*Disclaimer: I am not a financial advisor or accountant. I am giving advice based on what I have done and my experience. Before you make any decisions talk to a professional.*
So you’re thinking of leaving your 9-5. I’ve been there. I know how you feel and what you’re going through.
You’re worried, scared, and maybe a little excited. That exciting little piece is what keeps you going. And it will keep you going until you feel ready to leave your 9-5.
So how do you leave? Well, you want to sort out a couple of things before you leave because going into the unknown without a backup plan is scary AF.
There are two types of people who want to leave their 9-5s.
I’ll figure it out after I leave. The person who has no problem plunging into self-employment as it will help them light a fire under their butt to make moves and start their business. If you’re this person, then you’re ready to leave ASAP with not a plan in sight.
I’ll leave after I have a plan. The person who needs a plan in place to ensure that they are secure and set to start their business. This person might leave in 3-6 months from now.
I was a bit of both when I left my 9-5.
I made a plan, but at some point, I took the leap of faith because I knew if I spent one more day in corporate, I would continue to be miserable. AND I was tired of feeling miserable.
So, which person are you?
No matter the person you are, you want to do a couple of things to prepare to leave your 9-5. No one likes to start a business out of fear, so planning is essential, or at least thinking about a plan and implementing it after you quit (the latter is referring to person #1).
#1 Figure out your bottom line
Make a list. How much do you need to make a month to survive? How much is rent, electricity, car payment, etc.? Everything that you HAVE to pay each month make a list and add it up.
Once you have that number, add in money for fun (yes, you need to have fun even if you have a business). Make sure you’re realistic with your fun number. If you usually go and get a coffee each week at Starbucks, add that into the budget. If you go out with your friends to dinner twice a month, allocate for that too.
Add your survival number and your fun number, and that’s your bottom line. Well, almost.
#2 Figure out Health Insurance
Unfortunately, health insurance is damn expensive in the USA, and for a self-employed person, it doesn’t get any better. I am currently paying $200 per month, and my deductible is exceptionally high (if I go to the emergency room x3 times after, they’ll start covering costs). So also add into your budget how much you’ll have to pay for health insurance. There are many options, so just research in your state which is the best for you.
Add your survival number + fun number + health insurance = your bottom line – Wait for one more thing.
If you have a significant other, who you can use their health insurance because of their company, use that. It will be a lot cheaper, and you’ll get more benefits than self-employed health insurance.
#3 Add in taxes
As a self-employed person, you will have to pay taxes out of pocket. Meaning that for every service you complete for a client, you need to consider taking 30% of that and putting it in a separate account to save for taxes. So if you aren’t making money currently in your business but you want to find out that number use this formula:
Survival number + Fun number + Health insurance = number x .30 = taxes
Now you can finally figure out your bottom line:
Survival number + fun number + health insurance + taxes = bottom line
Once you have your bottom line, you know how much you need to make each month as a self-employed person to survive and thrive. This number is your goal and tells you exactly how much money you need to make per month.
#4 Save a backup plan
As most businesses do not make income on their first month in business, it’s essential to save for a backup plan. I saved about four months of my bottom line number before I felt comfortable quitting my corporate job. That’s what I felt comfortable with, but it’s whatever you feel most comfortable with.
I also advise you to have a backup because when you first start your business, the worst thing you can do is work for the money. You don’t want to take on clients that might not align with you, be best for you, or complete services that you don’t enjoy doing. I did that at first, and instead, I should have just relied on my backup plan and focused on working with who I wanted to work with and how I wanted to work with them.
#5 Invest In Your Business
Investing in my business is something I deeply regret not doing at the beginning. I wish I had invested in a business strategist. It wasn’t until year two that I decided to hire a strategist and a coach. If I had invested sooner, I would have learned how to run a business so much faster, make a lot fewer mistakes, and more money would have been in my account. But I’m okay with everything that I went through because now I can teach everything I know to my clients and you, a new business owner who has no idea where to begin.
If you’re looking to hire another strategist, I suggest you hit up Instagram and LinkedIn. BUT do your research! A lot of strategists and coaches will promise you the world and give you only a pea. Research who they are, who they have previously worked with, and if they are the best fit for you. Make sure you feel really good about who you hire. They should feel like your new business boss who will teach you how to create and have your dream business and leave your 9-5.
Those are my top 5 pieces of advice I strongly advise that you follow when you want to leave your 9-5. All five will help you build a strong business with clarity and growth in mind. You’ll feel confident that you have a plan, a backup plan, and know how to run your business.
Send me an email at [email protected] if this post resonated with you and if you feel more secure in leaving your 9-5 knowing just these five tips I’ve given you. I’d love to hear from you!