Launching your own start-up is exciting and you will face many challenges. These challenges range from times where it seems no-one wants your product to the other extreme where growth is so fast that your business could fail due to cash-flow problems. In this blog, I’m referring to tech start-ups as opposed to other small businesses. The difference is clear cut… tech start-ups are defined as technology businesses that have the potential to grow fast on a global scale.
1. Salary Sacrificed
First up, if you’re not prepared or unable to go without a salary for an extended period of time, don’t quit your day job. And by extended period of time, I don’t mean a few months. We have regularly gone a year or two without any personal income or drawing a salary in our start-ups. It is important that you quit your full time job to focus on your start-up one-hundred percent. A start-up is not a side hobby or interest. Any angel investor or venture capitalist will expect this of you as an absolute minimum. By the way, if you’re thinking about obtaining seed funding from angel investors, don’t tell them that you intend to pay yourself a salary with some of the funds, no matter how small you think it is. Investors expect every cent to go into research and development.
2. MVP doesn’t stand for ‘Make Very Pretty’
Next, if you haven’t market tested a minimal viable product (MVP) of your innovation, don’t quit your day job. Many would be entrepreneurs have approached me with an idea, a pitch deck and nice website. This isn’t enough. You need to build something that your potential customers (not any customers or friends and family) – real customers who are your target market and are prepared to use, test and provide honest feedback. You need to know your market and be able to answer the following questions - how big is it, what market share can be taken and what differentiates you from other players? A word of caution – answers like “everyone is in my target market” and “no-one else is doing what I’m planning on doing” are poor answers that will not serve you. To help you answer these questions, the business model canvas or the start-up version, lean canvas is a very useful tool.
3. Salesperson wanted
If you have never had a job where you were responsible for sales, business development or marketing, don’t quit your day job. Not only are sales and marketing skills crucial, you also need the ability to raise money. Many start-ups are started by two or more people with complementary skills. One founder is the technical guru while the other is the sales or business person. Partnerships of this nature can be very successful and there are many case studies where partnerships have worked well. However, there are probably as many if not more cases where partnerships have failed dismally.
4. Geeks needed
If you don’t have technical skills or experience in the industry you’re planning to launch your start-up in, don’t quit your day job. You need to be able to build your MVP and market your innovation on a shoe string - unless you’re sitting on a pile of cash. As mentioned above, if you have a partner/co-founder that has technical and industry skills that you can leverage, then this will place you in a good position.
5. SMEs are not mini-corporates
If you don’t have experience working in a small business, then you probably shouldn’t quit your day job. Small businesses are not small versions of large corporates. There is an endless list of things to do from the mundane (stocking the bathroom with toilet paper) to more complex activities such as completing financials and submitted statutory returns and paperwork to government agencies. Don’t underestimate the number of things to do – they will cost you both time and money and you need to decide who you will engage to help you sort them out. On the flip side, to run a large successful business requires experience in a large corporate. So if you have never worked for a large national or multi-national company, you should probably not quit your day job.
6. Age matters
Finally, if you’re too old, you probably shouldn’t quit your day job! I’m only joking here - you’re never too old to get going on a start-up and being mature may be advantage if you have achieved a solid financial base and have broad technical and business experience. In fact, research shows that most entrepreneurs are launching start-ups in their mid-30’s to mid-50’s. Here’s the breakdown from Start-up Muster report: In Australia, around 15% of start-up founders are under 30, 53% are between 35 and 50 and 16% are over 50. So there are as many start-up founders under 30 as there are over 50 and almost half of Australian start-up founders are 40 plus, mature and going grey!
So if you have invested time, energy and money into building and market testing an MVP, have the financial means to quit your job, have well rounded technical, business and industry skills and are of any age, then go for it - go ahead and quit your day job!