Today is the first part of our four part series in response to a reader’s question. Today we’re looking at how to decide it’s worth quitting the safe, well paid day job to start a business.
I’m choosing to focus on the personal, emotional, side of that question and in the upcoming parts to this series I’ll cover the economical side of going into business.
You have a lot to think about and consider when transitioning from full time employment to starting your own business…let’s get started.
First Things First
The first thing you have to consider when contemplating starting your own business, and thus leaving the creature comforts of the “day job” is: Do you really want to quit your job?
When I finally took the leap and started my company I thought there was no way I would miss the 9-5. And for the most part I didn’t, but every so often I’d miss work friends, or the “steadiness” of it.
I don’t regret the decision one bit, but I still had to work through the emotional side of not working for anyone but myself.
Think about the following:
For many the jobs people perform define them. They are an Accountant, a Nurse, or a Cab Driver. When someone asks what they do for a living, they have a concrete response. There is self identity there, and some comfort, comfort they wouldn’t get from saying “oh, I’m starting a business”.
It is hard to accept that yesterday you were a successful Construction Manager, and today you are a struggling business owner.
Jobs are a big part of our social lives. After college you don’t have as many opportunities to meet new people…this is where the job comes in. Most people have a close network of colleagues, and some genuine friends in the workplace, and giving up that social outlet can be daunting.
Also, whether it be good or bad you are getting human contact day in and out, which strengthens our social associations and makes us feel “connected”.
A job provides a comfortable, structured lifestyle. You have structure at work, usually clear expectations, time off each year, and benefits. When working for yourself a lot of that structure and stability go out the window.
No such thing as coming in at eight and leaving at five with the mentality of “oh well, what I didn’t get done today will get done tomorrow”. Two weeks off a year, guaranteed? Forget it! You could have more time off than that, or you could work years without ever taking a day for yourself.
Believe it or not, like it or not, there are social stigmas that exists for people starting their own business. When I started my first business I was amazed at the reaction I got from some of my friends and family. Genuine concern about my well being, and utter amazement that I was “throwing my successful career out the window to be a dreamer!”
Some people thought that I was literally throwing it all away, and giving up! For people who don’t understand the entrepreneurial spirit I’m sure it seemed that way, while from my perspective staying in my job was giving up.
As a would be entrepreneur you’ll need to make the decision for yourself if giving up the above is worth it to pursue your dreams of working for yourself.
Is Starting a Business Right For You?
After you’ve come to terms with some of what you’ll be “missing” by giving up the day job, you’ll still need to assess if starting a business is right for YOU. It may be a dream, it may be something you think you need to do in order to better your life, but unless you have some of the characteristics listed below you will have a long road ahead of you.
- Do you enjoy making decisions and being in charge?
- Are you willing to take risks and accept the outcome?
- Are you adequately capitalized?
- Are you flexible, and can you adapt to change well?
- Are you good at short and long term planning?
- Do you have strong people skills and build relationships easily?
Let’s look at these one by one.
Do you enjoy making decisions and being in charge?
From the first day you decide to go into business you will be the decision maker for your operation. From your business name, to who you will use as a supplier, to whether or not to hire help, these decisions and more you will need to make.
Also as your business grows you will continually be accessing and making decisions that could positively or negatively affect the success of your business. When running your own business there is nobody to hand off the tough decisions too or escalate an issue. You will need to be comfortable in this role, and able to act decisively when needed.
Are you willing to take risks and accept the outcome?
The key word here is to accept the outcomes of the risk you take. Many people say they are okay with risk, or that they don’t have a problem taking a risk, but the more important side of that equation is the acceptance of the outcomes those risk involve.
If for example you choose to put your life savings into a business venture because you think it’s “worth the risk” then you must be able to accept the outcome of loosing your savings if the business does not perform as you thought it would. I’m not saying you will loose your life savings if you start a business, but even something that has a 90% chance of success still has a 10% chance of failure and you need to be able to accept the downside possibilities.
Are you adequately capitalized?
This isn’t to say you need to be wealthy or rich to start a business, but you will need to have some money. While starting a business on a shoestring is possible, to give your business the best chance for success having some money as reserves is a must.
While there are programs to get the money you need to start your business, buy products, and market, some emergency reserves are a good idea in case personal expenses creep into the mix as well. I can’t tell you exactly how much money is enough (that will depend on the type of business you start and what your personal financial needs are), I can say without a doubt the more the merrier.
You will have a little more leeway if you intend to keep working while setting up your business, but if you intend for your business to support you and your family from day one cash reserves are necessary to bridge the gap until your business replaces your earned income. The last thing you need is to be worry about how to pay the mortgage when you should be focusing on building your business, and concentrating on operational efficiency during the startup phase.
Are you good at short and long term planning?
Planning is extremely important when starting a business. You will need to be comfortable planning 1 month, 6 months, 1 year, 5 years, and even 10 years down the road to properly address the needs of your business. The last thing you want to do is start your business without a plan for the future only to see a successful idea get blindsided 1 year down the road because of something you didn’t plan for.
Do you have strong people skills and build relationships easily?
This many be the most important skill a business owner can have. All businesses are built around relationships with people…I don’t care what product, or service your business sells, or what market you operate in, your ability to make connections with people and build relationships are the cornerstone to being successful in the long term.
Hedge Your Bets
After assessing all the above if you still want to take the leap from 9-5 to business owner, you may consider hedging your bets a little bit. You don’t have to jump from steady pay check to business owner all in one day.
- Can you slowly transition into working for yourself before leaving your regular job?
- Can you cut your hours back at the regular job in order to work on your biz as a side project?
- Can you contract what you currently do with your employer, freeing up more time to work on your own business?
You may want to see if you can baby step your way into your own business. You’ll have a bit of a safety net if things don’t work out, and you’ll get a flavor for what running your own company feels like.
When you do decide to transition to full time business owner you’ll have more confidence that it will work out, and you’ll be sure that the business fits your needs emotionally, as well as financially.
Putting it All Together
The decision to quit your job goes a lot farther than just coming up with a good business idea. And as you can see there is a lot to think about. A good business idea and a plan will get you a long ways, but knowing yourself and working through all the above will lay the foundation for an easier transition.
None of this is here to scare you, or to talk you out of making that leap, but the more prepared you are emotionally, and the more you know how a business will fit with your personality, goals, and lifestyle, the better chance you will have of making it a success.
Coming up next in this series we’ll look at: