When is it Time to Pursue a Side Hustle Full-Time?
Also known as: The millennial pipe dream.
I literally walked to a local coffee shop so I could drink a $7 lavender latte in order to write this post in the correct mindset (which is, I am a millennial with free will, hear me roar).
“My take, however, is that you shouldn’t leave a full-time job until your side hustle has proven long-term, consistent financial viability.”
This question comes up approximately once a week in my DMs, so I figured it was worthwhile to sit down and attempt to standardize my reply: When is it time to quit your “tradish” full-time gig and pursue your side hustle full-time?
To be fair, there are a lot of different takes on this; I know one gal who quit her full-time job before even starting her business because she felt like she was so stifled at work that she had no energy or creativity left over to build something in her free time (I pray that’s not your situation).
My take, however, is that you shouldn’t leave a full-time job until your side hustle has proven long-term, consistent financial viability (sexy, right?). It may not be for everyone, but for the chronically pessimistic and risk-averse (hi, nice to meet you, kindred spirit), this is the only approach that I think works in all situations.
(As in: You may decide to yeet full-time work with no plan and totally Zuckerberg it, but man, I’ll be damned if that’s not the exception.)
What do I mean by long-term, consistent financial viability?
Let’s take a walk down memory lane, shall we?
When I started Money with Katie, it didn’t make a single dime for about eight months. I just shouted into the void to an audience of seven people and texted my mom “please clap” every time I’d publish something. I don’t know of any side hustle that’s glamorous to start, but posting 60-second videos of yourself talking directly into the camera about a “really cool new blog post” you just wrote about Roth IRAs to three likes and zero comments certainly wasn’t all star power and rainbows for a long time.
But during this period of void-shouting, I did a goal-setting workshop where I had to “examine my ideal life.” Unsurprisingly, I spent the majority of the meditation imagining myself as a resident of San Diego, living in an airy, white loft space filled with plants, and attending leisurely 9am yoga classes during the work week. And what was my source of income in this fantasy?
My ($0 in 2020 revenue) Money with Katie job.
“Even then, I knew that in order to leave my full-time job security, I’d need roughly twice as much income to feel safe doing it. ”
One of the questions I had to answer in the exercise post-meditation was about what amount of income would make me feel “safe.” I remember writing, “I want to make $10,000/month from Money with Katie. That would make me feel secure and successful.”
In retrospect, it’s pretty ambitious that I even wrote those words: I hadn’t made a single dollar from Money with Katie (and still was about 3 months away from monetization), and $10,000/mo. was roughly twice as much as I was earning in my day job that paid $60,000/year. A year!
(While my goals now are technically larger, they are—in some ways—less ambitious than that original $10,000/month goal, because now I have proof of concept. I had no idea what I was doing when I committed to $10,000/mo.)
The point is, even then, I knew that in order to leave my full-time job security, I’d need roughly twice as much income to feel safe doing it.
Why? Because your corporate job offers a few things that doing it on your own likely doesn’t:
7.65% FICA tax, as opposed to the self-employment tax of 15.3% (in other words, your FICA liability doubles when you’re your own employer)
Health insurance (this one can cost thousands of dollars per year, if not tens of thousands)
401(k) matches and bonuses/profit-sharing that can amount to thousands (again, if not tens of thousands)
Paid time off (contrary to popular belief, being a business owner usually means taking less time off, not more; I still posted every day from my honeymoon for Money with Katie despite being “off” at my “real” job that week)
The TL;DR? You can’t just look at your base pay when you’re assessing how your side hustle income stacks up to your full-time job.
(To be clear, I thought $10,000/mo. would make me feel totally comfortable leaving my full-time job—but $10,000 came and went. Then $20,000. Then $30,000. December 2021 revenue was more than $50,000, and I was still on the fence about whether or not it was safe to pursue full-time.)
“I tell other small business owners that—if they’re not sure when it’s time to leave their full-time job—to wait until it feels stupid to stay.”
The truth is: It’s a lot easier said than done to say goodbye to a biweekly paycheck, healthcare, and myriad other benefits, some of which are more personal than financial. I loved the people I worked with, too, and I knew Money with Katie meant working basically on my own. The last thing I wanted to do was isolate myself (especially after moving to Colorado, where I already didn’t know anybody).
That’s why I tell other small business owners that—if they’re not sure when it’s time to leave their full-time job—to wait until it feels stupid to stay. I was approaching that point (where the ROI on the 40 hours per week I spent at work was so much lower than the ROI on the 30 hours I spent on Money with Katie) where it started to feel straight-up wasteful.
But there was one other thing I wanted to prove, beyond a few fat sales months:
Consistency in income
The fact that some months I’d make $20,000 and other months I’d make $50,000 made it all feel really, really dicey—not because it wasn’t enough money, but because it felt so hard to predict.
I did everything I could to manage cash flow and make it predictable—trying to plan sponsorships in three-month contracts, promote my products the same amount every month, etc., but I couldn’t deny that it felt a lot more unwieldy and random than I was prepared for. Moreover, my “high revenue” months were occurring during a wild bull market and economic boom times. I had no way of knowing if my business had staying power throughout recessions, wars, and long-term downturns.
“If you can do your side hustle easily in your free time or semi-passively, there’s… potentially no reason to quit your job.”
By the time I finally left, I had decided my threshold: If I could make $25,000/mo. for 6 months in a row in 2022, I would dip. That would be “proof of concept” enough for me that I could double my total corporate compensation (around $150,000 by this time) by going out on my own and do so consistently.
So let’s recap quickly on the two main points I’d suggest to anyone facing the same dilemma:
Your side hustle is reliably producing at least 2x your corporate income (salary, 401(k) match, bonuses, etc. included)
You’re producing that number (2x total compensation) for at least six months in a row
You think that—by spending more time on your side hustle—you could scale it even larger
That last one’s important: If you can do your side hustle easily in your free time or semi-passively, there’s… potentially no reason to quit your job. I know everyone’s excited to ditch the 9–5 forever and never look back, but I think we under-appreciate the potential dopeness of full-time remote corporate work.
Now, if your job is hella time-consuming, frustrating, or you just don’t like it, then that’s a different story—but if you enjoy what you’re doing full-time too and you don’t think you’ll gain any scalability benefits from spending more time on your side hustle, then I wouldn’t be so quick to assume you need to quit.
Do you actually want to do the side hustle full-time?
The last exercise I’ll leave you with: Build out a fake calendar for yourself. A fake “week in the life” of running your side hustle as a full-time enterprise.
Many full-timers-turned-solopreneurs I know are initially disoriented by dropping their full-time work, because it provides structure and scaffolding in our calendars that we can plan and plot around. Ever heard the saying, “If you want something done, give it to a busy person?” It’s a little bit like that.
Having more on your plate somehow forces your time management strategy to improve, and when you cut the corporate umbilical cord, things can feel aimless at first if you don’t already have a solid plan in place.
One such small business owner I spoke with a year ago told me the same: “I realized after quitting that I didn’t actually want to do this all day long. I missed my teammates at work, and I missed having somewhere to be in the morning. I found myself sleeping in too late, lacking motivation, and feeling generally lost, which I really wasn’t expecting.”
“Build out a fake calendar for yourself. A fake ‘week in the life’ of running your side hustle as a full-time enterprise. ”
Hence the “week in the life” exercise. Sit down and plan:
What time will you wake up?
What time will you start working?
When will you take meetings?
What time will you spend on pitching new business?
What about time for actually running the business? Time for growth?
The time freedom is awesome, but a total lack of parameters is pretty horrifying—and it’s up to you to provide those for yourself (and hold yourself accountable to them). It’s not for everyone.
And as much as I wish I could tell you that all the female small business owners I know were set free when they broke out of their corporate shackles, it’s kinda the opposite: Most of them went through a rough transition period for six months to a year where they felt discombobulated, disconnected, and unsure of themselves, despite being certain they wanted to pursue their businesses full-time.
That’s not to say you shouldn’t do it: Just expect it to be bumpy, and mitigate the bumps by planning ahead how you want your weeks and months to look. A good plan can—and will—remove a lot of the thrash.
How I actually ended up leaving
In the end, I took the easy way out and sold my business to a larger organization: It allowed me to keep my predictable biweekly paychecks, but share in the upside of Money with Katie’s potential growth.
Other odds and ends
There are a few other things you’ll want to have in place before you go full-time in your side hustle to make it as seamless as possible, and the first is almost laughably practical:
A bookkeeper.
Find a good accountant you trust. You cannot pay these people enough, I promise you. A good small business CPA is worth their weight in gold. Between keeping track of your expenses and revenue, filing your quarterly taxes for you, and letting you know if it’d be beneficial for you to change the structure of your organization, this is one thing I regret not investing in sooner. I mostly did this stuff myself and tapped my CPA when I had specific questions, but I wish I would’ve hired a bookkeeper to close the books for me every month and keep things on track.
“I’m big on setting ambitious goals that feel ridiculous, so maybe set one for yourself, but don’t overlook the ‘why.’”
The other is a tangible goal.
My goal for 2022 was (and is) $500,000 in personal take-home revenue. It’s up to you to decide what’s “enough.”
I’m big on setting ambitious goals that feel ridiculous, so maybe set one for yourself, but don’t overlook the “why.” In other words, maybe your goal isn’t $50,000 in monthly revenue working 40 hours a week. Maybe it’s $20,000 in monthly revenue working 15 hours a week.
Deciding (a) how much you want to make and (b) how much you want to work helps ground your work ethic and—more importantly—ensure you’re operating at proper scale. If your goal is to make $50,000 a month working 40 hours a week and there’s a client who wants to pay you $500/mo. for five hours of your time, it might seem promising ($100/hour!), but that means you’re using 3% of your time to reach 1% of your goal. Not a great trade.
In conclusion
At the end of the day, I hate to say, “When you know, you know,” but I think it’s true: You’ll know when (or if) it’s time to pivot. By ensuring these benchmarks are met ahead of time, you’ll be ready to jump when it’s time: A good bookkeeper, six months of at least 2x revenue, and a plan for how you’ll spend your time.
