We're groomed to go to school, get degrees, and then make our way into corporate industry jobs. These jobs must come with great benefits and pension plans so that we can retire around the age of 65. For some of us, this is not enough and the thought of venturing off on our own to pursue our dreams keep us awake at night. Our friends at Tipsy Elves, an e-commerce novelty fashion company that is projected to hit $12 million this year, are sharing some questions with me on what future entrepreneur's should take into consideration before taking the leap.
1. How Is Your Side Business Doing?
When Mendelsohn and Morton, the company's founders, were ready to move forward with Tipsy Elves they were a year and half in to their careers. Mendelsohn was a lawyer and Morton was an orthodontist. Mendelsohn advises that if you are getting traction in your new business then you could be ready to act. But if you're barely scratching two pennies together from your new venture, leaving your current job won't necessarily guarantee more income. Remember, its the steady paycheck that is paying your bills and keeping your head above water. To give that up means you need to start paying your bills from another source. Mendelsohn adds that if you're not generating much income from your new business, you'll need to rely on savings, loans or investors.
2. What Are Your Expected Growth Plans?
Mendelsohn's expertise is in SEO, therefore, he was able to create landing pages where he can gauge potential client interest and see what really drives the click-throughs to the site. This allowed for them to get numbers on paper and see what the actual audience was for Ugly Christmas Sweaters. Mendelsohn also notes, that if your projections and research indicate that your new company could take off in the next few years, you might be able to pull the trigger before the money starts rolling in. Be sure you have a solid business plan in place with finances, projections and expansion plans noted.
3. How Are Your Personal Finances?
Morton shares with us that both him and Evan invested $140,000 of their own money which they were able to save up via their corporate jobs. They were able to self fund Tipsy Elves in order to get it on the ground. Morton adds that, "Personal finances play a major role in entrepreneurship, especially if you plan to run a one or two-person show. If you have little to no credit card debt, an emergency fund in place, and long-term savings stocked away, you might be ready to go it alone. Many entrepreneurs must bootstrap their companies or forgo a personal salary until the company is self-supporting." Morton tells me. Solid personal finances make this possible.
4. Is Your Day Job Interfering With Your Business Operations?
An important question to ask yourself says Mendelsohn, "If you can't tend to your side business because your current career is getting in the way, it might be time to make the switch." For instance, if customer service is suffering, or you can't take on new clients because your day job requires too much time, you're actually foregoing possible income with your new business to maintain the job you're trying to leave. "If it happens once, carefully decide whether it was a one-time thing or an ongoing problem. If you're constantly compromising your new business for your day job, a transition might be in order." adds Mendelsohn.
5. Do You Have Access to Additional Capital?
Both Mendelsoh and Morton agree that, if you think your business needs more money in order to grow, now's the time to start investigating options. This is particularly true if you don't have any personal funds available for business expansion. Morton states "There are lots of ways to raise capital - angel investors, venture capitalists, crowd funding, and small business loans - so research which option is best for you." Lining up capital before you leave your job enables you to list your current income if you apply for a loan, and it also ensures there's no lag in cash flow once you're on your own.
6. How Is Your Personal Life?
The reality is that life is happening around you so its vital to be cued in on what can potentially effect you or your new business. According to Mendelsohn, "If you just became a caretaker for an elderly parent, or you're wife just gave birth, now might not be the best time to add more stress to your life. Your family should always come first, so think about their needs before deciding to quit your job."
7. Are You Disciplined and Organized?
Once you quit your day job, you'll be running your own show. Morton, who was running an orthodontist practice in San Francisco states, "You won't have a boss, a work schedule, or as many externally-assigned deadlines to meet. While the freedom of entrepreneurship is wonderful, if you don't have the personal organization and discipline to maintain productivity, you might not be quite ready to quit." I cannot agree more and think that one needs to take steps to improve your self-discipline and organization before you walk away from your day job - enroll in a class, or attend an online seminar to learn techniques for staying on track.
Leaving a traditional career to start your own business is a major decision and can be quite daunting but with the right planning, research, and prudence it can be all worthwhile.