The following is an excerpt from my new book, Get Funded!, available now. Need a copy? Want to write a review? Ping me on Twitter @johnbiggs!
The answer to that burning question keeps founders up at night–literally. Coming home after a full day of work to build another product is exhausting, and not many can maintain the pace. But entrepreneurs with families, at least in the US, need insurance and a steady paycheck. The mortgage won’t wait for your success.
Quitting your day job is a difficult decision, but there are a few guidelines to remember.
First, you need to assess your business in terms of potential earnings. Will you make more if you spend more time on your business? This is called scaling, and the first point of contact with scaling happens when you, the founder, pour yourself into the work. Perhaps try it for a week, spending a few vacation days focused only on your startup. Are you making anything at all? What’s holding you back? What is the opportunity cost? If you are wasting away in a cubicle doing nothing all day, maybe there is a good reason for a change.
The benefit of quitting your job is the clarity of purpose it provides, This is a fancy way of saying it scares you into action. Like drunks and babies, entrepreneurs who quit their jobs often survive the ordeal without a scrape. And, often, it is the act of quitting your job that kicks the startup into high gear.
I think the best example of this is the story of Rod Canion, Jim Harris, and Bill Murto. These three men were senior managers at Texas Instruments. In 1982, they talked about starting a chain of Mexican restaurants but, after some thought, they realized their skills would be better put to use in building what, at that time, was a miracle product: a portable computer.
The trio invested $1,000 each of their own money, and a designer named Ted Papajohn sketched out the first design on a napkin in a pie shop in Houston.
The three founders named the company Compaq. Each quit their jobs–they had wives and families, so the prospect was frightening–and took their fledgling idea to the equivalent of an angel investor who gave them $1.5 million to build their first computer. At the same time, the concept of the personal computer was gaining steam and Compaq came out with the first truly portable–or luggable–machines. These machines were also unique in that they were fully IBM compatible, a feat that required Compaq programmers to develop compatible software without seeing or understanding IBM’s own software. In other words, they forced their dream into being after quitting their jobs at a place that gave them the dream in the first place.
Is your idea as revolutionary as Compaq’s? Do you have decades of experience in the industry and a Rolodex of investors you can contact for funding? Do you have a certainty that you will be able to build a going concern in months, not years? If you can answer these questions in the affirmative, then it’s time to quit your job.
If any of those answers are still iffy, you should consider staying put.
Many entrepreneurs maintain their day jobs until they get into an accelerator or incubator. This means they’ve received a small amount of angel cash, and they may be on the road to success.
Still others quit to build while consulting on the side, ensuring a steady stream of income until the startup starts paying off.
Finally, others quit just because they want to. After all, you can always get another job in a cubicle, but it’s not every day you can build something for yourself.
Quitting your job is like going into a free fall. For many, their work is a defining trait, a place to go where you can be successful, make money, and hang with like-minded people. In other words, it is your tribe. It’s scary to lose that tribe. Interestingly, with a startup, you rebuild a new tribe in your own image, a process that is as exhausting as it is exciting.
Countless ideas have fizzled on the launch pad because of timid founders. One of the problems at Freemit was the failure to commit by two of the founders. They loved the idea of cash and insurance versus uncertainty and penury. This is natural. But it helped kill the company.
When should you quit your job? You should quit your job when your startup is cooler than your job. And only you, the entrepreneur, can know when that moment comes.