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Don't Quit Your Day Job....
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Don't Quit Your Day Job....
When going into business for yourself or with someone else the decision on when and if to quit your “day” job will inevitably come into question. Should you or shouldn’t you, and if so when?
Recently I was unfortunately witness to a friend who gave up her teaching career to join forces with a new technology start-up, only to have the owners walk in one day shortly after and declare the business defunct. No severance, no warning, just a “Hey, can you come in my office for a minute? Ah, how can I say this? It’s over, have a nice life.”
From a rewarding, at least, stable career to a “will work for food sign” in a matter of three months with nothing to show but a hard won life lesson: Before taking the leap, do the research and know the viability of the company and the industry. Privately held companies don’t have to divulge their business structure and financial details but there are still steps you can take to be reasonably assured of their stability.
- Research the length of time the product / service commodity has been on the market
- Is the customer base saturated or is there room for growth?
- Does the company have a strategy to enter new channels for growth?
- Does the company have a budget to implement the growth strategy?
- Interview previous customers; were they happy with their purchase? Would they purchase from them again? Recommend the company to others?
- Interview vendors; has the company made purchases recently? Is their account in good standing?
Now lets look at this same decision dilemma from a business owner’s perspective. We occasionally see clients at the SBDC* who believe their new venture would be best served if they quit their job and focused on their business full-time. In theory that sounds like a good idea, however in practice it may be the worst choice. Having a secondary income beyond your business has its advantages. It pays your personal expenses, provides leverage in the quest to secure additional debt based financing, and can be used to support your business when bootstrapping or in terms of emergency funds. Nevertheless, many will believe strongly that quitting their day job is the only way to go. So in that case, to prepare for the move be sure to do a thorough breakeven – analysis.
- Determine how much you would need to replace the lost income
- Do a feasibility study * on your business – will the business generate enough sales to cover its expenses, and make enough profit to grow the business and cover your lost income?
- Do your due diligence and confirm all material facts in regards to the viability of your business.
And above all else make sure your decision to jump is base on a sound business decision and not an internal emotional desire.