5 questions to ask before quitting your job to start a company
Many people fantasize about quitting their office jobs to start their own venture. Whether they have a side hustle that they think they can monetize, or daydream about writing proposals in pajamas, entrepreneurship can seem like a compelling alternative to working in a cubicle. However, given that 50% of businesses fail in the first five years, it’s important to make an informed decision. Before you draft your resignation letter, make sure to consider these questions:
Will people pay you?
A CBIinsights analysis found that 42% of small businesses fail because there’s no market need for their product or services. Ask yourself what the value proposition of your company is. Does your business provide a novel solution to a problem that many experience? Or do you plan to improve an existing product?
The best way to figure out whether people will pay you is to test a minimum viable product. Rent the Runway founders Jennifer Hyman and Jennifer Fleiss piloted their concept with an in-person dress rental service for college students. After 34% of women rented with them, they sent a PDF of dresses to their mailing list. Five percent of their listserv rented, which suggested that online clothing rental would have traction in the marketplace.
Will you enjoy your hobby if you rely on it for a living?
Many entrepreneurs start out by turning a hobby or side project into a full time job. It may be tempting to pursue something that you already enjoy doing as a career. However, the pressure of generating profit may suck the joy out of it. One of my friends started a catering company to capitalize on her talent for baking, but soon realized that the drudgery of prospecting clients, fulfilling bulk orders, and bookkeeping stifled her creativity. To avoid getting into a similar situation, take time to evaluate whether you’ll still get satisfaction out of your side gig once you’re relying on it as your main source of income.
Are you prepared to make changes to your lifestyle?
Early stage startups tend not to generate enough revenue to pay founders salaries. Unless your family is willing to support you, it is likely that your disposable income will take a hit, and you’ll have to scale back expenses. Think through the adjustments you’ll have to make to cut costs. Are you passionate enough about your idea that you can justify eating out less, canceling your gym membership, and postponing your dream vacation?
Do you take criticism well?
Maybe you find idea of running a business compelling because you don’t have to answer to a boss. This may be true, but you still have to answer to your customers. Good entrepreneurs constantly seek out feedback, and in most cases, it’s the negative comments that help improve your products and services. If you are the sort of person that gets defensive in the face of criticism instead of adapting, your business will not fare well.
Are you disciplined enough to create structure for yourself?
As a founder, you have to execute the strategic vision of your company. No one is looking over your shoulder. It’s your responsibility to set measurable goals, subdivide those goals into action items, and plan the agenda for your day based on what needs to be accomplished. If you lack the discipline to create structure for yourself in the absence of a supervisor, stick to your 9 to 5.
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Anya quit her corporate job to start Bad Apple Produce, an NYC based produce delivery service with a mission to reduce food waste. In her free time, she brainstorms ways to make the MTA more efficient and scopes out new additions for her hot sauce collection. You can connect with her on Facebook or LinkedIn.