When Should You Quit Your Job? (2 of 2)
Derek is an MBA in entrepreneurship, painter, and bassist for Onward We March, a local progressive metal band. He teaches business skills to artists and writes weekly music business advice for his blog Derek Thinks Music. Got a business question about your art? Shoot him an email at firstname.lastname@example.org
When (if) you decide to make the leap into being self employed, you’ll want to be as prepared as possible. It’ll be stressful adjusting to your new job now that your electric bill depends on success. A band is a start up company, and 60-70% of startups fail within six years.
Lets think through some considerations that will help you figure out when the time is right.
1) Figure out your burn rate.
Also known as your monthly expenses. This number will determine whether you’re sinking or swimming in your new career. If you’ve got dependents, they need to be factored here in too.
Its a simple concept, but bears repeating. If you earn slower than you burn, you’ll burn (out).
2) Build up an emergency fund.
Since you’ll be self employed now, there’s no such thing as paid sick days. If you get struck with a bad case of the AxlRoseitis, you won’t be pulling in any cash. What if your van breaks down the day before a tour? Or what if you have to post bail to get out of jail in Prague?
Random bad luck is inevitable.
An emergency fund is the difference between an inconvenience and a catastrophe.
At bare minimum you want at least two months worth of living expenses saved up before taking the plunge.
3) Figure out your expected income.
How much will you realistically make in the span of a month? Estimate this by seeing how much merch and music you sell, your income from shows, and any side income like teaching or session playing.
Now try estimating how much you’d make during a tour. Since you won’t always be on tour, estimate your monthly expected income somewhere between the two numbers.
4) Figure out how to increase your expected income.
This is where the hustle comes in.
Yes, you can cut your monthly expenses to make it easier to start making money, but that’s a temporary solution. There’s a limit to how much you can cut but there’s no limit on how much you can make. (shout out to Ramit Sethi’s excellent money blog I Will Teach You To Be Rich)
Should you do vinyl releases? Private house shows? Festivals? Song licensing? Keep your eyes and mind open.
There’s a million other considerations to make before going full time, but the hard numbers of “can I support myself and my family?” underly everything.
This post isn’t intended to dissuade you from going full time, its about information. If you’re going to make the leap, it helps to know where you want to land.