There are many people out there who have always wanted to be their own boss. Thanks to the internet and the vast capabilities of technology, it is now easier than any other time in history to do just that; be your own boss. For better or for worse, many of those same people are still punching the clock for someone else. Maybe they are better followers than leaders or maybe they don’t know what business would be right for them. Everyone has their own reasons. However, the answer that I hear most often is that it’s simply not the right time. That of course begs the question, is there a right time to start working for yourself?
The answer is yes, and it all boils down to a simple calculation that you probably learned in middle school. In fact, the set-up may be the hardest part. First, take your yearly salary and divide that by the number of hours you work in a year. This will give you your hourly rate or as I like to say, it will tell you how much your time is worth. If it’s easier, think about your monthly salary and hours worked. For instance, if you make $80k per year and work 2,080 hours per year, (40 hours per week x 52 weeks) your rate is roughly $38.50 per hour.
Next, you will need to estimate the amount of money you will make by starting your own business. Since there are no guarantees and building a business does not happen overnight, it may make sense to have a range or pick a few different scenarios. Let’s say that because you are starting from scratch, you may need to work 100 hours per week, and because of all that hard work, you think you can pay yourself $200k per year. Believe it or not, this scenario would put you at the same exact rate as above, roughly $38.50 per hour.
Sure, we could have used different numbers and $200k may be too optimistic for year 1, but that’s not the point. Contrary to my statement above, this exercise is designed to illustrate that there is no perfect time to start working for yourself. According to James Altucher, with salaries decreasing and home prices skyrocketing, the American dream is becoming just that, a dream. Therefore, whether your goal is to work for yourself or someone else, the sooner you decide, the better you will be able to prepare for the future of your career.