Entrepreneurs who hold down a full-time job while bootstrapping a startup must time their departure based on their confidence in the new business
Last year I founded an online media company with four others. We're bootstrapping the venture and we all still have full-time jobs. I work in an industry that has nothing to do with the new business and I'm feeling a lot of stress. Should I stay with my current job, quit, or find a full-time job in our industry so I can get some relevant experience?—N.H., Seattle
When to leave a full-time job is a quandary most entrepreneurs face eventually. The timing depends on the level of confidence you have about your new business and the risks you are willing to take, says CPA James Schaefer, a small business consultant with Mark Schaefer Associates in Arcadia, Calif.
Ask yourself how big and how quickly you can grow your new company, and how confident you are about the capability and commitment of your partners, Schaefer says. If you are fully committed to the new venture, talk to your partners about your dilemma and come up with a timetable for when you can leave your job or at least reduce your hours.
"If you're burning the candle at both ends, you're probably not devoting a lot of energy to your existing employer and that's not fair to them," says Braun Mincher, a serial entrepreneur and the author of The Secrets of Money: A Guide for Everyone on Practical Financial Literacy.
New Job, New Problems
Getting a new job that would be germane to your business can also be a tricky proposition. While you might learn about the industry, the job you get may not help you learn much about running a business, and it might impose additional demands on your time and energy if there's a significant learning curve involved.
It will also probably be tough to get hired if you are up-front with your would-be boss about your plans for opening your own venture. "Your new employer will be saying, 'What's the upside for me?' They want loyal people who will be team players in the long run. To pay a salary and benefits for someone who's leaving shortly? That's tough to do," Mincher says.
Even if you are not seeking outside funding now, it wouldn't hurt to act as though you are, Schaefer says, since the process will help you evaluate your company's chances more realistically. "Preparing a quality business plan and talking with potential investors will provide valuable feedback on your company's prospects for success and the capability of your partners and you. Seek out angel investors (visit angelcapitalassociation.org), business incubators (visit nbia.org), as well as local college extension entrepreneurship classes," he says.
Through an honest evaluation of your business potential, your capabilities, and your commitment, the decision about your current job should become much clearer. Make sure all the partners agree before anyone goes full-time with the new company, though: "If one person quits his job, he becomes more valuable to the entity than the others are" and the partnership agreement should reflect that, Mincher says.