When to Ditch Your Day Job

Easy, last minute action steps to test your startup business idea and make it more successful

Q.  I'm doing lots of research about running my own service company. I've been working at this for years. No jumping in without checking for sharks for me! But when does one jump? I'm not asking you to tell me if I should jump, just what factors should influence the timing of a startup?

A.  Congratulations for taking the time to carefully evaluate your new business opportunity. I admire entrepreneurs who think through the "economics" and overall wisdom of a new business pursuit. Well done.

Now, for conscientious entrepreneurs like yourself who have done considerable pre-launch homework, I like to put forth two more challenges that can help improve or disprove a new business idea's viability.

The first consideration is best summarized as follows: "Before you leap, jump or take the plunge, let's remember to wear a parachute."

This statement is not meant to be cute, but to highlight that there are some things entrepreneurs can do to soften the landing before leaping from the corporate nest. Entrepreneurship should never be a blind free fall.

Businesses fail when entrepreneurs can't generate enough customers and cash flow to cover expenses. Yes, every new business faces a period of negative cash flow, but it shouldn't go on forever. Startup entrepreneurs who prosper seek every possible way to reach cash flow break-even as fast as they can.

Here's your acid test. Make a list of 30 to 50 credible targets for your proposed service. Then take some vacation days to interview as many of these targets as possible to confirm their interest in your service, the price range they would pay for the service and the likelihood that they would hire you within 1 month of starting your business. Yes, 1 month. If your targets are expressing too many reservations, then step back from the ledge. Some retooling is needed before taking the plunge.

Other ways to soften the landing is to reduce your upfront investment and ongoing operating costs. Find some other successful business owners and brainstorm opportunities to team with other well-established companies, not as a vendor but as a partner. If, for example, you want to offer a home delivery meal service for older Americans, can you seize the market opportunity faster and better with a local catering company or a restaurant? Just because you are a solo entrepreneur doesn't mean you have to do all the work yourself.

My second favorite entrepreneurial motto is "build to sell." This phrase has to do with your aspirations as an entrepreneur. In your longer letter, you said "I just want to make a living and save for retirement." If this is all you expect to build, then I'd say your expectations are too low to sustain you through difficult days. And you already have the salary and benefits you seek.

Great business builders plant and sow their seeds for a lucrative harvest. They reason they can work 8 to 10 hours a day for someone else to generate a salary. Or they can work 8 to 10 hours a day on their own business to generate a salary plus a bonus payoff when they sell their company.

Genuine entrepreneurship is not about producing a replacement salary. It's about building an entity separate from you that has growing value. If you are not passionate about building a business that one day can be sold for a juicy profit, then entrepreneurship may not be right for you. For all the risk you are taking, you should drive for a greater return on your entrepreneurial investment! Hope this helps!

Take Command Action Step

Make a list of potential partners, vendors, distributors or other companies that can in one way or another help you either (i) reduce your startup costs or (ii) get your product or service into the market faster. Can you share office space with another company? Can you adapt a product so that it can be marketed by another company's sales reps? Be creative and think hard!

Do you need time-saving tips to help fund and grow your business? Check out Take Command archive columns or write to small business funding expert Susan Schreter at susan@takecommand.org.