Four reasons you shouldn't quit your job to set up your own business

    By Adrienne Burke | Small Business

    Entrepreneur and author Thomas Goetz recalls in an Inc. essay this month the moment when he became painfully aware of how committed he was to his digital health startup: his debit, Visa, and AmEx cards were all denied on a $6.99 smoothie purchase. Goetz says he realized, “I had no liquid assets, had maxed out my credit cards, and had put everything I had into the new company.”

    The way Goetz concludes his tale shows he is in his element as an entrepreneur: “No doubt, there will be more close calls and some outright blunders ahead. But that’s part of the thrill of this—being a bit out of our depth, learning on the fly.”

    The thrill? The mere thought of having every penny invested in a startup would be anxiety provoking, if not downright nauseating, to some. But several entrepreneurs who Tweeted Goetz’s story said they can identify with his “smoothie moment.”

    An iron stomach for living on the brink of bankruptcy just might be a prerequisite for entrepreneurship. And not everyone is cut out for it. Many of us already know who we are. But if you wondering whether you were born to be in business for yourself, there are some straightforward truths to consider.

    Ross Levine is an economist and chair in banking and finance at the Haas School of Business at the University of California. Together with the London School of Economics professor Yona Rubinstein, Levine researches entrepreneurship and the qualities of entrepreneurs.

    We wondered if Levine could infer from his research what traits reduce a person’s chances of entrepreneurial success. “Are there types of people who simply should not start a business?” Yahoo Small Business asked him.

    To start, Levine says it’s important to differentiate between self-employment and entrepreneurship. He defines several dimensions of “being your own boss,” and traits that predict success are not the same for each.

    Among the self-employed, Levine says, “There are those who work for themselves and maybe have one person working for them. You might think of a landscaper with his own business. Along that dimension, there is lots of research that suggests those people get a lot of satisfaction out of being their own bosses.”

    Another group of self-employed people are what Levine describes as “the underemployed.” Think of a laid off computer programmer. “To support her family, she picks up some freelance assignments or even engages in something completely different, such as opening up a business in her home to train computer science students, until she can find another salaried position.”

    An entrepreneur, on the other hand, is “someone who takes on a lot of risk, maybe does something more novel or transformative, and has the possibility of leading to the hiring of many people,” Levine says.

    There’s no hard and fast rule or metric that defines an entrepreneur from the others, he acknowledges. Self-employment has entrepreneurial elements. “But the nature of entrepreneurship, as well as the nature of the individuals who pursue it, are very different. People with different cognitive, non-cognitive, and family traits choose to go into these activities,” Levine says.

    With the caveat that entrepreneurs are so many and varied that “it would be tough to say there are common traits to all,” Levine does point to a few ways to assess your chances of success as an entrepreneur.

    These are four signs that you’re not cut out for entrepreneurship:

    1. You don’t consider yourself a jack-of-all-trades.

    Consider Steve Jobs, whose skill set and personality made him the kind of person who, unlike our hypothetical laid-off programmer, would never be satisfied as a part-time programmer who trains students at home. Levine says Jobs and people like Michael Bloomberg, are comfortable with a number of dimensions of engaging in commercial activity. “These are people who have a sense that they are jacks-of-all-trades” and won’t settle for focusing on one specialty.

    2. You don’t want to work really, really hard.

    “The people who succeed as entrepreneurs—at the helm of big risk-taking, transformative, enduring types of enterprises—work a lot of hours,” Levine says. “They work way more hours than successful salaried workers. They tend to be driven, single-minded, incredibly energetic people.”

    How do you know whether you are driven, single-minded, and extremely hard working enough? Look over the last 10 years of your career: “If you don’t have the energy or the latitude to work extremely hard, you will have a much lower chance of success,” he says.

    For instance, Levine points to people who opt to shift gears in their careers in order to raise children or manage other family constraints. Consider the lawyer who leaves a firm to work on independent projects, a professor who opts to teach classes at various universities, or an expert who contributes research to consulting firms, all in order to have more work-life balance.

    “These are by no means low-skill professionals, and by definition what they do is self-employment. But it is not entrepreneurship in the sense of a big risk-taking enterprise,” Levine says. “It’s a choice within the context of family to have a different type of lifestyle. People who choose those paths are very different from highly successful entrepreneurs.”

    3. You don’t think very highly of yourself.

    Levine says extreme self-confidence is crucial to success in entrepreneurship. “There are failures, it’s risky, there are rejections, it’s difficult. You need a thick skin and a lot of confidence about your own abilities.”

    To be sure, Levine isn’t talking about overconfidence or irrational confidence. “But the people who succeed as entrepreneurs have extremely high self esteem and an extremely high notion that they control their destiny.”

    If you don’t believe deeply in yourself and your project, he says, “the evidence suggests you have a much lower probability of succeeding.”

    4. You want to be happy.

    Assuming your goal is to have a happy, satisfying, fulfilling life, be aware that being a successful entrepreneur does not necessarily translate to being successful in life, Levine notes. “The evidence suggests that people with a balanced life, humility, and perspective about their own limitations are not successful entrepreneurs.”

    Indeed, success as an entrepreneur, he says, “is not necessarily what everyone wants out of life. Not every body is going to be happy that way.” But if the idea of “smoothie moments” and throwing everything you have behind a startup is thrilling to you, you might stand a chance.


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