Wisdom From The Comments: A Cautious Argument Against Starting A Business
Every once in awhile, I’m blown away by a comment someone leaves to one of my posts, and it’s a shame that most people probably don’t get the chance to read it. Well, I’m putting a stop to that today. Whenever I come across a truly awesome comment that I think everyone should read, I’m going to post it and address it in an actual blog post.
This particular comment was left in response to my post about why I decided not to quit my job yet. The comment was anonymous (no website URL included, and the name was input as “Not So Fast”), but that doesn’t take away from the depth and insight contained within it.
Essentially, it’s a an argument against why most people should NOT quit their “9 to 5″ jobs to pursue their own businesses. While I may not agree with all of it (more like, I don’t necessarily think it all applies to my situation), I definitely think it’s a comment everyone should read.
This was the comment:
A regular paycheck is invariably underrated by those who have never done without, especially the ones who leave work at 4pm, but expect to get paid until 5pm (how are you NOT cheating your employer, exactly?).
If you look at the people who recommend the “just jump in” approach, you will discover, INVARIABLY, that they had another source of income or support that they just “happen” to fail to mention. Frequently, it’s a spouse working a full-time job with health insurance. For Bill Gates, it was a million dollar trust fund, some time at Harvard to make connections with friends with important parents, and two extremely well-connected parents of his own (IBM, anyone?). Plus, he rode the wave of the 80s.
The other alternative, usually, is a single male (frequently living at home) with no children.
Real people need two incomes to feed their kids and the mortgage, or otherwise live close to their means. Their employer pays some or all of their health insurance, sometimes life insurance, their retirement fund, and half their employment taxes; pays for their office, sometimes their vehicle, and makes sure that the copiers and the computers work when and as they are supposed to. The entire US economy is set up for people who work for others, and it severely punishes those who don’t.
People who are anxious to “start a business” don’t think about how many HOURS get spent every week on the business for the one hour that is billed out at $150 (of which the taxman takes 40% or so). Or how many months it takes to win just one big account. Or how much more difficult it has gotten in the last ten years to even infiltrate most large businesses for a sales call; as they have become extremely insular in response to “security concerns.” New businesses don’t throw off money. They CONSUME it.
Most have no idea what it means to have a marketing machine in place, and many have never cleaned their own toilet (which will probably happen if you run your own business). They don’t know what it means not to worry about your credit score, because common thieves have better scores than you do (credit scores are for people with regular income, so they can pay every bill regularly). People who say “just jump in” never had to worry about their kids starving or their credit rating, because either they had none, or the spouse worked.
I’ve owned a business. It ran for more than ten years and was (by many definitions) a success. And all good the things they tell you about running a business are true. But the bad things that get glossed over are even more true.
For most people, like it or not, working for the man is the highest and best use of their resources. Sure, maybe (and I mean MAYBE) they get less money per hour of time worked, and they DO have less flexibility. But the trade-off for a regular paycheck and decent benefits; while not having to look for business, collect for said business, and pay taxes on said business is not nearly so terrible as the few would have you believe.
So. Definitely option two. Unless, of course, you have a million dollar trust fund and friends of mommy to whom you can market a buggy piece of software.
My suggestion (and it’s only a suggestion) is to have enough income coming in every month to replace your actual living expenses, including saving for retirement, paying taxes, and taking vacations. Plus, enough left over to fund your business for at least a year (rent, utilities, marketing machine, etc) without touching the income, if any, from the business. If you can’t replace your actual living expenses with passive income, how you gonna have time to build a business while you’re scrambling around figuring out to make the student loan payments and the rent? Also, reduce living expenses to the bare minimum (get used to it now). You don’t need a $1500/mo mortgage, and you can’t afford a new car (real entrepreneurs drive beaters).
You are fortunate. You are single, and you work for a large accounting firm, and you probably make at least double (and maybe triple) what the average family of four in America lives on. You should be able to save close to $30,000 a year, even with large student loans (which you MUST pay off if you want to keep your credit score).
If you are interested in staying in accounting, you can travel the world and work where-ever you are, so starting a business that provides a valuable service people want requires only a laptop and a willingness to serve a somewhat less than Fortune 2000 clientele (and a good marketing machine, of course).
I think a reasonable timeline is three years. And start learning some basic marketing (not the on-line kind, IRL). Maybe you’ll get your company some new business in the process, and they’ll give you a raise so you can leave sooner.
I really agree with the overall message of this comment, which basically says “approach your decision to quit your job cautiously, and consider all factors.” It’s very easy to get swept up in the excitement of quitting your job to “follow your passion,” but it’s also reckless if you haven’t fully considered how your expenses will be covered, how long it will take to make a sufficient income, etc.
I will quickly dispel a few assumptions the commenter made, however:
1) I don’t believe I make double or triple what an average family of four lives on. The average household in the U.S. (according to the US Census Bureau 2004 Economic Survey) earned $60,528. That data is a bit outdated, but it serves the point. With that in mind, I earn (as an individual) almost exactly the same as an average household.
2) I do not save close to $30,000 a year. After taxes, insurance, expenses, vacations, etc., I’m probably putting away much less than that. This is definitely something I would need to analyze though before quitting my job.
3) I agree that learning marketing is crucial to any business, but I’m not in a position at my current firm to bring in new business (and even if I did, it likely wouldn’t affect my raise based on how they do things at my level).
Thanks again for the great comment, anonymous commenter. If you disagree with him/her or have something to add, please do so in the comments!