Author Topic: Quitting day job to focus on side business  (Read 917 times)

lielec11

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Quitting day job to focus on side business
« on: November 06, 2017, 07:22:03 AM »
I am looking for some insight into the best way to go about transitioning from my day job to running my own company. Currently I work as an electrical engineer for a small company that does primarily multi-family design. I am very well regarded here and they are actually starting my ownership paperwork Q1 next year for partial ownership (allegedly).Coincidentally over the last year or two I've started my own company which specializes in short circuit, coordination and arc flash studies. I also do electrical design for smaller projects as well. For the record, I do not work with any of my "day job" clients on the side, nor do I plan to. I also did not sign a not compete or any other paperwork when I joined this company.

So far I've done very well for myself working with clients from the past at older jobs in different parts of the country on the short circuit studies. The design work I do is for an MEP firm in another part of the country that requires electrical help now and then. There is zero overlap of work between the day job and my side business. I'm on track to make more money from my side business than I do for my day job to date. Actually, I have contracts and PO's that total more than my salary already this year. Whether or not the clients pay in time for that to turn into reality is another story.

So safe to say I'm probably in a good place to jump ship all together and just focus on my own business, right? I want to say yes but I am held back by some fears and a steady paycheck. Multi-family MEP design work is rather easy and boring compared to other sectors. Most jobs are cookie cutter, copy/paste, type work where the owner wants everything done as cheaply as possible . It is sad to say but I can use about 30-40% of my talent/effort and still put together jobs that get permitted and can be built to code. At the same time it's allowed me to use some of that extra time to help my side business clients when possible during the day.

On to the fears part. The two largest fears are loss of a steady income and health insurance. Right now I've been able to use my day job to pay all of our bills, max out my 401k (plus matching), and save a little extra. This allows me to be able to basically save all of my side business income, even if it comes in slow. This has been great as my wife and I are looking to begin investing in rental properties ASAP. If I quit that steady pay check goes away and I'm worried I'll be relying on clients paying me two, three (and sometimes longer!) months late. This will be a big difference to what we're used to. Health insurance - my wife and I are trying to have our first child so this is a huge concern. Thankfully she has full time job with great benefits (although when we have a child we'd ideally like her to work less). At the moment I'm more concerned about how I would cover myself so I don't get hit with tax penalties, etc. What do some of you self employed guys do for insurance? My company is only me so I'm not sure a company-wide type plan would really make sense financially.

So after all those long winded details is there a way I can negotiate working for my day job on a limited basis, from home, or on a contract basis? That way I can maintain some type of steady paycheck, insurance, etc. while still being able to expand my own company. Do I mention to them that I'm starting my own company and want to focus on that but still want to help them? How can I best approach this?


TL;DR - Have boring day job in engineering that doesn't require much effort. Have great paying side business I'd like to run full time. Concerned about not having a steady pay check and health insurance. How do you recommend I approach my day job about working part-time, from home, or on contract basis so I can focus on my own company while keeping insurance and bi-weekly pay check.

kimac

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Re: Quitting day job to focus on side business
« Reply #1 on: November 06, 2017, 09:18:10 AM »
If you wind down with your day job and turn it into contract work, it is doubtful you will still get insurance and a steady pay check. You are asking for more flexibility from them, to decide which jobs you work and which you don't. They will get the same flexibility in deciding when to bring you on. They will also likely start looking for your replacement, after which you will probably be phased out.

However, that doesn't seem too bad, since you will likely want to transition more of your effort to your new business as it grows. Which job do you enjoy more? Which will you find more fulfilling over the next 10 years? There are pros and cons to being self-employed, you should seek professional tax advice for the implications in your situation. Keep in mind that exiting from a business you own is not as straightforward as quitting a job. You need to find a buyer, which is costly, time consuming, and risky.

If you are concerned about fluctuations in income, buying rental property right away doesn't seem to be the best idea, since it is very illiquid. You could invest that money (may some of it in REITs if you want real estate exposure). Once you have a cushion you are comfortable with, and stable contracts, then you could try investment properties. Investment properties will require more effort on your part to be effective (compared to passive investments). Effort you could otherwise be investing in your business.

Congrats on having this choice!

lielec11

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Re: Quitting day job to focus on side business
« Reply #2 on: November 06, 2017, 09:32:32 AM »
You are spot on in that flexibility would be exactly what I'm looking for. I understand the pros/cons and have a good accountant who has already helped me with my side business a great bunch already. I would definitely prefer my side work over the next 10 years as I enjoy it much more than the mundance multi-family design work.

So... any ideas on how to best broach the subject with my superior? We are a small satellite office for a larger company. There are about 60 employees in the base office and only 5 of us in the smaller office. We are basically autonomous and separate from them other than we share the business name, and can ask them for assistance if necessary on projects; but as far as I know we track our own projects, P&L, etc.

Do I approach them and mention that I have an opportunity and would like to spend time working on my own, but I also don't want to leave them hanging? I want to make it seem like I'm going for a win-win, even if it's not that accurate.

I agree they may look to replace me but from what I understand it was very hard for them to find someone with my experience who was also willing to some more of the dirty work for a fair price. Everyone else they interviewed was either to green, wanted too much money, or too set in their ways.
« Last Edit: November 06, 2017, 09:35:53 AM by lielec11 »