Want to start your own business? It might be a good idea to not quit your day job while you launch your new venture.
Steve Wozniak was an engineer at Hewlett-Packard when he designed what became the Apple I computer. While he agreed to partner with Steve Jobs to market it, he didn’t give up his day job. In fact, Wozniak didn’t resign from HP until seven months after starting Apple—after he developed the Apple II for general consumer release and after he obtained outside investor funding to get the company going.
“Don’t quit your day job” is good advice not only because you might need the regular paycheck, but also, according to a University of Wisconsin-Madison study, because people who stay employed while they launch a new business venture are a third less likely to fail than those who quit their jobs.
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It’s not entirely clear why that might be case. It could be because those who quit without a safety net tend to take more risks, which could imperil a start-up in the early stages. Or it could be an indication that taking measured steps is more likely to lead to success.
In addition to those psychological reasons, here are a few practical reasons why you’d want to stay employed while starting your business, at least during the initial stages.
1. Pay the bills while you figure out revenue potential
There are bills to pay, both in regular life and your new life as an entrepreneur. Having a job gives you some breathing room to do that.
2. Test the waters without falling beneath the waves
By working 5-9 after working your 9-5 job, you get an idea not only of whether you like running your own company, but whether the idea of your company has any real potential. And if the answer to either or both of those is “no,” you’ll find yourself with more time on your hands after work instead of having to hunt for a new job.
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3. Minimize fear and risk of making a wrong move
Fear can be your biggest liability. The security of a day job helps reduce that fear. Also, every new start-up involves a certain amount of financial risk. Staying employed with a steady paycheck puts you in a better frame of mind to decide what risks are worth taking.
4. Give your business time to work so it can provide you with a full-time income
No less an authority on entrepreneurship than Richard Branson advises that before your business can become your sole source of income, you’ll need investors and/or partners who can execute a solid business plan. Staying employed lets you develop these connections carefully to make a smooth transition from part-time business and full-time employee to full-time entrepreneur.
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Starting a business in stages is a way for you to learn what works and what doesn’t, without risking the long-term success of your venture as you try to figure it out.