Should you quit your day job? If you're considering entrepreneurship, chances are you've been told--more than once--that the only way to succeed is to jump in with both feet. Only then will investors take you seriously; only then do you have a chance of building a world-beating company.
Before you march into your boss's office, consider this: A paper appearing in the most recent issue of the Academy of Management Journal finds that entrepreneurs who start off by working part-time on their new ventures--holding on to their day jobs while they launch their new companies--cut their risk of failure by a full third. A third.
Although it's not 100 percent clear why you're better off working two gigs at once (it's certainly not for the quality of life!), the researchers, Joseph Raffiee and Jie Feng of the University of Wisconsin, Madison, say it might be quite simple. Working part-time at a new company gives the entrepreneur a chance to see if his or her idea, and chances to execute on it, are any good before he or she leaps in. That time spent working two jobs, which Raffiee and Feng refer as "hybrid entrepreneurship," is actually a time to vet whether or not the individual really wants to be an entrepreneur in the first place.
Here's how Raffiee describes it:
A lot of people want to go out on their own but are concerned about the risks… A hybrid arrangement permits one to start a business on a small scale with less sunk cost and downside risk. Equally important, it provides a learning experience about the enterprise in question and one’s suitability for it. Once gets a realistic preview of life as an entrepreneur as distinct from all the glamorous portrayals of that life.
Given those benefits, it should come as no surprise that the hybrid route… is superior in terms of business survival. Yet, so strong is the stereotype of entrepreneurs as brave mavericks who quit their day jobs to pursue their dreams that we are only now coming to realize that there may be a better way than plunging right in.
Interestingly, serial entrepreneurs benefit more from the keep-your-day-job approach than do first-timers, perhaps because they know what to look out for during those early days.
If you're debating whether or not to quit your day job, perhaps you'll take heart from the impressive list of entrepreneurs who’ve trod that path. The paper notes that Steve Wozniak stayed on at Hewlett-Packard long after founding Apple with Steve Jobs; Pierre Omidyar launched eBay while at another software development company, and even Henry Ford founded the Detroit Automobile Company while employed by the Edison Illuminating Company. World-beaters, indeed.