that the ONLY way to go is to own your own business. But the contributions here bring a realism to that; it's not all fairy floss and bubbles!

THIS is the sort of thing I hang around Somersoft for... THIS is the sort of thing that makes one THINK.

 

[oracle]

Personally; I think if you are on more than $100k per year you should shut up and suck it up, and work on transitioning from your horrible job to a business gradually.

I am in this position and am doing exactly what you suggested, only difference being I am investing in quality businesses through shares rather than running my own business.

Cheers,
Oracle.

 

[Melbournian]

i am in a PAYE job but i think you have to weigh the risk of just shifting to a business without proper due diligence done on the nature of the business. WIthout a great idea - or something that can work that takes time and will be a toll on your daily lifestyles.

Some of my friends have done this but many are backed up by their parents who just pump in cash into their business or they just take over some of their parents entities which they then claim as their own.

Although i have mostly been in a PAYE job there were times where in btw the years when i was changing jobs or taking a year off - i had investment in restaurant overseas (which was more effort to its return) and now having a women clothes line run through facebook selling overseas which only takes 1 hour of my time in a week. But to give up your PAYE job when your projected business cannot return more income but only more effort and work - i think is not worthwhile unless you have a killer business idea that can generate huge returns.

but i agree with others - work smart not hard or else you will just burnnn out after a while.

 

[Deltaberry]

Very interesting thread.

Should make a disclaimer first. I'm in a PAYG job so am not the person you want to speak to, but I do have the work ethic (at work) of someone who if I was in charge I'd fire him on the day.

So here's my thoughts and observations. A lot of things are hard to touch on without writing a long-winded passage, but here's some general thoughts:

1. The concept of how much money you need to earn in your business before you give up, for example, your $300k salary is absurd. If you earn $300k by working 9am-11pm everyday and have the choice to start a business that earns $150k but only need to work 2 hours a week, you'd obviously take the latter. If you earn $300k in your job doing jack all and have to bust your chops to earn $150k in your own business, then you'd think twice about it.

2. If your business gives you flexibility at least in terms of time, then it's worth more than your monetary income. Time is your currency. Without time you'd never discover that next property development that will make you gazillion dollars. If your business is one that ties you down, then it's not that great a business. If your job is one that ties you down, then it's not a good job either. Generally speaking your business will have more flexibility than a job. If it doesn't, it better earn BIG BUCKS or it's a crap business period full stop no questions.

3. Business is scalable. Job is not. A successful medium sized business person will have more $$$ than the best CEOs in this country.

4. People say running a business sucks all your time and commitment. Here's 3 example. Someone I know who I call Senior has not worked an honest day in his life since 40. His net worth graph is exponential. Another friend I know called Hedge Hog works less than 1 hour a day. Makes a mint again. Only 35. Last friend I know it's actually his old man, who I call Fuzzball Senior, doesn't even go to his sites. He just sits at home and points at land and does high level thinking. Now I'm sure all these people spend a lot of time thinking about their businesses as they're sleeping/eating/defacating, but the important thing to note is that they all have flexibility/time, which is currency.

5. Remember, this is a capitalist society. Are you trading your time for money? Or are you using your capital to make money? Are you a true capitalist?

6. On people's point about people who have high incomes not needing to give up their job and should just try to set things up on the side, yes there's a point to that but there comes a point where it's not true. I sit at what some here have called the high income bracket. Have used the spare time to build up side stuff. It doesn't quite overtake the salary yet but the way I look at it is I do 35 hours a week for my apparent high income. But I do on average 4 hours a week throughout the year to earn more passive income which is not far behind this high salary and again past the point of what was called a high salary here. So again, it goes back to my point. Are you a capitalist? Or a time trader? In 2 years when I'm 27 or maybe 28 I'd like to know I've made the transition to being a capitalist - someone who uses capital to make money, not time. Because my time is money and I don't have time to spend it on trading it for a fixed amount of money.

7. Lastly, you only live once. If you got hit tomorrow by a car, would you regret not taking the plunge? We're all just a lump of protein, water and fat melded together anyway with a bit of consciousness. Are we that scared to lose?

 

[BayView]

only difference being I am investing in quality businesses through shares rather than running my own business.

Cheers,
Oracle.

Not the same thing at all; we're discussing running (working in) them, but good on you for investing anyway.

 

[BayView]

Very interesting thread.

Should make a disclaimer first. I'm in a PAYG job so am not the person you want to speak to, but I do have the work ethic (at work) of someone who if I was in charge I'd fire him on the day.

Great post. shortened to save space. Sent kudos DB.

 

[LukeLang]

I too have been down this path. I have been a full time employee and a full time business owner. But I have settled on a third option - part time employee, part time stock trader. For me this is the perfect balance. I still have a regular steady income, plenty of flexibility and the potential for some very good $ (albeit not totally consistently). I have been operating this way for several years now.

The breakthrough for me came from reading a LOT of books on both finance and stock trading, doing courses and attending seminars before i solidified what balance and strategy suited me best. Of all the trading books and courses the stand outs were -
rich dad poor dad (fantastic book for opening up the world of financial possibility)
trading for a living (a great trading book offering an in depth guide to the psychology of trading)
and an online trading course called 'TheEverydayTrader'.(an excellent, easy to understand and complete guide to trading shares from short to medium term)

Everyone is different and has different time frames, objectives, risk profiles, lifestyles and financial demands. Work out what works for you and then work towards that.

 

[Nemo30]

And I haven't had more than a weekend break the whole time- usually working 350+ days per year. Even on Christmas Day, I've had to go in to get things ready for the next day.

My dad is in a similar position. He and his partner bought a hardware store about 7 years ago. Both are in their mid 60s.

They work 362.5 days a year (They take Christmas Day, Good Friday and half of ANZAC day off)...and have been known to go in on Good Friday to clean and catch up on paperwork.

They moved interstate to buy the business, so they very rarely see their family/grandkids - we have to travel there to see them and even then we end up working in the shop on our holidays.

On top of the normal shop work they have been refurbishing the store inside and out and are often there until after midnight.

Their shop is profitable, but damn hard work.

 

[chindonly]

Great thread all - thank you for being so open and describing your experiences.

There is however a difference between between buying a business and buying a job.

Many people do leave their PAYG position and buy into a business believing it will give them the flexibility and income to 'free' up their time and life. As many here have experienced, this is often not the case, and they work their a**es off being basically the employee, not the business owner.

In the end, the goal should be to set up the business so that it can run well without you being there. Only then is it a true business in the sense that most people desire.

"The E Myth Revisited" (Gerber) is the classic 'dumbed down' book on setting up business systems to create this true enterprise. A great and easy read which would enormously help some of the people described in this thread that are struggling with time issues.

I would strongly recommend that before you take a leap and go into a private business venture, you train and develop yourself to a point where you can confidently analyse a business, identify key measures, set up the approriate business and quality systems and have truly know what it takes to make it a success, incuding marketing, finance, HR management, risk etc. Don't need to know all of it, but the most important aspects of each is vital.

I see almost every day, people working hard in their businesses without ever stepping back, and taking a strategic and prioritized view that will give them great benefits down the track. Working in the business, and not ON the business.

Writing a precise business plan in advance will also help, as it forces you to be disciplined and ask the hard questions.

Buying into a well structureed franchise can help, but will not give you all of the answers.

Life is too short to be a slave to your job - whether it be in your business or someone else's!

 

[Rockstar]

Firstly I can say that I admire business owners for their hard work and enterprise as well as providing employment to the majority of workers.

There can be a big difference in motivations to go into business. I think that working at BHP Newcastle in the early '80s opened my eyes to the lowest of attitudes and made me wonder how workers can exist trying to evade productive tasks. Not only that, it was considered "clever" and openly boasted to co workers how one can be slack and get away with it!
Fortunately I got out.
My move into self employment began when I followed a passion for horticulture. It is a blessing when one can follow a passion, study in the same field and work in their industry of choice. Not only that, to develop a business in the same field can be truly uplifting. Although I wasn't making much financial progress, I was satisfied creatively. This led to landscaping, Rockmaking and moved into renovation and "house and garden improvement". Moving on a few years and it flowed into property investment and development. Now I have a more rounded package integrating my whole past. I work on small developments but still get to landscape and plant them out. I understand the whole business and am satisfied and hapy to be providing employment and housing for the local economy. I still work most of the time. If not doing a project I volunteer for a selected non profit organisation. I couldn't see myself being satisfied doing anything else - but we're all different. Some want to travel, some want to laze around, some want to be with family, and some just love working in their business. For me it's the satisfaction of creating a few important things.
Opportunity to earn a good livelihood in an occupation of choice and in an area of community necessity (housing)
Providing employment for others
Working in a challenging field where I can be creative and use my inherent skills and interests
Driving my own ship
Flexibility to adjust the speed and direction
Ability to give back through volunteering (moreso now that the financial success is growing)

Personally, aquiring or running a business/es that bring money and free time don't necessarily mean I've made it. Satisfaction and contentment must be present in my life/work experiences that enables me to challenge myself and help me to grow into a more stable and productive individual who can contribute in various ways to the betterment of society.

 

[Dazz]

Nice post Rockstar.

I think that working at BHP Newcastle in the early '80s opened my eyes to the lowest of attitudes and made me wonder how workers can exist trying to evade productive tasks. Not only that, it was considered "clever" and openly boasted to co workers how one can be slack and get away with it!

I've had plenty of experience with that also. It's a soul destroying philosophy that many live by. They get every mornign and drink a cup of poison I'm sure of it to carry on like that. The bigger the company the more rampant that attitude becomes, and the easier it is to "hide".

There is a political party founded on those workers who would swear black and blue it doesn't happen, and that those type of 'workers' are angels.

Big companies are strong enough to have a floatilla of sucker fish like that hanging off them, bleeding them dry at every turn. Little companies cannot afford to carry that type of deadweight.

Satisfaction and contentment must be present in my life/work experiences that enables me to challenge myself and help me to grow into a more stable and productive individual who can contribute in various ways to the betterment of society.

Fantastic to see you break out and achieve the success that running your own small business yields.

It gets a tad disappointing however, when you get to the "giving back to community" stage, and you run up against the same type of thinking by some people that you encountered in Newcastle working for BHP. The same destructive and toxic elements are there chipping away at whatever you try and do.