Leaving a job to start a business comes down to 6 numbers. You can work out every one of them this month, while your salary is still being paid.
Search “should I quit my job to start a business”. The first page of results gives you 10 reasons and 9 questions about your character. Do you have a growth mindset? Are you flexible enough? Do you have support?
None of those are answers.
As it turns out, there is research on the sequence itself. A study published in the Academy of Management Journal looked at how people enter self-employment. People who built a business while still employed, and only then went full time, survived at much higher rates. The people they were compared with left paid employment and went straight into working for themselves.
So the real question is when. And when to quit your job to start a business is something you can work out from 6 numbers.
Work them out in order, because each one feeds the next.
Treat quitting your job to start a business as a math problem
Each number below comes with a test you can run on your own situation this week. Write the answers down somewhere you will find them again.
1. Work out what you actually spend each month
You have a number in your head for this and it is wrong. It is usually last year’s rent plus a guess about everything else.
The problem is, spending rises to meet income without announcing itself. A raise 3 years ago turned into a better apartment and a second subscription. It also turned into a habit of not checking the grocery total. None of it felt like a decision at the time.
Here is the United States version, because it is the easiest one to underestimate. Average annual spending in the United States came to $78,535 in 2024, according to the Bureau of Labor Statistics Consumer Expenditure Survey. Housing alone took $26,266 of that. It works out to roughly $6,500 a month.
That average is not your number and it is not meant to be. It is there to show you the shape of the thing. Housing is the biggest single line, and the small lines together beat it.
Your test: pull 3 months of bank and card statements. Add up every line, including the annual charges divided by 12. Compare that total with the figure you would have given from memory. The gap you find is the error sitting inside every other number on this page.
2. Add up what your employer pays for you every month
Your payslip shows what your employer pays you. It does not show what your employer pays for you - and that second figure is larger than you think.
This is the number almost nothing on the first page of Google asks you to look up.
Here is the United States version. Employers spend an average of $49.46 an hour on each civilian worker. Of that, $33.85 is wages and salaries and $15.61 is benefits. Benefits come to 31.5 percent of total compensation, per the Bureau of Labor Statistics Employer Costs for Employee Compensation release for June 2026.
Health cover is the biggest single item inside that. Average annual premiums for self-only employer coverage reached $9,325 in 2025, and the worker paid $1,440 of it. That is from the KFF Employer Health Benefits Survey. The employer paid the other $7,885, about $650 a month that stops on your last day.
When I quit my job before the pandemic, the thing I had not priced was health insurance.
Outside the United States the mechanism holds and the figures do not. Find the 2 or 3 things your employer pays on your behalf. Usually that is health cover, a pension contribution and social contributions. Price each one as a self-employed person where you live, and add it to your monthly number.
Your test: price your own health plan with no employer paying in. Then add your employer’s pension contribution. Put that total beside the figure from your statements. The business has to cover both.
3. Check how long your savings can last you
Every list on this question tells you to save 6 months of living expenses. Fine. The only thing is, 6 months of living expenses does not buy you 6 months.
Your savings have to cover your real monthly spending. They also have to cover what your employer used to pay for you, and what the business itself costs to run. Divide by that fuller figure and the answer comes out smaller than you expected.
The answer is a number of months, and months are the unit this decision runs on. What you buy with savings is time to find out whether customers will pay you.
Time is what the odds need. About half of new establishments in the United States are still open 5 years after they open. That is from Bureau of Labor Statistics Business Employment Dynamics data on businesses started between 1994 and 2015.
James Hawkins and Tim Glaser founded PostHog. They saved a year of living costs and planned to build and launch for 6 months before going full time. Notice the order. Their first checkpoint came while half the money was still in the account.
Your test: divide your savings by the monthly figure you now have, and write the number of months down. Then subtract 3, because your first invoice gets paid later than you think it will.
4. Work out what the business has to get paid each month
The business has to get paid more than your salary. The reason is a tax line you have never had to look at.
As an employee, your employer pays half of your payroll contributions and you never see the money. Working for yourself, you pay both halves - the employee half and the employer half.
In the United States that is self-employment tax, and it runs at 15.3 percent. That is 12.4 percent for Social Security and 2.9 percent for Medicare. It applies to about 92.35 percent of your net earnings from self-employment. It starts at $400 of them, per IRS Topic 554. Income tax sits on top of that.
If you work elsewhere, look up the self-employed social contribution rate in your own country. Find the earnings level where it starts. The mechanism travels: the half your employer used to pay becomes yours.
Your test: take your monthly take-home pay and add the monthly figure for what your employer covered. Then divide the total by 0.75. That is roughly what the business has to get paid before tax every month. It leaves you standing where you are now. The 0.75 is a stand-in, and your real rate depends on where you live and what you earn. It still gets you close enough to see the size of the problem.
5. Check the highest price a customer ever paid you
Open a document and write down the largest amount a client outside your job has ever paid you. Put the date beside it.
For most readers of this page that line is empty. That is useful information, and it points at the most actionable thing on this list.
Your employer paying you every month tells you nothing about whether a customer will.
The problem is, the projections you build before leaving almost always use a rate you have never actually been paid. You convert a senior salary into a day rate. You multiply the day rate by a number of billable days. The result is a spreadsheet with no actual transaction anywhere in it.
Alex Styl wrote up his first year of self-employment line by line. He made $7 a month from a product that his one customer then cancelled. He made $680.32 from a template, selling 41 copies. The book he wrote brought in about $3,342 over 3 months. He had skills people wanted. The first year still looked like that.
Your test: if there is a figure on that line, multiply it by the days you could realistically sell. Check whether the result covers the monthly number you just worked out. If the line is empty, filling it is the first thing to do. It does not need you to leave your job.
6. Price what the business costs to run for a year
The savings math falls over here, because the business spends money too. It starts spending before a single customer pays you.
Count the business registration and an accountant for the first tax return. Add liability cover if your work needs it, and the software you use every day on your employer’s account.
This is the line that catches you out. Your employer pays for the design tool, the spreadsheet suite, the project tracker and the video calls. Each one has a single-user price you have never looked at.
Michael Drogalis built an example around a founder with $120,000 set aside. Her living costs ran $60,000 a year and her business costs $2,000. That comes to about 1.8 years of cover. The business line is small beside the living costs. It still has to be in the sum, or the months you calculated are months you do not have.
Your test: list every tool you opened for work this week and look up each one’s price for a single user. Then add the accountant. That total is your first-year business number, and it goes into the savings division alongside your living costs.
Start closing the gap while you are still being paid
You now have 2 figures that do not match. One is what the business has to get paid every month. The other is what a customer has actually paid you so far.
Closing that distance is the work, and all of it happens while your salary is still coming in.
Give it 2 hours before work, 4 mornings a week, and you have put in roughly 400 hours a year. 8 good hours beats 20 tired ones, and none of it touches your income.
You do not need a sabbatical, a career break or a gap in your income to start.
For 2 years I carried my personal laptop into the office and set it beside my work computer, so I could build my business in any 10-minute gap.
Put one evening in the calendar for the task that needs an evening. Write the actual task into the slot. Then spend 2 weeks having 4 real conversations with potential customers. Ask each of them what they currently pay to get this done. That answer is the rate your spreadsheet has been missing.
There is a longer version of this in how to start a business while working full time. And 10 signs it’s time to quit your job and work for yourself covers whether you are ready at all.
Working the gap out by yourself is possible, and it is also how a year or two goes by. Plan A is the 8 weeks of 1:1 coaching we run for exactly this step. We pick your direction with you, and work out how you reach the people who might pay for it.
Wait if your stock vests or your bonus pays within the year
The 6 numbers can all come out right - and the timing can still be wrong.
A block of stock options might vest in 8 months, or an annual bonus might pay in 4. Leaving before then hands your employer money that was already yours. Work out the amount and divide it by your monthly spending. You will usually find it buys more months than any amount of extra saving would in the same period. (And if your right to stay in the country runs through your employer, that outranks every number on this page.)
There is one more case for waiting. If the highest amount a customer has ever paid you is nothing, stay where you are. Go and get that first payment. Getting it is the next step in the plan, and you can take it from inside the job.
Key Takeaways
- Leaving a job to start a business is 6 calculations, and you can finish every one of them while you are still being paid.
- Your real monthly spending comes from 3 months of statements, and the figure you guessed is almost always too low.
- Your employer pays for things your payslip never shows, and health cover is the biggest one.
- Savings buy you a number of months, and the business’s own running costs come out of the same pot.
- The business has to get paid more than your old salary, because both halves of the payroll tax are yours.
- If no customer outside your job has ever paid you, change that first, and you can do it without leaving.
The part you should not work out by yourself
The numbers tell you what has to be true. Choosing the business that makes them true is the step this stalls on. Working that out alone is how a year or two goes by.
The Solo Founder Roadmap puts the moves in the right order
The Solo Founder Roadmap is our free tool, and it works whether you are employed, were laid off or already freelance. It builds your 12-month plan from 6 answers in about 90 seconds. It lays the moves out in 3-month blocks in the order they have to happen. If you are not working right now it also works out how long your savings realistically last. Start there, and then bring what it gives you into Plan A, where we do the building with you.
Plan A is how you build the business before the salary stops
Plan A is our 8-week application-based program for a professional employed 9 to 5 with real expertise and nothing earning yet. We work with you one on one to pick the direction and set the business up correctly underneath it. Then we get the offer and the pricing right, and work out how you reach your first customers. You get 16 hours of live 1:1 coaching and all 6 Uncommon Toolkits, and it runs alongside your job. It works the same way if you were laid off or you already freelance.
