Dave Says: Put a Little More Thought Into It

Dave RamseyBy Dave Ramsey3 Minutes

Dear Dave,

I don’t like admitting this, but I absolutely hate my job. Last year I almost cashed out part of my 401(k) to start my own business or open a franchise, and doing something like this is still on my mind. Considering how I feel, do you think this would be a good idea?

— Kurt

Dear Kurt,

In your current state of mind, this entire idea is a trap. Don’t misunderstand, I love the idea of someone living their dream and owning their own business. But you just mentioned starting your own business in the same breath with opening some sort of franchise. That tells me you don’t really know what you want to do.

Have you ever heard someone say they’re “going all in”? When you’re playing cards, that means you’re about to bet everything on a single hand. But here’s the deal, it’s never smart to go all in when it comes to small business. That’s a good way to turn a dream into a nightmare.

I’m urging you to really think about this before you take action. You didn’t mention anything about your financial situation, other than you have a 401(k). That’s a good thing, but if it’s all you have—and you don’t have any other savings set aside—you could be in real trouble. If you decided to leave your job, and your idea for your own business doesn’t pan out, you’ve lost a chunk of your retirement savings. It’s gone for good. Bankruptcy also becomes a real possibility. Opening a business just because you don’t like your current job, or you’re angry at “the man,” is a bad idea. You need to find something you truly love doing, because to have any chance of success you’ll have to live and breathe that business day and night, seven days a week.

Don’t make any rash decisions about your current job right now. If you really want to start your own business, begin by doing a lot of research, saving as much money as you can, and thinking about things you could do for a living that would make you smile every day. Once you figure that out, the next step is devising a plan that will allow you to open a business without putting your entire financial world in danger. In other words, how can you start small with the money you have, instead of damaging your retirement funds or taking out a loan?

It’s not an either/or proposition, Kurt. You don’t have to risk it all to get away from a job you hate and into one you love!

— Dave