A Check List: Considering Leaving Your Day Job?

If you are considering leaving your day job to start your own business, there are some serious questions you must ask yourself. I did not erratically jump ship when I got bit by the entrepreneur bug. Before leaving my 9-5 (or rather my 8am-1am finance gig), I made sure that I assessed the risks and weighed the benefits.

If you think coming up with the idea is the hard part, you are mistaken. Certainly good ideas don’t come along everyday, but I can promise you that conceiving the idea is actually the easiest part. The process for determining if you should go off on your own is long, hard, and involves some serious introspective examination.

In general, investors look at three types of risks: 1) Market Risk, 2) Technology Risk, and 3) Execution Risk. When determining if you should go into business for yourself, you should weigh the same questions.

The first two are obvious. To quantify market risk, you need to ask “Is my concept/idea/product marketable?” “Does it solve a real problem?” “Will people pay for it or can I find a way to monetize it?” Most importantly, “Is this something that I need?” , “Will I use it?” To address the technology risk considerations you need to ask “Can this be done?” “Can I build it or find people to build it?” Both require extensive due diligence, and I personally spent a long time researching and writing everything down into a draft business plan before even considering leaving my job. Writing a business plan is a painful but critical step. (More on that to come later)

However, the third type of risk: Execution Risk can not be quantified by typical research. It involves serious self examination, understanding your personal limitations, financial situation and relationships with family and friends. To help you determine if you are ready to go off on your own, I have created a check list of questions I asked myself before submitting my letter of resignation:

1) Do I have an entrepreneur’s personality?

An entrepreneur is a person who thrives under pressure, enjoys challenges and is self-motivated. You must be a high-energy person who is not afraid of hard work and long hours. Passion is a must. If you are not passionate about your business, you will find it hard to wake up every morning.

2) Am I willing to make sacrifices?

Becoming an entrepreneur can flip your life upside down and usually involves sacrificing customary ways of life and creature comforts. It is about more than cutting back on luxuries and discretionary expenses. For some, it even means moving in with Mom and Dad. The strain can affect relationships; girlfriends, boyfriends, wives, husbands, and best friends can be lost. When you become committed to realizing your dream, you may find yourself alienated from those who are central to your life. Balancing work and life becomes much more difficult and you have to be prepared to accept that.

3) Do I have the proper support system?

Not every entrepreneur is fortunate enough to have a strong family, supportive spouse, or rich aunt. But every entrepreneur must be aware of the role the people in their lives will play and how their startup will affect those individuals. You must consider your family and loved ones when starting your own business as it will most certainly affect their lives as well.

4) Do I have the financial resources to quit my job?

Many experts say you must have a least one year of salary saved up before even considering going off on your own. If you have significant financial obligations, dependents, or responsibilities you can not give up, you better make sure you can meet those commitments in the absence of steady income.

5) Do I interact well with others?

An entrepreneur is someone who can find answers to difficult answers. To find those answers you must be able to interact well with others, convince them to help you, and if you are good, make them want to help you. This is also crucial for building your team, attracting investors, and most importantly acquiring and retaining customers.

6) Can I trust others?

An entrepreneur must wear many hats, but you can not do everything. Those who try, typically fail. Those who are able to find the right people and delegate task have a much better chance to succeed. To be successful you must not only delegate but also inspire. This often means letting go of the reins, trusting in others, and making sure everyone’s mission and interests are aligned.

7) Am I confident in my abilities?

There is a fine line between confidence and cockiness; and, optimism and stupidity. You will experience ups and downs, successes and failures. To succeed, however, you must be resilient and, in general, positive. You can learn many things on the fly, a key trait of most successful business people. But you must also have a core skill set that you can use as a base. Experience in the industry you enter, is not a must, but it is a huge positive. The most important aspect, however, is trusting in your abilities, knowing when to ask for help, and believing that you can actually do it.

There are tons of online resources that can help you make this very important decision. However, two of my favorite reads include Founders At Work: Stories of Startup’s Early Days - a compilation of interviews from successful entrepreneurs in the tech and Web2.0 world (a must-read for any internetrepreneur) and Change the Way You See Everything: Through Asset-Based Thinking - one of my favorite inspirational books.