When to Quit Your Job and Start a Businessby
I want to get into owning my own business, but I’m not sure about the timing. Should I start working on the side first and then leave my job if things look good, or make a clean break right away? —J.A., Redding, Calif.
The answer to your popular question probably depends on your situation and the kind of business you’re planning to run. Many entrepreneurs start pursuing a venture in the evenings and on weekends: Think freelance service providers and home-based crafters whose product lines catch on and develop a following large enough to justify their full-time attention.
Others plunge directly into full-time entrepreneurship, because they can’t afford to be distracted by a day job and need to demonstrate their commitment to their business concept.
Experts, too, are divided on the answer to your question. One camp strongly advocates testing the waters of entrepreneurship and then easing gradually into having your business support you full-time. The other says you can’t start a successful business without a strong commitment from the start.
Therese Prentice, a women’s business coach in New York, reflects the common wisdom that would-be entrepreneurs should not leave their day jobs until they have proved their business ideas will pan out. She says she never advises clients to preemptively resign their full-time employment, even if they have capital lined up to start a business.
“You have to test everything, so allow yourself the space to plan, do, and review, while you still have full-time employment,” she says. “The confidence you desire will be reinforced as you have success with testing your ideas and gaining high-paying clients.” She suggests that aspiring entrepreneurs wait until their new venture is generating about two-thirds of their full-time income before they quit their day jobs.
Patrick K. FitzGerald, a Wharton Entrepreneurial Programs lecturer at the University of Pennsylvania, disagrees. “People can smell a half-baked entrepreneurial concept. Potential investors, partners, and employees know when someone has got one foot in and one foot out” of the business, he says.
FitzGerald, who co-founded Recyclebank in Philadelphia in 2004, believes entrepreneurship is so all-consuming that it is impossible to pursue on a part-time basis. “There is no hedging your bets with entrepreneurship. You’re either all in or you’re daydreaming. Making peace with that is the first step” to owning a successful business, he says.
Phillip Moorcroft, a business consultant at MGPS in Toronto, says pursuing entrepreneurship part-time can crucially lessen the psychological and financial resolve necessary to succeed. “Going in with the Plan B mentality—”I’ll try this for six months and if it fails, I’ll go work for my uncle”—is not workable,” he says.
There’s no substitute for risking everything, and having everything to lose, as a strong motivation for success, he says: “At the end of the day, [entrepreneurship] is a do-or-die decision. Either you do it or you don’t—that’s it.”