the 3, 2, 1 method, side hustle to full time

Summary

the side hustle stays a side hustle as long as you split your bandwidth. real growth needs all of you. the 3, 2, 1 method is how you make the jump without blowing up your finances.

1. three. three consecutive months of business income at or above what you need to live on. consistent, not averaged. one big month and two small ones doesn’t count.

2. two. two months of personal savings in the bank as a runway in case things go sideways.

3. one. one source of income. quit the job. give the business all of you.

the part nobody warns you about is the mental shift. once the business has to feed your family, you stop tinkering and start operating. that pressure is the unlock. but only if you’ve earned the right to be there with consistent income and a runway. don’t skip those.

Transcript

introduction: when is the right time to go full-time with your side hustle?

The most impactful business is the business that genuinely improves another human, a better human business. And to grow a business like this, you have to continually improve yourself. This podcast is a documentation of that thesis, scaling businesses and also personal growth. My goal is for you to shortcut this journey. So if you’re ready to try hard, subscribe. If you like what you’re hearing, please share and enjoy. So how do you know when it is time to take your side hustle full time?

What’s the threshold? What’s the idea behind it? I’m going to tell you what I did and how I think about these things. This is the Better Human Business Podcast. I’m Jerred Moon and it’s a very difficult thing to do. So if you are listening to this and you are in those beginning stages, I’m going to walk you through it. And then if you’re more advanced, you know, person listening to this, maybe it’s something that you can share with others who might go through the journey.

the challenge of balancing a full-time job with a side hustle

There’s a couple of reasons it’s hard because one, you are already spending all of your time. Like if you have a full time job and then you have a side hustle, you’re spending all your time at this full time job. And so your side hustle isn’t growing as much as it should. And you are always wondering, like, is it not growing as much as it should because I’m not able to focus on it? Or is there just limited potential?

And I can tell you 99 out of 100 times, having seen this with so many different entrepreneurs and myself, it is you are not focusing enough time on it. So hopefully that adds some comfort already. Like, hey, it more than likely 99% of the time, it’s just it’s not growing because I’m not putting in the time. That’s it. That’s why. It’s not that you hit market saturation or you have a bad idea. That’s very, very rarely the case, you know.

setting financial goals and thresholds before taking the plunge

So just think through that. The other reason why it can be hard is because let’s say you’re making $50,000 a year of just a pull random number out at your full time job and you’re like, well, I’m not going to go full time until my side hustle is making at least what I’m making over here, which is already a lofty goal. But let’s just say you actually achieve it and you’re making $50,000 a year full time and you’re making $50,000 a year as a side hustle, which is an awesome side hustle.

But now you’re making $100,000 a year. And so for you to do away with the job and just go all in on the side hustle, you cut your income in half, which is also very painful. So you have to really want what you want. And sometimes it’s not actually that drastic. It might be more like maybe you’re making $75,000 in your job and you got your side hustle to $25,000 and you’re making $100,000 and you’re like, well, you know, it’s just it’s difficult.

introduction to the 3-2-1 method for transitioning to full-time

And so there’s a lot of Band-Aids to rip off. One, you have to get rid of the full time gig at some point to go all in to get the time that it needs. And there’s also going to be a step back in income for most people most of the time, but it will grow and eventually surpass your income. So that’s why you ultimately want to do it. But I did put a little method around this, you know, having helped people through it.

And then, like I said, also doing it myself. And what I did was this and this is some people this is still too risky, but it’s a it’s what I call the three to one method. So first, I needed my business income to be consistent for three months straight. And you all know if you’re especially if you’re a new business owner, you know, you can have some inconsistent months, you can have a bad month, a really good month, an OK month, another bad month, another bad month, a really good month.

And so it’s that inconsistency is really scary if you’re trying to support a family and you’re just barely getting there anyway. So what I had to make sure was I needed business income to be consistent for three months straight. So let’s just say my threshold for going all in on my business was it needed to make ten grand a month. I needed to make ten grand a month, three months in a row, because now I feel like I at least know what I’m doing right.

It’s like, OK, three months in a row, you’re you’re good for this month. You can probably do this the next three months. So that was what consistency I wanted. And I’m not talking about averaged out. I’m saying like whatever the threshold is for you, if that’s like, OK, it needs to make four K, five K, six K, seven K, 15 K, whatever it is, you kind of set that lower threshold number and it needs to do that three months in a row, because what I don’t want is like I made twenty grand one month, five grand the next month, seven grand the month after that.

And I average them out and I’m OK, like none of that consistency across three months. Now the next thing is I want to make sure I had two months of savings as a cushion just in case. So three, two as part of this method. So I got three months of consistency in my side hustle and I have at least two months of savings. Some people want a lot more than that, but. I wanted I wanted more than that when I was going from side hustle to full time, but the reality of like it happening was like, OK, well, my savings rate right now, it’s going to take me two years to get six months worth of savings in the bank.

the importance of financial consistency and having a safety net

And I’m just pretty confident if I just put more time into this, I will make more money. And so two months was the minimum for me. So I got three months of consistency. I’m like, OK, the business is making this money. If for some reason that consistency was a fluke, I now have two months of savings that can support my life until I figure out what happened. OK, so three and two, I got those as a cushion.

Now, once I had those three months of consistency and two months of emergency savings, then I will go to one source of income. OK, so that’s a three to one method. It’s not taking about it’s not about risking it at all. It’s about setting yourself up to succeed. So if you can do all of these things, you have all these things in place, you’re going to feel very comfortable doing it, because if you have that consistency for three months, you’re starting to build confidence.

If you have two months of savings, you’ve got that cushion and you feel like, you know what, I can do this. Even if I had to go get another job, I at least have two months to figure out how to get a new job. It gives you a lot more. You know, cushion and confidence to be able to tackle going from side hustle to full time. But here’s the deal. I want to end where I started.

Your business will never grow as big as you want it to purely as a side hustle. So I’m talking to all my side hustlers out there. Like I said, ninety nine out of 100 times, I’ve seen it over and over again. People are afraid to let go of one branch to grab onto the other. And I get that it’s scary, but you absolutely can do it. And you actually have to, because there’s not only the time commitment of, OK, my business needs more time, it needs more time for me to grow it.

That’s half of it. The other half is mental bandwidth. When you go all in on a business, it’s all you think about. That’s it. You’re thinking about growth strategies. You’re thinking about being creative. You’re thinking about content. You’re thinking about this. You’re thinking about that. It’s all your brain will think about is how to grow your business. That’s all you’ll read books on. It’s all you’ll focus on. And when you have a full time job somewhere else, that’s either sucking your energy or making your you think about other things that aren’t your side hustle, right?

the mental shift required when moving to a full-time business focus

All of these things have an opportunity cost you’re not even aware of, and it has nothing to do with time. It’s just the mental bandwidth. And you will be so surprised when you finally take that leap and you’re like, wow, I have a full day to focus on this. So I have all the time that I need. And this is all I need to think about. You’ll be amazed at how fast your business can grow when you finally put in all that effort and energy into one single source of income and your business will grow very fast after that.

And I’m saying all this because I see people just kick the can on this for you year after year. And then it’s like you’re you’ve been doing this part time thing for four or five years. I even see some entrepreneurs do it with taking on an income source that isn’t really like something necessary for them to do, but they just want to do it. There are all these things you just need to focus and you will grow your business because who wants to kick the can three, four years down the road when you could probably get this done in three or four months if you just gave it the time, effort and energy that was required.

closing thoughts: making the final decision to focus solely on your business

But to do that, you are going to have to 100 percent try harder.