Every year in January, it seems I always get asked for advice by a number of corporate friends that share their aspirations to “leave the nine to five” and “be their own boss.” Many have told me that they want to be the next Elon Musk or Mark Zuckerberg and that they feel that this is the right time for them to go all in and leave the comforts of a steady paycheck.
As much as an investor and a fellow founder myself, I lace many mentorship sessions like these with much optimism and encouragement, I also balance it out with doses of reality that entrepreneurship is not going to get you more time to hang out on the beach drinking fruity beverages, but it will demand much more of yourself than any job that you’ll have in your life. This is especially true since most venture capital firms, even at the pre-seed stage, require a full-time commitment from founders.
Some context here, I myself am a late bloomer. I decided to start a startup at the tender age of 37. This feels late for many, but in actuality, many founders start companies in their 20s but also in their 30s and 40s.
What is different this time, though, is that I have a wife and kids, and I was well into my corporate life. If leaving an executive role in a financial services company wasn’t enough, it is the responsibility of being the sole breadwinner in the family that created a lot more stakes in this decision as it is not just my life that will be affected but four other individuals that I am responsible for their well-being.
Here are the five questions you must ask yourself before leaving your job:
Do you have a business or just an idea? Is there external validation that people need this?
Fundamentally, are you quitting your job for a hobby or a real business opportunity? When I was in Cisco, we called this the “anyone but your mother rule.” A true test of a business is that someone is paying for your product or your service besides your mother, uncle or friends.
Also Read: What startup founders don’t know about exit strategies
Again, payment is key, as it seems many people start businesses without any commercial validation, often relying on gut instinct or market surveys. The best validation is to have paying customers or, for B2B, commercial agreements to know that you have a real business opportunity worth pursuing.
Are you financially prepared to take on the business? Can your income go to close to zero for six-12 months minimum?
This is probably the toughest to hear. Many of us have dreams of starting a company, but we can’t afford to do so. Not all of us have rich aunties or uncles, so the option of just quitting is predicated on financial savings, particularly asking if you have four-12 months of household expenses that you have saved up.
When we were starting Plentina, I had about four months of household expenses saved up before tossing in the towel, but note that it took me five years to save up that money consciously every month. I called it my personal startup bank account.
Why is this important? Since as much as we see movies or articles that people get funded in a day or a week, the reality typically happens that you should never assume that external funding will come, especially at the earliest stages of a company’s pre-product stage.
Will you have any regret if this business does not become successful?
According to an article in Fast Company, “as many as 75 per cent of venture-backed companies never return cash to investors.” This doesn’t even account for the millions of businesses that do not get past the standards of venture capital. Despite these odds, most founders-to-be start companies not to solve a personal mission or a problem but the dream to build a unicorn and maybe retire early.
The past five years have given a false sense of hope for this generation that founding a company is sexy and is the path towards millions. A critical question you must ask yourself is if you can be happy in the fact that you have a rare chance in your lifetime to try to solve something important to you and perhaps the world.
Can you imagine that in four or five years, the company might not exist, or your startup gets sold for zero dollars, but the mission still continues?
Do you and your family all know the sacrifices needed to give this a shot?
A few years ago, INC Magazine published an article entitled The Start of a Company, the End of a Marriage. Launching a business can shatter the founder’s marriage.
Also Read: From hobby to startup: Here’s my story as IKIGUIDE’s Co-Founder
This is because the founder’s life is no easy path, mired in stressful situations, near-death experiences and personal income instability that is almost impossible to shield your family from, unlike a normal nine to five where you can leave your work worries at the door.
Can you have an honest discussion with your loved ones on what this decision to quit means for them and how this will affect them individually?
I had a sit-down with my wife and kids indicating that we might have to cut down a lot from our lifestyle and that dad will be busier but have less time for the first few years. I also had to ask my parents and my in-laws for support as they might need to help my family during this time. Are you having these conversations?
Do you have an unfair advantage in building this business?
The last question is putting the investor’s mind into your business. Will you trust your own money and invest in the business because you and your founders are the right people to pull this business off? Do you have unfair insights, expertise or advantage to make this happen for the world?
Final thoughts
If I had to sum up my advice to many, the simple answer if people should go full-time all comes down to timing. Timing of your readiness as an individual to mentally, emotionally and financially go towards this path, and timing of the market to accept the idea that you have.
Even if this seems gloomy, starting a company and seeing how much impact it has given to hundreds of thousands of individuals has been one of the most rewarding feelings I have had in my lifetime, and I will never regret the day I decided to pack up my suit, and traded it for my startup hoodie.
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