When to Quit Your Job for a Startup
I’m often asked: “How do I know when to quit my job and work on my startup full-time?”
You dream of being an entrepreneur. A full-time commitment to the new opportunity matters. Ideas don’t count. Execution counts. And execution requires focused founders. If no one is working on the opportunity full-time, how will you make progress? The more people who are all-in and working exclusively on the opportunity, the greater your chances of success will be.
Having said that, you will want to test your idea, validate it and achieve some level of pre-sales before you quit your day job. After all, there are bills to pay. Leaving a job with a steady income is a big decision. It’s scary and risky. As a founder, you are already aware that startups are inherently risky but also come with big rewards when successful. So, do as much as you can to ensure the success of your venture before leaving your full-time gig.
Here are 4 signs that you’re ready to leave your secure, paycheque-producing but not what you want, job.
The venture is ready for the next step but you don’t have time to take it there
Do you find yourself working most nights and weekends? Are sales coming in but you’re feeling behind the 8 ball, having trouble keeping up with demand? Or do you simply have a to-do list that exceeds the time you have available? Once you’ve validated your idea and ensured people will pay for it (pre-sales are the best barometer), you can start thinking of committing full-time. And assembling your team.
Your savings can support your needs for at least a year (you can count on a small salary from your venture if you really need it but you may want to reinvest the revenue to grow the company).
Your new business may start off profitable enough to draw a salary but it is more likely that you will need to manage cash flow and reinvest the income to sustain the company, produce inventory, test new channels and create awareness. So, it’s best to have a nest egg of savings that will sustain your needs for at least a year. And become a pro at making Mac & Cheese!
You are so passionate about what you’re doing that you wake up every morning thinking about it and go to bed at night doing the same.
You are ready to work hard, constantly thinking about how to push your company forward. You are 1000% committed to it – in other words, this is not a test. You’re not saying to yourself “I’ll give it 6 months and if it doesn’t work, I’ll drop it”. You are committed to making it work (yes, there is a time to call it quits but you are nowhere near that thought process). One of the keys to entrepreneurial success is the single-minded commitment to a new venture. Successful founders will do whatever it takes, and whatever needs to get done, to make something happen.
You are ready to go with your gut!
You can always find a reason to justify why it’s not the right time. Don’t overthink it. If your gut is telling you that you’re ready, go with it. If your idea has been validated and you have been talking to customers, receiving consistently positive feedback, go with it. If your potential customers have placed pre-orders or indicated that would pay XX amount, it’s a good sign. If you have approached resellers and received verbal commitments or (even better) PO’s, go for it. If you started a website and sales are coming in, go for it. You have proof of concept and your gut is telling you to pursue it.
A word about investors:
If you feel that you need investors, here are some words of advice. Firstly, try to bootstrap your venture as long as possible. Working on a new opportunity full-time demonstrates commitment. If you aren’t able to do that, consider other ways you can show commitment to potential investors. Investors want to see what is commonly known as “skin in the game,” a term that refers to founders having something at stake in the outcome of their company.
Most investors are hesitant to invest in something that the founders won’t commit to on a full-time basis. However, many founders need funding to be able to focus on the opportunity financially, which results in a big catch-22. So, what do you do if you aren’t ready to quit your day job? If you can show that your product already generates revenue or users while you continue to work on it part-time, then you can make a credible case that taking on investment and going full-time would propel you to greater success. Today, most digital ideas can be proved by early experimentation and customer discovery. It’s always important to show early proof of your concept to potential investors, but it is even more important when you aren’t able to commit full-time to your opportunity.
Bottom line: work on the idea, turn it into an opportunity, follow the and Lean Startup methodologies (100 Steps 2 Startup program if you like) until you have enough evidence to give you the comfort you need before quitting your job.
If you are chasing your dream but haven’t done enough research yet (research can be done at night and on weekends), it might be a bit premature. In the end, there is never a perfect time to quit your job. But if the criteria above make sense, and your gut says “Go For It” this is the time to start scaling your own business and begin an exciting chapter in your life.
Note from 100 Steps 2 Startup:
For more in-depth advice on how to Know When to Quit Your Day Job, check out Startup Opportunities by Dr. Sean Wise & Brad Feld.