Should I Leave My $500,000 Job for My Side Hustles?

9 min

•Apr 15, 20264 days ago

Summary

Dave Ramsey advises Jeff, a Kansas City technology sales professional earning $250-500K annually, on whether to leave his W2 job to focus full-time on his two side businesses: an event rental company and a moving company, each generating approximately $500K in revenue with strong profit margins.

Insights

Profitable side businesses with proven growth trajectories can justify leaving high-income W2 employment when personal burn rate is controlled and businesses are debt-free
The decision to transition should be based on business growth trends and profit trajectory rather than savings accumulation alone, as savings cannot sustain a failing business
Maintaining the ability to return to previous employment provides psychological and practical security for entrepreneurial transitions without requiring a complete 'burning bridges' approach
Personal involvement and effort in business operations can significantly accelerate growth; the caller estimates his sales expertise could add $250K+ in additional profit within 2-3 years
A low personal overhead ($10K/month) relative to business profits creates financial flexibility and reduces risk when transitioning from W2 to business ownership

Trends

Technology sales professionals leveraging high W2 income to fund and scale multiple business ventures simultaneouslyEvent rental and moving services sectors showing strong growth in regional markets with significant scaling potentialEntrepreneurs maintaining W2 employment while building businesses to de-risk the transition rather than making immediate full-time commitmentsDebt-free business model preference among growth-focused entrepreneurs as a prerequisite for leadership transitionsKansas City emerging as a market with significant growth opportunities in service-based businesses

Topics

Career transition from W2 employment to business ownershipSide hustle scaling and profitability analysisPersonal financial burn rate managementBusiness growth trajectory evaluationRisk mitigation in entrepreneurial transitionsMulti-business portfolio managementProfit margin analysis (event rentals vs. moving services)Market expansion strategy for service businessesDebt-free business operationsSales expertise application to business growthFinancial decision-making for high-income earnersBusiness valuation and exit timingPersonal overhead optimizationTrend line validation before major career decisionsMaintaining employment optionality

Companies

NetSuite

Cloud ERP platform with built-in AI used by Ramsey Solutions for business operations and financial management

Ramsey Solutions

Host organization and producer of the EntreLeadership podcast, headquartered in Nashville

People

Dave Ramsey

EntreLeadership podcast host providing business and leadership advice to callers with 30+ years of experience

Jeff

Caller from Kansas City seeking advice on transitioning from $250-500K W2 job to focus on two side businesses

Quotes

"I just want you to be sure that you're, you know, that I want to see these trend lines on both of these things be real. And how long do you need to have the trend lines on both the growth on both these things before you can count on it to walk away from a pretty substantial W2 income"

Dave Ramsey•Mid-episode

"You run a business so you already know that bad information leads to bad decisions. And everyone is talking about AI, but AI is only as good as the data behind it."

Dave Ramsey•Sponsor segment

"I'm trying to say, is this boat close enough to the dock? And the bottom line is, is you've got your personal burn rate, your personal overhead down low enough compared to these numbers, that if you keep that there and you're not planning on spending all this money, then we're playing with house money."

Dave Ramsey•Late episode

"Savings won't work if the thing gets upside down and starts burning, but it's not burning money now. It's creating money. So you can't save enough to make the leap. You have to make the leap based on trajectory of these profits going up."

Dave Ramsey•Late episode

Full Transcript

From the headquarters of Ramsey Solutions, this is Entree Leadership. I'm your host Dave Ramsey with over 30 years of experience leading in the trenches right alongside you. If you got a question for the show, go ahead and click the link in the description. We're glad you're here. Alright, Jeff is with us in Kansas City. Hi, Jeff, how are you? Doing well, sir. How are you doing? Better than I deserve. How can I help? Well, one, appreciate the opportunity to speak with you, diving right into it. I own a couple of businesses and I am looking at when is it the right time to exit my W2 to focus on those businesses. Right now, I'm in technology sales and my W2 income is between $250,000 to $500,000 a year. And then my wife and I have a one and a half and a three-year-old. My wife runs business number one, which is an event rental company. It does about $500,000 in revenue. We started that in three years ago. And then last year, we purchased a moving company that does about $500,000 in revenue. And I have a partner that owns 20%. That runs the day-to-day on that. Both businesses are debt-free. Well, the profit on those two businesses. Yes, sir. The moving company is about 15% to 20%. We bought it last May and so we're still working on the final profit. And then the event rental company is about 40% margins profit. Okay. So you got about $300,000 in profit on those two if it comes out like you think it's going to. And you make $300,000 for W2. Yes, sir. So when you quit, your income goes in half? Yes. Okay. But you have a $300,000 income. Correct. And we right now, our personal lives, our burn is about $10,000 a month before insurance and all that investment and stuff. And so we've anything above and beyond the 120 after taxes, we just reinvest into other opportunities, whether it's the businesses that we own or potentially looking to purchase a warehouse for cash in the future as well, where we can house and park our vehicles and house all of our rental equipment. Okay. All right. Is the either one of these businesses on a growth curve? Both are growing significantly in the Kansas City market. The event rental company will have a cap of about a million and a half dollars. And then the moving company will be about $2 million on that cap before we expand into another market. Both have been growing significantly. The event rental company will triple this year to about last year we did 450. This year I'm expecting about 750. So that's about double. So when you move over there to do one of these things full time, what does that add to these numbers? Your presence. I don't know. The sale side of it from what I do on a day to day business. And I think after two to three years, I could cap them both out in the markets that we're in. Okay. Okay. So the effort you're putting in for someone else making 250, you could put that effort in and grow yours by 250, say? Yes, sir. Give or take. Okay. Profit. And it's not gross versus W2. It's profit versus W2. That's what we're looking at. Correct. Yes. Yeah. Okay. I mean, you can afford to quit anytime you want, right? Mm-hmm. So it's up to you when you do it. I just want you to be sure that you're, you know, that I want to see these trend lines on both of these things be real. And how long do you need to have the trend lines on both the growth on both these things before you can count on it to walk away from a pretty substantial W2 income that I suspect will be hard to go back to? If I fit, I don't think so. I still hit my number every single year and even with these side hustles going on. And I have not burned or planned to burn any bridges and I'm 90% sure I could come back to at any point. It just depends on where the market is at at that time. You know what we're going through with all the memory chips and everything going haywire. So it's just an AI going haywire. So it just depends on where that is at if I decide to go back to that. Yeah. Okay. You run a business so you already know that bad information leads to bad decisions. And everyone is talking about AI, but AI is only as good as the data behind it. The best AI is built on the best data. That's why I recommend NetSuite. NetSuite is the number one AI cloud ERP and more than 43,000 businesses run on it, including us here at Ramsey Solutions. Their AI isn't bolted on, it's built in and it connects everything that runs your business accounting, inventory, customer data, all in one place. Because when your numbers are connected, AI actually works like it's supposed to. NetSuite's AI helps flag cash flow problems, spot inventory issues, close your books faster and cut down on manual reporting. No more guessing, no more spreadsheet chaos, just clear numbers and real insights so you can lead with confidence. An investment in NetSuite is an investment in clarity. If your revenue is at least seven figures, go to netsuite.com slash Ramsey for a free product tour. That's netsuite.com slash Ramsey. Yeah, I think you do it. I think it's time to do it. You just got to, you have to think about, you know, like you said, what is my return possibilities? Are we burning the boats? The bridges? No, we're not. So we can go back and if one of these trend lines is off, and it could be that just your personal attention causes all your dreams to come true over there. So I'm all for it. I just, anytime someone says I'm going to quit my day job to go work on the business, I want to pull the boat up close to the dock and step over into the boat and not take a leap of faith and get wet. And that's what these questions are, right? So I'm trying to say, is this boat close enough to the dock? And the bottom line is, is you've got your personal burn rate, your personal overhead down low enough compared to these numbers, that if you keep that there and you're not planning on spending all this money, then we're playing with house money. Yes, sir. So that was April 27 was my target date. And just to get a more savings and get that year savings of when we do, I have my family has that little bit of cushion there. Yeah. Well, savings won't work if the thing gets upside down and starts burning, but it's not burning money now. It's creating money. So you can't save enough to make the leap. You have to make the leap based on trajectory of these profits going up. But savings helps. Savings gives you some emotional cushion. But if both these things start eating money and you have to burn through that savings, that's not a sustainable plan, right? Yeah. Yeah, which I don't foresee. I can't see that either with the numbers you're giving me. This sounds like it's working. So I don't hear anything in here that makes me scared. But I just, and if you're going to go ahead and play it out for a whole another year, then yeah, I think that's fine for sure. And you know, during that year or two, you should see some more growth trend, some more trend lines, which gives you even more, I'm more secure based on the growth curve of these businesses than I am the money and savings. That's what I'm saying. So and I think you are. So I think that's you give this nothing in a whole another year to trend out and let's see where it lands. I like that a lot. Sounds like you're on top of it, Jeff. I'm impressed. Very cool. Proud of you. Keep it up. Folks, if you enjoyed today's episode, be sure to like, share and subscribe for more great leadership content. I'm your host Dave Ramsey. This is On Trade Leadership.