Outlook for a 27 yr old who wants to quit

[captain_krunk]

I'm married with no kids at 27 and I'm planning on quitting my job in a few months to start a business in graphic design and web development. I'm not totally happy at work and I've been dreaming of my own business for 7 years.

I'd love some reaction and advice.
Here's my current situation:
50,000 in aggressive 401k
15,000 in wife's aggressive 403b
3,000 in Roth
3,000 in wife's Roth
18,000 in personal savings (emergency)
18,000 in business savings

232,000 Mortgage on a house valued at about 400,000+ (before the bubble bursts ;-)
No CC debt.
Wife's Master's degree debt at 36,000

My current salary before freelance business is 60k and my wife's is 34k
We're putting away about 2,800 into 401k and 403b every month

I plan to quit my job in June and attempt to get some contract work with the same company and I'm trying to work myself into even more of an integral role before then. (I have some other smaller clients too)

I want to get some outside reactions. I've stayed in a position because of decent pay for a long time and I have been very eager to create a successful business. I recognize the opportunity for great success or great failure, but my wife and I are willing to give it a go.

I only pulled in 13,000 in side business last year after expenses, but I'm hoping that my attitude, desire, and the fact that it'll be succeed or die will motivate me to do well.

On top of all of this, we're trying to have kids and we want to retire early.

What's the reaction dreamers and more experienced entrepreneurs? Are we crazy?

I figure that in 6 months I'll know if I should keep going forward, or return to employment.

That's the same position I was in when I was your age. I quit, and consulted with the company I'd been with for several years, did general consulting for a few more, then started selling my own product.

Absolutely starting your own business is the way to go. You know how to LBYM, and your frugal tendencies will be very important with your own business. You didn't have a single spelling mistake in your post, and it was clearly written -- that kind of stuff is important.

You've got the right attitude. It may be hard, but you'll do fine.

[captain_krunk]

I plan to roll my measley SEP ($500) into an individual 401k at fidelity so I can roll my real 401k money there in my own business.

My biggest fear, after paying for the roof over my head, is being able to continue to save for retirement. I anticipate that it will basically stop, or I at least will severely limited in retirement savings at first. Both my wife and I will not contribute nearly as much when the rollercoaster ride begins.

I know a lot of people lose sleep over their investment selections, but I tend to lose sleep over whether I'm saving enough or spending too much. I think my investments will work themselves out over time if anything goes awry, but I fear missed opportunity to contribute most.

[kat]

I fully agree with what Al said. When I was a few years older than you, I opened my own law practice and never looked back to the years when I worked for government and a law firm. It's been very rewarding and provided unexpected opportunities to pursue what mattered to me, in work and in time off. Keep costs down and stay motivated, and you will be in an excellent postition to achieve what you set out to do.

Being self-employed will give you so many more opportunities to save for retirement. You're likely to soon make more than before. You can max your SEP-IRA, you can deduct medical expenses, business use of your home.

I think most small businesses fail because they spend too much, and it sounds like you won't have that problem.

[captain_krunk]

I'd love to let everyone know about it when I launch. Is that against the board policy? I couldn't find anything on advertising like that.

[REWahoo]

Quote:

Originally Posted by captain_krunk I'd love to let everyone know about it when I launch. Is that against the board policy? I couldn't find anything on advertising like that.

Captain, the board frowns on direct advertising and moderators have frequently deleted posts blatantly promoting individual businesses. On the other hand, we have board members who contribute and interact on an ongoing basis who have mentioned their businesses and have suffered no ill effects. But their mentions were sublte, finessed, and probably interpreted as not being overt advertisements.

IOW, proceed with caution.

[captain_krunk]

I have no intention of spamming the board. Thanks for the heads up. I'll just leave it alone.

Thanks everyone for your encouraging words!

[brewer12345]

krunk, I sincerely doubt anyone would be upset if you put a URL for your business in your profile.

[Sisyphus]

Cap'n Krunk...

After having witnessed several friends who did what you are about to do (some did OK, some did not), and launching a business and working in the same field for a long time (web development/design, over 100 sites built), here are my thoughts. Consider or ignore at will.

• Mentally prepare yourself to work harder than you ever have in your life. Web development and design is extremely competitive. There are a million talented people out there, and every client wants work done for dirt cheap... especially if they know you're just starting out. Someone is always willing to do it cheaper.
• Mentally and finacially prepare yourself to "break even" for the first 1-2 years. Most people assume they'll "make at least $xxx the first year" and it comes back to bite them. IMO, 6 months is not enough time in this field if you're serious about working for yourself.
• Build partnerships with local advertising, marketing, and web development companies... they often won't deal with web projects under a certain dollar amount and gladly refer them to you if you are good. You can pick up a lot of work that way.
• Network via your local small business clubs and Chamber of Commerce if you have one.
• If you don't do programming and database work yourself, partner with someone who does. Even small projects require that kind of work now, and if you can't do it, you're in trouble. Also, find a good hosting partner. Clients want you to handle the entire project... don't expect them to work with you on one part, and another provider for a different part. If you're a graphic designer who dabbles in web development, I'd urge you to focus on graphic design and stay away from the web piece.
• Focus on moving forward immediately. Don't waste time on "playing house." I have seen people waste the first 6 months or year worrying about business cards, logo development, yellow page ads, promotional clothing, business bank accounts, etc. By the end of 6 months they are exhausted and haven't done a thing. Decide what the key issues are (networking with local businesses, doing quality work) and move forward like your life depends on it.

I know there were times when I was in your shoes or helped friends in the same situation. Every situation is unique, but I hope this helps.

[thefed]

First off, I have to say it looks like you're headed in the right direction.

Personally, I would consider working a along work week, and splitting it between your own business and one that gives you a weekly check. If you can survive on just your business income, imagine what you can do with both!


Owning a business is also, to me, a way to have OTHERS work for you and make you money while you do little or nothing!

Consider what tasks you could pass along in order to free up your time. That's the joy of running a business, IMHO.


To qualify myself, I am only 22, but doing just what I said: working one FT job, and running my own business. Sure, I could do just one or the other, but after a long work week, I can stuff a LOT more $$$ into retirement accounts. I'm planning for a 20 yr retirement from right now....


In summation, if you really want ER, I think you should reconsider quitting. Once your business is booming, then drop the 9-5.

[TargaDave]

Quote:

Originally Posted by thefed Owning a business is also, to me, a way to have OTHERS work for you and make you money while you do little or nothing!

Sort of like the $20/week Powerball lottery retirement plan. Ahh, but it's nice to dream.

Good point fed on trying to build the business more before quitting. I have a younger brother who is basically broke after 3 years of trying to start a software business with no backup income.

You need to be able to stare down the worst case scenario and just laugh about it.

Jump when ready, have fun, don't look back.

[captain_krunk]

Sisyphus, thanks.
I'm not too worried about being in a flooded field. I think one of the main problems people have with business is to sell their price. I have been selling my value and I'm confident I can continue to do so. Customers will screw you if they buy your price, but not necessarily if they buy you.
I have my LLC and business accounts set up already, so it should be a smooth transition in that regard. I definitely need to do some more networking though.

fed,
I'm definitely looking for ways to use contractors to work for me and I already have done so. Part of that is necessity. If I quit and have more time, less money needs to leave my account to pay for someone else.

And Dave is right on. I don't know if I actually will be able to do it when it happens, but I should be able to take the worst case scenario in stride. I've learned quite a bit from people on this board and I've seen that you can lose your home, family and have a ton of debt and still get back on track. I'll get a part time job at Blockbuster if I have the need to do that.

[captain_krunk]

How have any of you handled saving for retirement when starting a business?

Right now I put money into a SEP at the end of the year, but I'd like to do it regularly. Should I expect that retirement funds are the low man on the totem pole until I have a broader outlook for the company?

[vvsonikvv]

I'm sort of in the same boat as you. My friend and I want to start a web design company, he is a graphics designer, I am software engineer. He's into the creative art, im more into the business side. However, I dont have any of the savings you have.

My plan is to continue my regular job (mines 8-5 but usually 8-6 or 7 ). When I am ready I will transition. I think it would be a good idea as others have said to continue your regular job, and do the side job. As it grows you can shift the balance and eventually stop your 'regular' job.

On a side note, it was mentioned to me that Starbucks gives benefits (401k, health care) for 20hrs part time employees. I heard that The Container Store gives benefits to PT employees as well. Maybe those jobs would be much better than blockbuster.


Im interested in the business you want to start. feel free to PM me if you would like to chat.

[Sisyphus]

"Owning a business is also, to me, a way to have OTHERS work for you and make you money while you do little or nothing!"

This is only true for infomercials and get rich quick schemes. Talk to 100 self employed, successful people. I promise you at least 95% will say it's the hardest they've ever worked (but it's usually also the most rewarding).

Not trying to discourage anyone... I think it's an excellent path to take. I just think too many people have visions of driving their Porsche around while the checks roll in.

[retire@40]

Quote:

Originally Posted by Sisyphus Talk to 100 self employed, successful people.* I promise you at least 95% will say it's the hardest they've ever worked (but it's usually also the most rewarding). Not trying to discourage anyone... I think it's an excellent path to take.* I just think too many people have visions of driving their Porsche around while the checks roll in.

I'll vouch for that. Although, as hard as I worked for myself, at least I can say I was doing it for myself and doing it my way.

I could never see myself dedicating my life and working myself to the bone for someone else. I would just feel like a tool to make someone else rich.

Being self-employed I paid myself AND I got to keep the profit I would have generated for the master.