Legend has it that when Alexander the Great arrived in Persia with outnumbered troops, he ordered his men to burn the boats they had just arrived in. When he was asked by his commander how they would get back home, Alexander replied that they would be successful in battle and use Persian boats or expire trying. When starting a new business, many entrepreneurs take a “burn the boat” approach. They quit their day job and jump into the new business full force. Other entrepreneurs keep their day job and start the new business off slowly while keeping the security of a steady paycheck. Experts are mixed on this topic and unfortunately this narrative will not provide you with the deciding answer. This narrative will, however, cover some of the things to consider when determining the right move to make.
The argument for making a clean break from a day job and plunging into a new business centers on the idea that eliminating your fallback position will drive your sense of urgency to be successful in the new business. Many entrepreneurs stress the idea that a new business needs full effort and concentration and cannot reach any potential with a half effort. Patrick Fitzgerald, a Wharton Entrepreneurial Programs lecturer, says, “People can smell a half-baked entrepreneurial concept. Potential investors, partners, and employees know when someone has got one foot in and one foot out of the business.” He adds, “You’re either all in or you’re daydreaming.” Another prevailing concept is the thought that having a day job and a side business requires a business owner to continually contemplate which one takes priority. The experts and entrepreneurs in this camp believe that you cannot start a successful business without a full commitment from the start.
A more conservative (maybe) group of experts and entrepreneurs believe you should hang on to your job as you start a new business. Often times, potential entrepreneurs do not get started due to a fear of uncertainty. The thought with this group is that you can start your business slowly and eventually move from the day job to the business once it reaches a strategic milestone. This allows the entrepreneur to keep the security of the steady paycheck, and other benefits, until the new business is successful enough to replace the income from the day job. The entrepreneur can find their footing without the added stressor of personal survival. Starting a business this way allows the business owner to test the market in a soft opening before investing an inordinate amount of time and capital in an unprofitable venture. There is more disagreement as to when a business is seasoned enough to leave the day job. Some experts say the new business needs to be generating two thirds of your income, while others say the new business needs to be doubling your income before you leave a focus on the new business full time.
Whether you quit the day job and dive full force into the new business or whether you start slowly and stay in a day job depends on each entrepreneur’s specific situation. Some ideas and business concepts lend themselves to a slow roll out while other ideas need as many eyes as possible as soon as possible. Business owners respond to uncommon (and common) situations differently as well. With those two concepts in mind, it is important to plan ahead and do plenty of research regardless of which path you take as a business owner.
First, research and understand yourself.
- What are your strengths and weaknesses?
- If you do not know how to do it, can you find help and pay for it?
- Do you have a reasonable amount of equity to contribute?
- Are you willing to put off a paycheck, forgo vacation, and fill multiple roles?
Business owners should examine themselves first before making the start-up decision. Be honest with yourself and know what areas you need to improve and where you compete well.
Second, research and understand your product or service.
- Have you tested the product or service?
- Do you have a network of friends and business owners with industry or business knowledge that can give advice or help test your idea?
- Have you prepared and understand the importance of your business plan?
- Does your business make sense in that people want it, you know how to do it, and it will make you money?
- Have you prepared realistic projections to help you determine whether you should leave your day job?
- Have you identified an effective marketing plan?
Obviously, there are risks associated with any type of new business. Analyzing yourself as the business owner, analyzing the product and service, and planning for an effective launch will give an entrepreneur the best chance of success whether you start slowly while continuing to work or leave that day job and go in full steam ahead.