Go into business for myself or not?

[hakuna matata]

First off sorry for the long post! But I am at sort of a career quandary and thought I would solicit some opinions from this board. As I have mentioned I am an Architect and I have worked for my current firm for 15 years. I have over 30 years experience as an Architect but have to admit I am fairly disillusioned about the type of work I do—it pays well but isn’t personally satisfying. I like what I do, being an Architect is a fun profession but the type of work I do, while interesting and beautiful work, the work itself isn’t feeding my soul, so to speak.

What I had planned on doing at ER was to set up a small home office that focused on projects that actually helped people. Home additions/remodels, maybe some church or community projects as well as some small government and retail projects. Nothing too big or complicated, just helping a few folks out and making a few bucks along the way. Right now my projects tend to be huge commercial development projects where I am pretty isolated from the end user and is as far away from the reason I got into Architecture to begin with as one can get…but the money is damn good!

I currently am on-call which means I have access to the firm, my phone, laptop, etc. But my current project with them is on hold going through a city approval process and there is no guarantee that when it gets approval if it will move forward. As such unless I have billable hours I have no income. Some weeks I do have work with that client, and other weeks I do not. Thus, the on-call status—during that time I am free to look for work with another office, etc. I am not restricted from any activity. I am also not subject to a non compete clause either.

Now I also have an option to be laid off and get a severance package. That package would be about 1/5 of my annual salary. I won’t get this unless I give up my position, laptop, etc. The three options all have pluses and all have minuses to me. The thought of working for another firm and basically starting over and proving yourself again doesn’t hold a lot of appeal. But striking out on my own certainly is pretty spooky too!

So I can stay in this on-call status until another project comes in, or find another job elsewhere, or take the severance package and open my own office. I am 51 ½ and I had planned on ER at 55, and when I say ER I mean not do the corporate thing but open my own small office. So this would just be a few years earlier then I had planned.

Money wise, well we actually could ER now, but we plan on 55 as that is when my wife gets her pension and it would be illogical to walk away from that when we are this close (and we are anything but illogical people!). If I look at the ups and downs in my pay the last three years due to the economy and divide it by the three years well I think I can make at least that much if not more. Last year I worked the entire year, but the year before was maybe half the year, so far this year I worked January and half of February.

I can dedicate a room in my house to this office, I can also share a space with another Architect I know. If I use my house I can see I would have very little overhead. Business license, a drafting computer program (expensive!), web site setup, business cards, etc. The biggest expenditure will be E&O Insurance and setting things up to keep our personal assets safe from lawsuits, so consultation with an Attorney and our Accountant. Health insurance is through my wife right now.

So maybe give it six months to a year out on my own and see what I can generate? Or go find another job with another firm working for the man? Or stick it out and likely eventually go back to my office?

What do you think? Take the chance of making a go of it?

 

[Meadbh]

Door #1. What the heck are you waiting for?

 

[hakuna matata]

Door #1. What the heck are you waiting for?

I know, I know. Just a big step is all. But if I am going to do it in three years anyways, why not. A lot will be clearer next Friday, as I am having drinks with a good friend who opened his own office about 5 years ago. He is a pretty straight shooter and will tell me the good and the bad.

I assume there is some mechanism for doing a type of self employed 401k? I need to do a little research there as well as I haven't looked into those implications yet either.

And who is the joker who voted for #4 You trying to get me killed!

 

[Moemg]

I voted do it now . Once you get a taste of retirement you may not do it . Your wife will be working anyway so give it a go .Maybe you can still do some on call work as your new office grows .

 

[Animorph]

I'd do it now, but it would be nice to hold off on quitting your current position if the offer would still be available later. Just to keep maximum options.

There is a "Solo 401k" or "Individual 401k" for the self employed (same thing, but not everyone calls them the same name). You can save about $30k in one before you need to pay income taxes due to the additional profit sharing feature. Not too hard to setup.

 

[fisherman]

Its called a solo K for proprietorships I think and owner K for S corps and such. We are doing the part time work as ESRs within our S-Corp. If you are comfortable with the budget and dollars ( Try Firecalc for extra confidence) then you probably should do it.

If it helps I ESRd over 3 years ago and all is working out better than planned. The only issue has been controlling the part time work but that is improving with time.

 

[eytonxav]

Is it not possible to stay on call with the existing firm and begin to setup home office and take on small jobs during your down time? Being an architect always appealed to me, but I went down the EE path instead. Good luck with whatever you decide.

 

[hakuna matata]

Thanks for the input. I have been off line the last couple of days since I posted the OP. Evidently my wife as she was moving plants at our new house cut through the cable line! But it just got fixed and so I was able to read these responses...and I have a good story to tease my wife about too! I told her she didn't have to take away my internet if she wants help in the yard, all she has to do is ask!

I don't think I can stay on and take on side work as their liability insurance likely won't allow that. Plus I would use the severance as start up funds, etc. However I could do work for my old firm as a consultant, and if they get busy enough they would hire me back I am fairly confidant.

Thanks for the info on the 401k programs. I will need to look into that as well (now that I have internet again!).

I have a lot of thinking to do over the next couple of weeks, finding out what is entailed, etc. I am leaning towards opening my own shop, the idea of starting over with another firm really has little appeal to me at this stage.