Calculating the Cost of Freedom

How much money do you actually need?

Nobody starts a business so they can be worse off than they were at their full-time job. So they can make themselves sick from stress. So they can live project to project, with little to no safety net, one surprise expense away from total financial ruin.

But that’s what we face when we don’t understand the true cost of making the leap to self-employment.

How much income do we need to bring in, not only to replace our take-home pay, but to cover things like taxes, business expenses, health insurance, and a dozen other line items we’ve never even considered?

Not knowing can be paralyzing. Jumping without being prepared can be disastrous.

So most people just stay put in the safe embrace of a biweekly paycheck, health benefits, and predictable routines.

I did.

I’ve heard this referred to as being shackled by “golden handcuffs.” My insurance plan wasn’t the best, so I was wearing “bronze plus” handcuffs (or maybe heavy duty zip-ties), but they were still strong enough to delay my launch by a year or so.

But you don’t need to be stuck. Because I put together a tool that I wish I had when I was first starting out. And you can use it to help get clarity on exactly what you need to make the leap. And it’s FREE.

The Hidden Costs of Going Solo

It’s important to understand that when you're employed your company provides much more than a paycheck. When you work for yourself, you need to prepared to cover:

• Taxes: You’ll now pay both the employer and employee share of Social Security and Medicare (there are ways to reduce your tax bill, but that’s another conversation, and that comes with its own cost and complexities)

• Health insurance: Say goodbye to subsidies. Now it’s all on you

• Business expenses: Subscriptions, tools, software, and supplies

• Professional development: Courses, certifications, conferences. On your dime.

• Equipment and workspace: That free laptop and desk space? Not free anymore

We need to figure out how much all of this costs. And we need to make sure our business can actually cover these costs. How many hours do we need to work and what do we need to charge to be profitable?

Crunch the Numbers, Not Your Dreams

Calculating this can be a challenge. To make this easier, I created a Salary Replacement Calculator. It walks you through the questions above and helps you estimate what it’ll take to truly replace your full-time income.

You can:

✓ Factor in taxes and health insurance

✓ Estimate startup and ongoing business expenses

✓ Set target hourly rates and see how the math shakes out

✓ Plan your savings runway before you make the leap

It’s still in beta, but it’ll give you a ballpark. And that’s more than most people have when they start.

It won’t eliminate all uncertainty. But I hope it can help replace some of your paralyzing fear with a little bit of informed courage.

You’re venturing into uncharted territory. There will always be unknowns when starting and growing a business. But there’s also a lot you can calculate and plan for. You just have to ask the right questions and be willing to do the math (and now you have a tool at your disposal to help you with that part).

You also have at least one person at your disposal. If you want someone to talk to, I’d love to have a conversation. You don’t have to figure this out alone.

🧮 Try the Salary Replacement Calculator today and see what it would actually take to replace your current income.

And feel free to shoot me a message and let me know what you’re working on or if you’re hung up on anything. Let’s crunch some numbers and keep moving.