Author Topic: Deciding whether to be Self-Employed or Not  (Read 3926 times)

The Mobile Mustachian

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Deciding whether to be Self-Employed or Not
« on: May 10, 2015, 03:06:37 AM »
Hello everyone,

My wife has been considering whether to leave her job and try working for herself. I'm the primary income earner and she works part-time at the local library. Her retired father has a very small business (generates about 3K per year) and has offered to train her in the family business so she can take it over someday. She has many great ideas on how to expand the business that I think would work well. As a small business owner myself in addition to my full time job, this excites me greatly. This also gives her the chance to travel with me when I go overseas for work 3 - 4 times a year which an important plus. The only downsides are whether her business will grow enough to cover her current job's income and that I'll need to dedicate about 10 hours a month to help her with some logistics and accounting.

She currently makes about $10K per year or about 7.5K after taxes. Her expenses and contribution to her IRA total 6K per year, so at worst I will be covering her living expenses and the IRA contribution totaling about $500 per month or 6K per year. We have a lot of margin in our budget to support this as it will just mean saving less than we do now and potentially delaying FIRE by about 4 - 5 months (assuming worst case scenario) beyond our current planned 8.5 years from now.

This will be her first time working for herself. My only real concern is that I'm unsure if she's really cut out for it. She has many wonderful attributes, but being a proactive go-getter isn't one of them unfortunately. I know that it will make her happy to have a flexible work schedule and it will also give her a job she can do mostly from home when we have children in a few years. Her current job schedule is very inflexible, so we'll have more time to do things together and I'm sure she'll volunteer more which is something she enjoys. I estimate that she'll be able to earn $60 profit per month or $720 a year with very minimal work, so I think that income level is assured. Additionally, there will be some minor savings on food every month if she is home more often -- I would estimate about $30 per month or $360 per year.

I'd appreciate your advice on what to do in our situation. Would you recommend that she try out self-employment or continue to work at the library? Helping us look at the situation from your perspective would be invaluable.

Thank you

ShoulderThingThatGoesUp

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Re: Deciding whether to be Self-Employed or Not
« Reply #1 on: May 10, 2015, 03:32:52 AM »
For 10 additional hours of your time per month and presumably the same amount your wife is working now, you'll make $60 per month? That's $6/hour for you, probably less for your wife, unless I misread that section.

The Mobile Mustachian

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Re: Deciding whether to be Self-Employed or Not
« Reply #2 on: May 10, 2015, 04:01:22 AM »
Thanks for the question. The $60 per month is just a starting figure - I was estimating how much profit she'll start earning from the get-go. Her goal is to earn at least 6K profit per year to cover her expenses or $500 per month by the end of 2015.

BlueHouse

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Re: Deciding whether to be Self-Employed or Not
« Reply #3 on: May 10, 2015, 05:36:45 AM »
I can't tell if here is any passion in it for her. If there's passion, people learn how to be go-getters and will surprise you.
Either way, I say go for it if she likes it. You never make a killing working for someone else, but you can make surprisingly good money working for yourself.

KungfuRabbit

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Re: Deciding whether to be Self-Employed or Not
« Reply #4 on: May 10, 2015, 06:50:20 AM »
What could it grow too?  $720 / year wouldn't even qualify as a small business really.

i'd say stick with the current job until it gets off the ground more. 

thedayisbrave

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Re: Deciding whether to be Self-Employed or Not
« Reply #5 on: May 10, 2015, 07:23:34 AM »
If she's only working part-time now, could she go ahead and begin training during her downtime? That should better poise her for the transition when it does occur, as she will have been trained and then can just jump right in.

Rpesek6904

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Re: Deciding whether to be Self-Employed or Not
« Reply #6 on: May 10, 2015, 07:36:36 AM »
I'm generally all for starting a business. But be careful of projecting your business oriented ideas on to her. If she is actually interested in doing it, then great. But if you are really having to convince her, it might now be a good idea.

I also agree that this sounds like a super small micro-business. What is the potential upside?

The_path_less_taken

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Re: Deciding whether to be Self-Employed or Not
« Reply #7 on: May 10, 2015, 07:57:58 AM »
"Her retired father has a very small business (generates about 3K per year) and has offered to train her in the family business so she can take it over someday. She has many great ideas on how to expand the business that I think would work well."




Unless this is her idea and she loves it...it's something I'd like to maybe see her try while Dad could theoretically still take it back.

My mom died when I was 18 and I had to become a landlord, fix  and rent the property, roof two duplexes...very much not my idea. But I did it to honor her memory and not lose all of her hard work.

Is she maybe doing this to honor her Dad?

If something isn't your idea it's easy to come to resent having to do it.

Best of luck. I'd need more "let's really talk about this", myself.

rafiki

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Re: Deciding whether to be Self-Employed or Not
« Reply #8 on: May 10, 2015, 09:04:31 AM »
Well, given the choice between a job generating 7k a year and a small business generating 3k a year my answer would be "it doesn't matter" as practically speaking these numbers both round down to zero, given that her employment (or lack thereof) would only take a mere 4-5 months of your FIRE date. My point is that I wouldn't base this decision on dollars and cents. 

The Mobile Mustachian

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Re: Deciding whether to be Self-Employed or Not
« Reply #9 on: May 10, 2015, 10:42:33 AM »
I'm generally all for starting a business. But be careful of projecting your business oriented ideas on to her. If she is actually interested in doing it, then great. But if you are really having to convince her, it might now be a good idea.

I also agree that this sounds like a super small micro-business. What is the potential upside?
I think with a work level that's consistent with the effort she expends on her current job, the potential upside is 7 - 9k profit per year. Her Dad would also make about 2.5k in addition to that. If she decides to really go for it, 11k - 15k is possible.

The Mobile Mustachian

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Re: Deciding whether to be Self-Employed or Not
« Reply #10 on: May 10, 2015, 11:49:30 AM »
If she's only working part-time now, could she go ahead and begin training during her downtime? That should better poise her for the transition when it does occur, as she will have been trained and then can just jump right in.
Yes, she is currently training with her Dad. Her primary consideration at the moment is whether to leave in June or August if she does decide to work for herself. The financial implications of 2 additional months not working at the library are minimal (about 1k) and I can take her on a trip with me during that time frame (trip would cost another $700, but that's within our travel budget).

mozar

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Re: Deciding whether to be Self-Employed or Not
« Reply #11 on: May 10, 2015, 03:15:02 PM »
It sound like you want to spend more time with her but you don't want to spend time doing her logistics? Why can't she do her own logistics/accounting? The worst thing that will happen with accounting is that she sets up her accounts wrong and she will have to it again. The best way to learn is through failure. Some famous person said if you are not succesfull, fail twice as much.

The Mobile Mustachian

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Re: Deciding whether to be Self-Employed or Not
« Reply #12 on: May 10, 2015, 08:20:46 PM »
It sound like you want to spend more time with her but you don't want to spend time doing her logistics? Why can't she do her own logistics/accounting? The worst thing that will happen with accounting is that she sets up her accounts wrong and she will have to it again. The best way to learn is through failure. Some famous person said if you are not succesfull, fail twice as much.
That's a good point, mozar. I think most of my help will be during the ramp up showing her basic business accounting and helping her move around supplies.

The Mobile Mustachian

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Re: Deciding whether to be Self-Employed or Not
« Reply #13 on: May 10, 2015, 08:29:41 PM »
"Her retired father has a very small business (generates about 3K per year) and has offered to train her in the family business so she can take it over someday. She has many great ideas on how to expand the business that I think would work well."




Unless this is her idea and she loves it...it's something I'd like to maybe see her try while Dad could theoretically still take it back.

My mom died when I was 18 and I had to become a landlord, fix  and rent the property, roof two duplexes...very much not my idea. But I did it to honor her memory and not lose all of her hard work.

Is she maybe doing this to honor her Dad?

If something isn't your idea it's easy to come to resent having to do it.

Best of luck. I'd need more "let's really talk about this", myself.
I appreciate your thoughts on this. We sat down and discussed this today. She is genuinely interested and believes in her Dad's micro business. Her feelings were consistent with what she's shared in the past. I'm not 100% sure that interest will translate into a labor of love, but I don't think we'll know until she tries it out.