February 7, 2012, 5:00 am

Quitting Your Job, The BS and The Truth About It

by: The Financial Blogger    Category: Business,Career
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Last Friday, our Epic Shiz of the week was about a “punch in the face” article by Sam, The Financial Samurai at Untemplater titled Quit Your Job And Die Alone. In this very well written article, Sam outlines the entire BS about the people who tell you to quit your job to pursue your dreams. He outlines 4 examples:

Adam Baker

Erica

Myself!

Himself!

 

I like Sam’s writing skill and there are a lot of things that he wrote that were true and was fair about quitting your job to become self-employed or to create a business. However, I think he purposely picked an angle from which to see this problem and hit it hard with his hammer. I have a feeling that he *forgot* a few details in his article. I’ve already posted a lengthy replied in his thread and feel that I have a lot more to say about it. This is why I wanted to write about my perception of the BS and the truth around quitting your job to create your own business.

 

Truth: Money doesn’t come easy

Well… the funny thing about this statement is that it has nothing to do with being your own boss or not. Money doesn’t come easy: PERIOD! I rarely see employees make 6 figures while chilling like a villain on the beach… oh wait, I’ve seen entrepreneurs do this… But when you start your business, regardless of your field, money won’t come easy. It requires a lot of work and patience. I keep saying on my blog that I’ve made 125K with my online company but I also explain in the very same post that I went from 18K to end at 125K!

 

BS: Money doesn’t come easy

I just told you that I’ve seen entrepreneurs chillin’ on the beach right? I guess this is one of the biggest differences between an employee and an entrepreneur: if you work hard and succeed, the employee will always have to come to work on Monday morning. The entrepreneur doesn’t always have to come in. Some say that the entrepreneur has to work like a donkey to get there…. Well not necessarily! After all, I can manage my 6 figure online business in less than 10 hours a week! This is called productivity. So while money doesn’t come easy at first, I can tell you that if you have the right setup, money will come easy. I actually work less than I ever have and my business is still growing. Why? Because I run my business as an entrepreneur and not as an employee. On the other side, I’m very successful with my day job too. But my bonus meter hits the big fat ZERO each year. I still have to come in each Monday morning if I want to see the money rolling.

 

The truth about being self-employed vs being an entrepreneur

This is exactly where I want to go: some people will quit their job and work as self-employed folk. They will do freelance work and will have to work hard every single day of the year. This situation is pretty similar to being an employee. In fact, it’s the same thing besides the fact that you don’t have a boss and have some more flexibility. However, you work the same number of hours and if you don’t work, you don’t see any money. Being an entrepreneur is being able to setup a money making machine. I don’t care if I have to spend 35K in VAs as long as I don’t have to work hard :-D. The funniest part is that I never ended-up paying the 35K in VA’s since my main VA went on maternity leave 7 months after we hired her. Therefore, we didn’t grow as fast as expected, but we “saved” a few thousand ;-).

 

The BS about people who can’t make it and bash others for their incompetency

I was surprised to see this point in Sam’s post: basically, he says that people bash employees is because they couldn’t make a great career in a big corporation. I was surprised because so many times I’ve heard the opposite (that people who bash entrepreneurship are the ones who couldn’t make it). In the end, I don’t think it’s the case for either. And for the record, I don’t really bash employees; I’m one myself anyways so would be pretty stupid to do so! There are some great employees who could become great entrepreneurs but never will and some great entrepreneurs who could have become great employees too! It’s not a matter of competencies or failure/success, it’s a matter of choice in your life.

 

The truth about my own company

Since I publish my monthly income report, you can tell that I’m focusing on gross income way more than anything else. I rarely breakdown my expenses because they don’t really matter to me. Why?

–          Because I’m making more than I spend

–          Because I’m growing my business month after month

–          Because I don’t need this money right now

–          Because I value my lifestyle more than working and therefore need to pay people to work for me

–          Because I’m not spending, I’m investing

There is a huge difference between spending and investing and while I have the feeling I’ve written this before on this blog, I need to do it again. If I really need 60K or 70K to run my business as is, then, I’m in big trouble. But I spend this money to grow and not to maintain. This means that if I stop my aggressive growth plan, I can stop my extravagant spending too! This year, I want to go from 10K to 15K/month the very same way I went from 6K to 10K/month in 2011. But this, my friend, can’t be achieved without some serious investment. Growth doesn’t happen over time just as your next raise in salary won’t happen over time either.

 

What’s the most amazing thing about having a business?

Yes, you can pursue your dreams.

Yes, you can do what you do.

Yes, you can be your own boss.

Yes, you can work offshore.

 

But that’s all “marketing BS” compared to the real reason why a business is so awesome. The truth about running your own business is that you can scale it. I’m being very successful at my day job (here’s the chronology of my income) but there is one thing that frustrates me: I can’t scale my job. Whatever I do this year, no matter how amazing I am, my bonus will always reset to a big fat 0 at the start of the year. A big fat 0.  How much can you scale at work: NONE! On the other hand, I’ve scaled so much with my online company that I barely work and still manage to make the equivalent of $45/hour NET OF TAXES. There is one thing I know: this number is going to grow year after year while my base salary won’t be able to follow the same hype. You can’t expect 20% growth in your salary for the next 10 years but you can definitely expect it from your business!

 

So what’s hip and what’s not?

 

Honestly, I don’t care about trends. I’m actually the kind of guy who goes against the trend just to not be a follower 😉 (I know… I still have a few teenager anger inside of me I guess!).

I don’t have anything to sell you (well I do but it has never been the pillar of my income in my plan anyways!).

 

And I still tell you: if you can quit your job and create your own business: DO IT!

 

I guess Sam’s article would have been different if he would added 4 more examples:

JD Roth who sold GetRichSlowly for probably over 1M$

Pat from Smart Passive Income who definitely live a healthy and wealthy life

Crystal from Budgeting in the Fun Stuff who makes a killing since she quit her job (she beat me income wise within a few months!)

Trent from The Simple Dollar who sold his blog not so long ago for a healthy profit too

 

As I written at the beginning of my article; it’s only a matter of taking a different angle!

 

If you live in another world and make $250K+ per year, this is not your article, not your blog and not your world. I totally understand you won’t quit your day job, but hey! You are part of the minority! While I make a smaller income, I haven’t quit yet for the very same reason: the money is too easy and too good to quit.

 

But if I lose my job, ask me if I’ll look for another one…  😉

 

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Comments

The truth is that owning your own business is a lot more stressful than being an employee. You have to be totally accountable for everything you do.

High risk = high reward. However, you can take calculated risks and realize a calculated reward. I’m working on building my online business as well. My niche does not have many well established blogs, so I am looking to change that.

by: The Financial Blogger | February 7th, 2012 (7:09 am)

@Mike,
I don’t agree with you. If your business is doing well, you won’t be that stressed. It’s the same thing that if you work for a company that is doing well; you won’t fear from being laid-off. However, if you work for a company that is losing steam and you know that you may lose your job or if you have to go to work after 3 of your colleagues have been laid off yesterday, I’m not sure that this situation is not stressful. If your own company is not doing well, I guess you will feel a similar level of stress.

by: The Financial Blogger | February 7th, 2012 (7:15 am)

@MoneyforCollegePro,
I think you are making a good move to create blogs in order to add fresh content on a regular basis. It definitely helps in term of SEO!

Awesome post! The huge difference is scalability….
Many people see entrepreneurship as self employment and not actually creating something that can go on autopilot…

Really nice post! I read the post from Sam and your comment on that post. I agree that I think he was more so trying to get is point across about how many people fail at leaving there job. Like you I enjoy my job and would rather be an Entrepreneur verses quitting my job only to spend double the time working for myself. In the end i am still killing myself working. Seems to me a better option would be to pay others so I can sit back and let income flow in. But nothing comes without hard work and some help. Have a mentor is great as well.

Mike – I encourage you to continue to talk about Operating Profit instead of just online Revenue to make an Apples to Apples comparison to day job income.

You make a valid point about scalability and bonuses resetting to zero, however, the argument is hard to swallow because……… you haven’t quit your day job yet!

by: The Financial Blogger | February 7th, 2012 (11:12 am)

Hey Sam,
If I take operating profit, I would then have to consider if my new computer or my cable/internet/phone bill that is currently paid by my company should be a real expense or not.

And if you want to compare Apples to Apples, you would also talk about after taxes pay check, right? And you should also factor all expenses related to your day job (such as transportation for example) that are not applicable if you have an online company. If I was to stay home, I would not need a second car. Does this mean that I would have to take off all my second car expenses from my day job (once I took my net pay check instead of gross). I never hear of anyone talking about how much they make a year once the tax guy has come and once they have factored that they need to work 40-50 hours + transportation time (which is usually another 2 hours per day). This needs to be factored as well, right? The devil is in the details…

The argument is hard to swallow? Well if I wasn’t able to rack so much money at my day job while working 30 hours a week (5 minutes from my house), I would quit. For now, I think I can get both my career and company growing. Don’t worry, I’m only 30, I’ll eventually quit ;-).

We both know that you are making more than 2K per month with your network, thus, you took a 2K/month revenue example to talk about your site. I think you should have used real figures or simply not take your site as an example if you don’t want to provide the numbers. I totally understand why you are not sharing your income, but I’m not too sure how accurate this example was.

Definitely include Net Profit after tax figures as well. That’s what public companies share. So in other words, highlight:

Revenue
Operating Profit
Net Profit

That way, people can use the apples to apples comparison. Many people confuse revenue with net profit, which is scary since expenses and taxes are a huge chunk of pain.

Anybody in a revenue generating job probably produces 5-10X++ more than they make in income. Their business generated for the firm can be compared to the revenue generated by an online business.

I really hope people can see and understand the difference. But, unless one looks at financial statements all day, or actually runs a business, many don’t.

For my example, if 2K/month is my revenue, can you imagine my operating profit, and net profit? Much less of course!

I think it’s great you can make ~$22-25,000 a year in net profit a year online. I like the hybrid model approach of working both.

by: The Financial Blogger | February 7th, 2012 (12:25 pm)

I understand where you are coming from as revenue and net profit is definitely different and most people don’t get it. However, I still believe that most people look at their “gross” pay check and don’t look at all their related expenses (that are not even tax deductible) to work.

If you look carefully, you will find out that most first entry level managers are not making much than a burger flipper at McDonalds. Why? because they have to work days and night and weekends to make their higher income. If you bring this down to an hourly wages, those people are not making a lot more than $10-$15/hour. But this is pretty hard to understand as well.

As for my company, I will still continue to provide revenue and expenses but I won’t get into the accounting and taxes implication as rules differ from one country to another and it can be very hard to follow. What comes in and what comes out it easier to get. The only thing to add is estimated taxes (which you always try to reduce to a maximum when you have a private company anyway).

As for your example, the problem is not the operating profit and net profit, it’s the first number that is wrong 🙂

I gotta agree with Sam on this one Mike. Gasp, I can’t believe I just said that! (Kidding Sam.)

You argue that expenses just aren’t important, which is like you telling someone what they spend isn’t important. Sure it is. It’s almost as important as what you make. Business is all about cutting expenses to the bone.

And then you say “However, I still believe that most people look at their “gross” pay check and don’t look at all their related expenses (that are not even tax deductible) to work.” This is true, but the comparison is really, really far off.

Your online business pretty much has 20% net margins. So you’re saying that it costs me 80% of my salary to go to work everyday?

I, for one, don’t expect you to give an after tax number. I don’t think it’s unreasonable to ask for operating income rather than revenue.

by: The Financial Blogger | February 7th, 2012 (6:04 pm)

Hey Financial Uproar,

I can’t believe you’re with Sam on this one too 😉 haha!

I said that there is a huge difference between expenses and investments. They are reported the same way on my financial statement but expenses can be hardly reduced while investments can be cut down to almost 0.

If you take you net pay check and take off your cost of transportation to go to work, you are probably at 45% of your net income if you live in Canada (probably less if you live in Quebec, lol!).

If I take my last 6 months of activity, I make 10K per month on average and 4K per month in expenses. This makes 6K/month operating profit. Net of taxes (19%), this makes $4,860. Therefore, I have a 48% net margin, not 20%. If you cut the profit in half because I have a partner, you need to cut the gross revenue as well to make it right in term of proportion (’cause I either make $4,860 out of 10K or $2,340 on 5K).

As you can see, both situation are fairly comparable. BUT, my business allow me to scale my model. So next year, when I will run the numbers once again, I will increase my profit margin while your salary will be at the same %. The reason why it will happen is that my current cost structure will support growth in my company. Therefore, if I can reach 15K/month, I will still average 4K/month in expenses. This is the whole point of my post : “scalability” 😀

Wow Mike, it costs 45% of your operating profits in transportation costs to go to work? That’s brutal man.

I have a bus pass that costs $45 a month and I am making more than $100 a month in income at my day job.

by: The Financial Blogger | February 8th, 2012 (12:54 am)

oops! I mean taxes + transportation (taxes & other things such as unemployment insurance alone will eat roughly 50% of your income). The transportation is not necessarily a big issue (unless you need a second car to go to work;-) ).

The one thing I agree about with an online business is SCALABILITY as you write. However, if we are to put your arguments up with mine, I have to objectively say my post, “Quit Your Job And Die Alone” wins.

Why? Just look at the number of comments at 180+! The arguments I’ve given in the article are factual and bullet proof. Maybe my writing style and ability to engage readers has something to do with it as well, maybe not!

Do you think I write especially well? I don’t think so. Hence, why is there so much activity on Untemplater? Things to think about!

Sam

by: The Financial Blogger | February 8th, 2012 (10:52 am)

So your main argument is :”I have more comments than you so I hold the very truth about everything?”. That’s pretty interesting…. so I guess that if you write that smoking is good for health and I write the opposite but you get more comments, you will be right. Is that your logic?

One of my weakness on my blog is that I’m not able to get a lot of comments. I don’t really know why, but I know that I’m not good at having comments. But that doesn’t mean that what I write is wrong. However, kuddos to you for being able to engage people like you do, this is definitely a talent that I don’t have!

Factual and bullet proof?

I’m sorry Sam but your examples are far from being factual and bullet proof:

– Yourself: you don’t even disclose how much you make from your sites. So either you lie when you say you are making a lot of money with them or either your example with a 2K/month gross revenue is wrong. ‘Cause if you are making 10K per month with your site while working 20-25hours/week on them, I’m pretty sure that your net operating profit is higher than most people who has a job and work 20-25 hours/week. Let’s say that after taxe and expenses, you make 5K NET a month, which kind of job gives you a NET pay check of 5K/month in exchange of 20-25 hours per week of work?

– My example: you take my net operating profit but you don’t consider how many hours I work on my company a week. Considering that I work 10 hours a week, I bet you can’t find any employees that is able to A)_work 10 hours a week (besides working at Wal-Mart) and B) make this kind of net income (21K per year of NET income that’s at least a 35K job).Tell me, who works 10 hours a week and make 35K? can you name at least 1 employer that offers that?

– Erica: have you took the time to compared who much Erica would have needed to make as an employee during the same period of time to amass the same amount of money she did? She sold her business for 1,1M$, how much per year do you need to make to get a salary and accumulate 800K NET of taxes? I’m not familiar with all the details around Erica’s business but I guess she didn’t worked on her company for 10 years if she sold it at 26. But just for fun, please find me a company that would hire a 16 year old kid and pay her 800K NET in 10 years (that’ 80K NET of taxes) + an additional salary (because she was making money before selling the business, right?). She had to find a new job and a mortgage? Well it’s impossible that you can retire at 26 with only 800K in your pocket. Depending on what she did with her money, I can understand that she had to find another job. But then again, who could stop working at 26? Did you have 800K net in your pocket at the age of 26 from working? I doubt it. This can only happen to entrepreneurs.

– As for Adam, this is probably your best example FOR THE MOMENT. Since he is currently building his business, it makes total sense to not make much money out of it. It’s like asking as college student to make a lot of money. He can’t – he must study and get his degree before he makes the big bucks.

I would really like to hear your thoughts about your bulletproof and factual examples after what I wrote about you, me and Erica’s situation. I don’t think you outlined all the facts in those cases.

Cheers,

Mike

Its a funny argument isn’t it? It’s not the number of comments, it’s the comments themselves that are filled with examples after examples of agreement in the thesis that it’s brutally difficult to make a living online.

When have I ever said I make a lot of money from my sites? The entire thesis is that I don’t make a lot of money from my sites. Maybe I am a bad writer after all if you don’t understand my point.

Erica didn’t have $800,000 in her pocket at 26. I gave her the benefit of the doubt on having no debt, and a lump sum payout, which was not the case, however I don’t want to speak on her behalf.

I think the reason why there aren’t a lot of comments in this post supporting your thesis is because frankly, your argument is not clear and well crafted, no offense.

I mean, even Financial Uproar agrees with me, and he never agrees with anything I say! 🙂

by: The Financial Blogger | February 8th, 2012 (12:49 pm)

I don’t know if those comments can tell anything, Sam. Look at my primerica series:
http://www.thefinancialblogger.com/primerica-reviews/

I think I have over 1,000 comments within those 5 articles and you know what? most of them says that Primerica is an awesome company. The rest of them says that Primerica is an awful company. Who’s right? the majority? Based on what? their number?

You will obviously find more people that want to keep their job and don’t want to be an entrepreneur… 95% of businesses don’t survive the cap of 5 years!

I remember once you told me that I would not believe how much you were making with your site, I must have read it wrong, my bad. Then again, if you are making 2K per month with Financial Samurai only (this is definitely a big MINIMUM) for 20-25 hours a week, that’s pretty good! Mind you, you can’t have much business expense with Financial Samurai as you write all articles and hosting a blog cost almost nothing.

So your factual and bullet proof arguments are based on semi-researched fact on Erica’s story? Okay… let’s pretend that she had a $400K loan (very unlikely, but let’s make it a very worse case scenario). So she starts working at the age of 16, rack up a salary for 10 years and make 400K NET at the age of 26. How many people can do that with a job? almost NONE! So I still make my point: great arguments, well crafted approach, but when you dig pass your argumentative skills, you find a lot of holes in your rationale.

Your article was very well written and well crafted but if people would have dug a little further, they would have seen that you are omitting a lot of information to prove your point.

And what about Crystal? Pat? JD Roth? Trent? Bargainnering? I would have loved to see those examples as well in your article. But this would have burnt most of your points…

Great conversation (debate?), Sam ;-D