Should You Give Up Your Job to Start a Business?
Resigning from your job to start a business is a drastic move that must not be based on emotions alone. It has always been my advice for those who want to be entrepreneurs to keep their current job, if feasible, when starting a business. However, there are situations where the arguments for resigning outweigh the advantages.
Taking risks is unavoidable if you want to enjoy success. Nevertheless, it is mandatory to carefully study the pros and cons before you make the move. There are countless things to consider but I hereby list some of the most crucial.
Positive Factors In Favor Of Retaining Your Job
You have a steady cash flow. You may think you have more than enough to sustain your expenses until you become profitable, but the truth is nobody knows for sure when you will be profitable. It may take only six months before you recover your investment or it is possible, too, that your business may go bankrupt despite all your efforts.
You have an affiliation. Being connected with an established company confers credibility especially if you have a senior position. This may open doors to people who have a good impression of your firm. In the future, in case you may want to get a job again, it may not be good on your resume to have a few years of being self-employed. This may seem unfair but the skills you develop as an entrepreneur may not be the talent the large companies would need. Corporate jobs usually need specialized learning while you develop a different set of skills in a small business where you may have to be a Jack of all trades but master of none.
You have a capable and honest manager or supervisor in charge. If you have someone of unquestionable honesty you can count on to watch over things while you are working in your day job, then it may not be necessary to give up your current employment. Otherwise, spend a lot on control measures if you cannot be present.
You have dependents. If you have kids about to go to college and your wife has no job or whose income is far from sufficient, you have a lot of soul searching to do if you plan to risk everything for your dream business.
Health, insurance and other benefits. Very often, only the basic pay is factored in; but a closer study would reveal that you would have to give up far more than that. Figure out all the benefits you are receiving from your employment to get an accurate amount of what you will be missing.
You have a large separation benefit due in a few years. It would be prudent to wait a little if a financial bonanza awaits you. But you have to also calculate the opportunity lost while you wait.
Situations That May Justify Resignation
You can easily go back to the job market. If your particular skill is in short supply or you are extremely talented, there is a good chance you can find a job again in case your venture does not work out.
You are young. You have the luxury of time if you are young. As in the case above, it will be relatively easier to go back to being an employee. Just remember that many companies here think that being in your late twenties is already too old if you are aspiring for an entry level position.
You have wealthy parents to turn to in case of failure. This option is a double-edged sword—it could cut both ways, meaning it is both an advantage and a disadvantage. Knowing that there is a safety net in case you fail reduces the risks. However, in many cases this very security is what causes problems. There is a strong tendency not to exert full effort, especially for those not used to hard work.
You have other sources of income that can sustain your expenses indefinitely. If the cash flow from your investments is large enough to cover your daily expenses, then you only need to worry about running your business. This case is very different from just having a year or two of savings because your savings could be depleted.
A good separation package is currently offered. Sometimes a company offers generous incentives to those who will avail of early retirement. If the offer is for a limited time only, then you should consider accepting it if you are already planning to start your own business.
The business needs your presence. There are many businesses that can only operate successfully if the owner is present, at least, in the start-up stage. It may be that the owner’s personal skills are needed, controlling is hard, and many other things.
The question on whether to resign to start a business has major impact on your life. With so many things to consider, it is best to ponder the matter for a few months before deciding since this could make or break your future. Rely not only on passion but also on your mind.
*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.