Should I Start a Business While Receiving a W2?
The big question many people ask is: Should I start a side hustle? More specifically, should you start one while working a full-time W-2 job, dedicating most of your time to someone else’s business rather than building your own? If you feel driven to start your own business, we believe you can—and should—pursue it! Remember, becoming self-employed and/or a business owner isn’t for everyone. If it’s right for you, make sure you’re not just starting any business. It should be something you're passionate about, something you either have expertise in or are willing to develop, and something you can build while still respecting your obligations to your current employer. Let us lay out some practical steps for what that may look like.
You’ve identified the industry you want your business to be in. Setting aside the legal and financial questions, one thing we want you to ask yourself is whether you have the time. Many people want to do many things, yet only certain people can do one thing well. Much of this comes down to time management. You work a forty-hour workweek, and whether that’s traditional or three twelve-hour shifts (actually being 36), can you set aside ten hours to dedicate to your side hustle? We recommend starting with ten hours of work because it's digestible and obtainable. If you bake cakes, strive for however many cakes are needed to keep you in the kitchen for ten hours that week. If you value bookkeeping, make it a goal to get to know QuickBooks intimately while also getting paid for it. For my folks who love working in the trades, how many service calls will you need to justify ten hours' worth of work? Start there.
Now, let’s say you exceed ten hours in your side business yet you're definitely not near forty. Feel like you’re stuck between a rock and a hard place? Communicate. Not with your job, but with your customers. You can take on those extra hours that week, yet you know it’s not sustainable to do that every time. Not yet. The reason for communication is to help them manage their expectations when it comes to your business. By letting them know that you still have a traditional job and prior obligations, some won’t want to hear that, but most will understand and work with you. You just need to be great at what you do. Slowly increase your workload, hours, client list (however you want to label it), and manage that tension in a healthy manner.
Making money steadily every week now? Now it’s time to compare paychecks. There’s more to it than just looking at the dollar amounts though. Pay attention to opportunity costs as well. Finances are a huge metric, yet dare we say it may not be the most important when it comes to working your life away? Practically speaking, in a weeks’ time, you’re making $500 in profit and $1,500 from your full-time job. Ten hours equal $500, so will forty hours equal $2,000? Think about it like that if you’re wanting to justify it through numbers. If the numbers don’t meet or exceed your full-time pay, should you still walk away? Some people say no automatically, while others are conflicted. To help with that conflict, think about the opportunity cost.
Opportunity cost can include questions such as: Will I be okay without insurance? Can I afford to give more time to this business? Do I have the savings to sustain me during a slow week or month? Will leaving my job hinder me? Am I okay with pausing my retirement until I become financially stable in my business? Should I have any additional training or education before becoming my own boss? Am I leaving my full-time job on bad terms? Will I lose healthy relationships?
We want you to ask yourself these questions before moving forward with the process. This is just the beginning. Check out some of our other posts and read about how we help solopreneurs rationalize how to go about starting a business in specific areas.