September 14, 2015
While some people manage to maintain a 9-to-5 job and work on their personal business projects on the side, at a certain point you’ll need to make the big choice: your business or your day job. These days, the “quit the job to become an entrepreneur” mantra is gaining mass popularity.
Before making your leap of faith and pursuing your “big idea,” make sure you have taken the following five steps.
1. Test Your Business Idea
This sounds like a no-brainer, yet a sad 90 percent of startups still fail. Before calling it quits, test your idea for viability.
On paper, your business idea may sound perfect – you solve a huge problem with an innovative solution. But don’t forget about the following factors:
- Production costs and strategy. There’s nothing worse than turning a great idea into a mediocre product.
- Target market availability and potential competition.
Next, get equipped with some more data to analyze carefully. Research the potential market and the ideal buyer persona; run a few thought experiments; gather any data about past attempts at implementing a similar idea – did they fail, and why? Last, think of the financial aspect – what are the estimated costs, will you need additional funding, and how will you look for it? The more data you have initially, the less chance you’ll return to your desk job in a few weeks.
2. Give Yourself a Reality Check About Entrepreneurship
Sure, there are numerous perks to becoming an entrepreneur – from choosing your own working hours to building from scratch the business you really care about. Yet, the blasting success of tech giants like Facebook and Uber added a somewhat glamorous stigma to this king of a lifestyle. Launching a billion-dollar business from a dorm isn’t as easy as you may think.
Entrepreneurship is a rewarding path, but a challenging one. You need to understand that a lot of businesses fail, a lot of risks cannot be predicted, and there’s just one unicorn company born among gazillions of ponies. You will face a lot of difficulties; you may fail and may need to return to your job.
“There are some dark sides of being an entrepreneur I always mention to everyone aiming to start a business. Most probably, you will make hardly any or no money during your first year. You should not expect huge revenues or spend those you earn on anything other than further business development. Your personal life will likely suffer. Things will not go the way you’ve planned and there would be a lot of emotion to tame and things to juggle at once,” says Chris Riley, founder of GearHeads.
Make sure you fully realize the difficulties you are committing to and really think again how “viable” your idea is. Is it so good that you are willing to go through all this uncertainty?
3. Create a Personal Finance Plan
Quitting your job means being cut off from a consistent income stream. Do you have solid personal finances to sustain you until the first entrepreneurial paycheck arrives? Your early revenue will be small and inconsistent, and most likely 100% re-invested into further business development.
Sit down and analyze your current spending. How much money will you need to sustain the same lifestyle? What things are you ready to give up to cut costs? Can your savings sustain you for at least a year? What’s your backup plan if you run out of money at some point?
4. Get Second Opinions
Talk to your spouse and close friends. What do they think of your idea? Does it sound promising? Would they share the risks with you if you invited them to join in?
Talk to your peers and mentors. Get at least a few solid opinions on your decision that might uncover hidden problems you had not thought of or, on the contrary, put your mind at ease.
5. Keep the Door Open
Once the decision is made, you need to actually quit your job. Do it the right way. Do not burn any professional bridges as you never know when those connections might come in handy.
Inform your employer about your resignation in advance, leave them room to find another good replacement (or recommend someone you may know), and exit as graciously as possible to keep your relationships intact. Welcome to entrepreneurship!
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