When should you make the jump to work for yourself?

To start a business, many people think they have to quit their job and be the next Google. Is there another way?

Ramit Sethi

Too many weirdos think that to start a business, they have to quit their job, raise millions in venture capital, and start the next Google.

Uh, that sounds pretty risky to me.

Is there another way? Can you start something slowly? What if you want to quit your job and start your own thing, but you have bills and you don’t want to take on a huge risk?

What do you do?

I made the leap to running my own business, and then I taught a bunch of my students how to do it, too. So I wanted to share my answer to today’s “Ask Ramit” question, which comes from Jacquie in Atlanta:

“Financially, is it wiser to work for yourself (freelance/contractor) or to work for a company (who offers healthcare benefits, 401K, etc.)? I am at a crossroad, and the thought of leaving my company both thrills and terrifies me”

Here’s my framework of thinking about when to stay…when to quit…and the best way to do it. All in a short video for you:


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  1. Jaky Astik

    Ramit, I’ve always known that our minds live dual lives. There’s this thing we actually want to do and then there’s this whole segment of “why I can’t do it just yet” segment simultanously alive withing us.

    So, anytime we think about what we want to do, and everytime we discover a situation of doubt, we could say that there’s crossing happening between the effort we’ve to make to achieve something and the rewards we ‘might’ achieve that we’re not really sure of right now.

    If we could come in terms with rewards we can earn after the effort we make, we might just be able to take better decisions as to whether something should be pursued or not…

  2. Vincent Nguyen

    I agree with you 100% Ramit. It’s not always about dropping everything you’re doing right this second and dive in with both feet. Right now I am a full-time college student, but that doesn’t hinder my efforts at all. I’ve started up tons of things on the side and now I’m starting to get comfortable with the freelance work.

    It’s definitely working smarter, not harder.

  3. Lauren Doyle

    Thank you, Ramit. This is great advice! I am still on the teeter of working a FT career job but and working on my horse related web- business that is slowly building up to be something special (just made 1st page ranking on 2 target keywords!). I have one other thing to add to what you shared. I have discovered because of what I have taken the time to learn about web marketing and building a website, etc, there is a HUGE need for that from my existing clients in my current career job as well. So I am now able to develop a second passive income serving the clients I am already serving anyway and have an established trusted relationship with. In other words, as you are making the transition from your career job to your dream independent business, look for opportunities to serve your career market clients even better and gain experience and a passive income all at the same time! Even though I am planning to leave my career job, I have a new vigor and enthusiasm in speaking with my clients because I have the opportunity to offer them a solution to their problems, build my web marketing and site-building skills and provide an avenue to continue our relationship in the future all while setting up the framework for a future passive income. Win Win!

  4. Sandra Davis

    I have already managed to put away 12 months of living expenses, but I’m still too scared to make that leap. Perhaps I now need to turn my attention to racking up those paying clients to get that extra sense of security, before I do anything drastic.

  5. Darnell Jackson

    I tell people if you want to work for yourself DO IT.

    Don’t ask for permission or wait until the time is right.

    It takes SO FREAKING long to figure out a system that works where you actually have a business.

    If you wait then you will NEVER make it.

    Start today.

    Start on the side but don’t wait.

  6. Nisar

    You just set me free! 🙂
    I’ve been pondering over the same question for a while now.. Always knew the answer.. nice to be re-enforced by you. Awesome advice Ramit.


  7. Tatenori Hamasaka

    For someone who is ambitious but has family obligations (like myself), I would also add that it`s important to be very patient and do the due diligence (saving, research, etc), while not losing your initial drive. I used To Get frustrated easily when I Wasn`t making as much as money I Wanted, but once I Have set realistic goals, a working system, and got feedback from clients frequently, they helped me To keep on going With my dual job/freelance lifestyle.

  8. Marissa

    What if what I make in my full time job doesn’t even leave room $$ for saving enough for those 12 months? Like, not even close.

    • Ramit Sethi

      Then you probably need to negotiate your salary or get a better job. I strongly recommend doing this before you start a company. I cover all of this in exhaustive detail– including exactly how — on my site, newsletter, and courses.

    • Thomas Redstone

      Adding to what Ramit said, you would normally be building your savings from the money you earn using your business, the fact that it can do that for you will only reinforce that your business *is* viable! And can support you living on it alone.
      But, getting a raise is always a great help too!

  9. Alan Yu

    I think the only time you would really have to drop everything and go all the way is whether or not your side business conflicts with the company that you are currently employed with if you are going with that route. Example, working for a shipping company where you think you can create and operate a better one yourself where you are essentially competing directly with your place of employment.

  10. Kian Zarnegar

    Dear Ramit,

    I started a small company offering commercial loans, while working. There are many programs offering loans to businesses with credit not so perfect, as required by banks. I’d like an affordable marketing program attracting these businesses. Any suggestions?

    Kind regards,


    P.S. Some of the programs are not mentioned on the web-site.

  11. Sunil @ CPA Career

    the two most important variables in my opinion are:

    1) ensuring you have a rainy day fund – 12 months
    2) ensuring your side business is profitable and scaleable

    you can do without 2, but you can’t do without 1.

    in my case, when i pursued my passion full time my side business was making as much as what i was making at work. at the time i was making six figures plus. this is a rare circumstance however, thus i feel it is ok to start something from scratch as long as you have funds saved away.

    the ideal situation is to have your side business already going and showing promise. you know you can grow it if you focused more resources on it.

    rainy day funds are critical because it gives you mental stability, as well as practical. the amount and longevity depends on individual circumstances. i.e. do you have a family to feed, parents to take care off, etc? much easier for a single, worry free individual to embark on this journey i feel.

  12. Elizabeth Grace Saunders

    Your advice is wise to start something on the side to see if it works, you actually like the work, and to figure out how to structure the business so you can make sufficient income.

    But one additional word of warning I would give is to make sure that you’re asking clients to pay you and moving toward a rate that’s sustainable as a business owner. If you take on lots of non-paying clients or people paying way below what you need to make as an entrepreneur, you’re creating more stress for yourself and not moving toward having the ability to leave your job.

  13. Ralph Beale

    Some good advice there Ramit. Obviously there isn’t a one size fits all solution. If you’re 22 years old, single and debt free it’s a different situation to being 40, married with 3 kids and a large mortage to pay for.

    Broadly speaking I agree with the “rainy day fund” but 12 months is a bit too much, 6 months should be more than enough. When I took the plunge I had less than 3 months’ savings.

    Ideally you should already be earning enough from your business to cover all your core living expenses (rent/mortgage, food, utilities, etc). In the real world that probably isn’t realistic for most people so that’s a personal judgement call.

  14. Akshay Nanavati

    Hey Ramit. As always, your advice is gold! When I quit my job last March, I saved up enough money, gave myself room to quit, had 2 clients before I left, and then took the leap! Granted I ended up blowing 15grand to ski across Greenland for a month 🙂 Most importantly for me, I developed the confidence to know I could generate clients. I follow your advice to the tee with the people I work with, pure gold! I am curious though, what are thoughts about the burn your boats philosophy? Do you think once someone has that 3-10 clients they should leap and burn all boats in service of their own business? Does having a plan B weaken plan A, or do you think its wise to always have a plan B?

  15. Financial Planner Baltimore

    Nice explanation you shared for weirdos .This article will definitely helpful for those weirdos who are taking risky challenges for starting a new business. These advices will make them to become financially fit. And they can cope up with any situation.

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    My experience has been that this is not for everyone. I spent years working for others, enhancing my skills, knowledge and experience. It is still hard to do even after 35 years but I have found it well worth it. But I recognize this is not for everyone.