Are You Ready to Quit Your Day Job to Open Your Own Business?
10 Questions to Ask Before You Do
Are you thinking about quitting your day job to open your own business? Or, has the decision to leave your job already been made because you were laid off or fired? Should you look for work or take this opportunity to pursue your passion? Here are 10 questions you should ask yourself before you plunge into entrepreneurship. You just might find that you are ready…or not.
#1. Do you have entrepreneurship characteristics? I have identified at least nine of them: tenacity, creativity, street smarts, a healthy ego, leadership drive, coping skills, problem-solving skills, risk taker and common sense (which, it turns out, isn’t common). Do an honest assessment to determine if you are “tailor made” to be your own boss, or whether you might need to do some more groundwork first.
#2. Do you have a viable product or service for your geographical location or market? I once launched a business combining two very different, but related services which I thought was a novel and desirable combination. Although it’s been 4 or 5 years since that failed venture, I still don’t understand why my market didn’t find that combination of services valuable. But, the reality is, they didn’t and so, I don’t market this “combination service” anymore. Better to explore this issue before you quit your job, not after.
#3. Do you have the financial wherewithal to pay your bills while you get your business up and running, and create a sustainable revenue stream? I don’t happen to subscribe to the school of thought that you need to have 1-2 years of savings before launching your business. But, don’t get me wrong—if life works out that you do have the savings to back you, then great. That is certainly most desirable. I’m just saying that if you don’t have that level of savings, don’t necessarily, on that point alone, be deterred. Again, two of the key characteristics of a good business owner are tenacity and street smarts (neither of which, by themselves will pay the bills) and having these can take you far in figuring out how to keep your business going when finances are low. I know this to be the case because I’ve been there.
#4: Can you get your business off the ground alone, or is a co-owner or partner necessary? If you can start by yourself, then great; it keeps things nimble and makes you flexible. But, if you need a partner, re-think the timing of quitting your job (or the job hunt), until you can find a suitable business partner.
#5: Are you just running away from a job you hate, or do you really want to be an entrepreneur? Running away is very different from running toward something. When I quit my very lucrative corporate gig for the thrills of entrepreneurship, I was very clear that I was running towards entrepreneurship. The lure of owning my own business was very enticing.
#6: Are you quitting because being your own boss sounds good? Don’t do it. There are so many downsides to simply being your own boss (for starters, the overwhelming responsibility and culpability for EVERYTHING that happens in your business) that if that’s your sole reason, you’re not going to like owning your own business. In fact, I can guarantee you that you will hate it.
#7: Does your spouse/significant other/family support your dream? By no means is that the defining decision on whether to strike out on your own. But, if you don’t have a support system cheering you on (or at least not dragging you down—neutrality is acceptable), then you need to make sure that you have a strong constitution because you will question your decision, motives and ability enough yourself, especially during that first year. You don’t need anyone else bringing you down.
#8: Aside from financially, are you “psychologically” prepared to give up ordering your life around the “15th and the 30th”? Because when you own your own business, especially during the first couple of years, they are just two days on the calendar, just like any of the others. This is a crucial question because working (meaning: busting your butt for long hours day after day, month after month, year after year) for free, or for the measly leftovers, for an extended period of time can really start to wear on you psychologically. Be prepared.
#9: Are you disciplined? Having no one to answer to but yourself is the kiss of business-owner death for the undisciplined. This was never a problem for me, but I’ve seen it railroad other business owners countless times. Just because you CAN take the day off and go shopping or golfing, doesn’t mean you SHOULD do it. If you will have to talk yourself out of bed every morning to go work on what is presumably your passion, then you might as well stay employed, unless of course you are independently wealthy (in which case, why are you even reading this article?).
#10: Do you know what your income goals are for your business? To replace your corporate income? To make enough side income to send your kids to private school or to travel? To become a millionaire? To grow an amazing online company to sell to Yahoo or Google? Knowing income goals is important because these goals will determine the resources you need, the time you need to dedicate, the path you need to take, etc. In other words, the answer to this question will drive some very key decisions you need to make.
For example, a woman I met at a networking event wanted to start up a company that would own several franchise companies. Because her goal was to build the company and then sell it off, certain decisions had to be a certain way. For example, since she needed to attract investors in order to raise a large sum of cash, she needed to form a corporation, not an LLC (and obviously not a sole proprietorship).
Another example is the catering client that I represented. She planned to bring her daughter into the business (owning a small percentage of the business) as soon as she graduated from college (in less than 90 days). So, I advised her against setting up a sole proprietorship (which by definition precludes any other owner) or a partnership (where each partner is personally liable for the debts of the entire partnership). Instead, we set up an LLC, which was the perfect entity for her goals.
Surely, there are dozens more questions that need to be answered along the path to entrepreneurship, but getting a handle on at least these ten questions up front will provide critical insight into whether you are ready to own your own business, and perhaps how you should proceed.
