Here are four questions to ask yourself before you quit your day job.
Dear Annie: I’ve been in my current job for about five years, and not only do I dislike what I’m doing, but our department got a new boss a few months ago who drives me crazy. He has no integrity, encourages us to take shortcuts that do a disservice to customers, and second-guesses every decision anyone on my team makes.
I’ve always wanted to start my own business, and I think I have a solid idea for a company. The thing is, I read your column mentioning the high rate of failure among startups — the ones we never hear about — and I’m debating with myself over taking the plunge. How do you know if you’re really ready to run your own company? — Thinking It Over
Dear Thinking: Good question, especially given the current IPO gold rush, which is creating a whole new batch of overnight-millionaire entrepreneurs. Still, your main motivation right now seems to be getting away from your terrible boss, and that sets off some alarm bells.
“You never want to start a company as a reaction to a bad situation,” says Ashish Toshniwal. “You need to have an idea you are really passionate about, or you’ll never make it through the first couple of years, which are extremely tough.”
Toshniwal has been in your shoes. About six years ago, at 26, he was unhappy in his job as an engineer at Dell. At the same time, he and a friend, then-Yahoo-engineer Sumit Mehra, were building Facebook apps for fun in their spare time. When smartphone technology came along, the pair quit their jobs to launch Y Media Labs, which now develops mobile apps for PayPal, eBay, Bank of America, Symantec, and many others. The company has grown from the two founders to 141 employees, and Toshniwal expects to hire about 80 more staffers by the end of the year.
“We were really passionate about this new technology, and we saw an inflection point, where growth was just about to take off,” he says. “Wanting to leave an unchallenging job, or any particular boss, was never the motivation.”
It shouldn’t be for you, either. “You have to start with what your true passion is, and then work backward and find a way to pursue it,” says MJ Gottlieb. “You might find that’s by getting a different job, rather than starting a business.” Gottlieb is the author of How to Ruin a Business Without Really Trying, a compendium of 55 mistakes he made while starting and running six successful companies over the past 23 years. “Above all, don’t quit your job because you believe you have a great idea for a business,” he adds. “An idea is not enough.”
So, what is enough, then? Consider your answers to these four questions:
- Do you have any evidence that your idea will fly? Too many entrepreneurs start companies without doing enough research, or asking enough hard questions, to make sure their product or service is “something that people actually want or need, and that will entice business away from competitors,” says Gottlieb. “Especially if you hope to attract investors, you need customers and revenues. Nobody funds an idea.” One way to try out your business without quitting your day job: Build your company on the side, in your spare time, until you know for sure it can survive in the marketplace.
- Are you ready to be flat broke for a couple of years? Toshniwal and Mehra funded Y Media Labs with their own savings and credit cards, and then took no cash out of the venture for the first two years while they built a solid customer case and refined their mobile-app technology. “We lived a very frugal life,” says Toshniwal. “In fact, we took such a hit financially that we almost gave up.” This isn’t everyone’s cup of tea. Notes Toshniwali, “If you work for someone else, you always get paid no matter how the business is doing.” Not so with a startup.
- Are you good at solving problems and overcoming obstacles on your own? One thing Toshniwali missed after he left Dell was the enormous corporate support system he had always taken for granted. “As an employee, you have access to the company’s resources. You can usually assume your manager or someone else will take care of details and problems that get in your way,” he says. “In a brand-new enterprise, it’s just you doing everything — while being under intense pressure to produce results.” This is why it’s not unusual for exhausted would-be business owners to run back to a cubicle somewhere.
- Would you mind giving up a life outside of work? And, if you have a family, how do they feel about it? “As an entrepreneur, you’re always on call, including nights, weekends, and holidays,” notes Gottlieb. “I’ve had to miss a lot of birthdays and events, and let down a lot of family and friends. At one point, I realized I hadn’t taken a vacation in 14 years.” In what has to be in the running for Understatement of the Year, Gottlieb adds, “The life of an entrepreneur is not in everyone’s DNA.” Many entrepreneurs — including those who have real-life, flesh-and-blood spouses or significant others — say they feel married to their companies.
If your honest answer to all four questions is “yes,” then go for it. But if any of the four (or more than one) gives you pause, think about looking for a different job — maybe even inside your current company, but with a better boss — instead. Good luck.
Talkback: If you’ve ever quit a job to start a business, what was the biggest adjustment you had to make? Leave a comment below.