November 24, 2016 at 11:27 am #10379
My question is with regard to leaving your career to pursue business interests and the survival money required to make the move. I want to talk hard numbers though and see whether there is anything I am missing or not planning for.
I want to leave my current career to pursue an MBA and ramp-up a plumbing business that I started 6 months ago. My partner is running the business currently and it is ticking over (breakeven or small profits monthly). The problem is the business requires both of us at the helm to ensure that we start increasing its income potential. He is the operational guy and I am the marketing and sales.
If I leave my current employer next year. I have the following savings.
ETF investment – R250,000
Pension – R500,000
Access bond “savings” rental property – R750,000
Access bond “savings” primary residence – R900,000
Total “savings” = R2.4mil (don’t really want to use the money in the primary residence access bond)
We require an additional R400,000 for the business to get additional bakkies, plumbers and tools on the road, implement marketing strategy and additional cashflow to keep us afloat.
I will also be doing my MBA through GIBS at the same time at a cost of R250k over 2 years part-time.
That leaves me with about (2.4mil – 900k (primary residence) – 250k (MBA) – 400k (Business)) = 850k to survive until the business is able to pay me a salary. They always say that small business takes at least two years to pay you a half decent salary.
That means I have 850k to survive for two years.
My current salary is R42k a month including pre-tax benefits (medical aid and pension).
I will obviously seriously tuck in my belt for the next 2 years and my wife still draws a salary from her business of R25k a month.
We don’t have any debt at this stage (no car or home loan debt). However as we use the rental property access bond we will start having to make payments on the loan again.
We could easily live off half if not less of what I earn now.
My final question is what expenses should I be considering before I leave and unforeseen expenses? With my current savings is it a wise move to make or should I hang in there?
Has anybody else made the jump and can shed some light on capital required and expenses incurred.
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