Should I quit my job and start a business?

Miscellaneous and Personal Stuff I Must Share
1

I’ve been dying to start a business my whole life. I’ve always been into computers and technology, so my business ideas have always been computer-related.

I don’t want to discuss my current business idea in too much detail yet…I’m still hashing things out…but here are some points to consider:

  1. I’ll have to borrow between $80K and $100K from the bank for the next year’s operation, which I’ll be in debt if I don’t succeed.

  2. IF I succeed, I MAY be able to pull down my current salary after one year…even less than I’ll be borrowing. But there’s possibility for future growth.

  3. I am the primary breadwinner for my family…I have a wife (who essentially makes nothing) and three kids.

  4. I truly, truly hate my job. If I didn’t have a family to support, I would have quit months ago.

I desperately want to own a business, but don’t want to jeopardize my family’s well-being. I’m starting to think that if I stay at my current job another week, I’ll go insane.

What should I do?

2

How much have you saved so far?

What do you have for collateral for a start-up loan?

You realize start-up money is hard to come by without investors, right?

Why isn’t your wife making money? She’ll need a job to cover shortfalls in your monthly bills until you have a steady net income.

Do you have a plan for child care? And how you’ll pay for it?
Forget those and any further questions.

I am the last to discourage you from making your own life on your terms. But as almost every entrepreneur, you have a shitload of sacrifices coming up. You will live very, very poor for awhile. Unless you get lucky and find a larger company to pick you up. Bill Gates started in his mom’s garage. Ron Popeil scrounged state fairs for his dad before buying the old man out to go on to millions.

Sacrifice plus a lot of luck and we’ll be reading your book in 20 years. Sacrifice, hard work, and a supportive wife and you may be answering yourself when you yell “Boss!”

Sacrifice, hard work, supportive wife, luck and a government grant may just earn you the ole duffer as your top salesman.
But only when the company assets are over $5 million. Keep me in mind as I sincerely say Good Luck in your endeavor.

3

My advice to you is to seek out help. Every state has a group of Small Business Development Centers (run by the government) that can help you see if you’re eligible for any SBA loans or grants. They will help you through the steps if you’re really serious about it.

Keep in mind that it is extremely difficult to open a business. The type of business you want to open may be unworkable in your area due to lack of market or too much competition. Your credit should be excellent and you should probably have enough savings that you could live on them for at least a year.

Your wife not earning any income, especially with kids, is going to hurt. Many investors are looking for DINK (dual income, no kids).

Start by doing research. The Small Business Development Centers can help you and they often have websites. Here is the one for Ohio. Good luck.

4

There are several threads here in the last couple years on the same topic which have a lot of good advice from people who’e been there & done that.

I did it myself 10 years ago. Did damn nicely for a few years until the Feds changed a law for another purpose & shut us down cold turkey with no warning one fine day. Plan on 20 hour workdays for you for at least 2 years, and whatever you think it’ll take in startup capital right now, triple it. Then double that.

Capital requirements depends a bunch on your chosen industry, but even a guy trying to sell himself as the traveling on-call geek-with-a-laptop-and-no-staff needs a bunch more than you think.

Don’t quit your job until the day before you can start the new venture. It can take 6 months to rent space, get permits, line up advertising, etc. And that’s after you’ve secured financing. All that crap can be done in your spare time & lunchhours while still drawing a salary. Do just enough at your job to stay below their radar & soend the rest of your energy & time on getting it going.

Read everything you can get your hands on about starting a business and about your proposed industry. Visit every one of your soon-to-be competitors, pretending to be a customer. You’ll learn a lot about what to do and what not to do. And you’ll also get a feeling for whether they’re all starving or anyone is actually making any money.

Join the local trade association for whatever it is, and also the chamber of commerce. Get involved & get known. The finest product in the world is useless if nobody knows what it is or who you are.

Do NOT plan on taking a single penny out of the business for 2 years. If all goes superbly at that point you can begin repaying some of the startup loans (from either yourself or the bank). The third year you can probably pay yourself $20K or so as salary.

Read this book: http://catalog.scccld.lib.mo.us/marc_record.asp?marcindid=222004 The others in his series are not as good; he got famous from this one and kept beating his one & only horse until it was dead. He’s also got a website & training company where he make lotsa cash from his one idea.
I’m involved with a startup now as an employee, not an owner. We’re a software development group for the telecom industry. We’ve been in operation for right at 2 years, we’re well into burning our second million dollars of seed money and we hope to have our first breakeven month along about April 05, roughly 30 months after startup. The owners haven’t taken spit out of the business since they began. And they’e on the hook for loans pushing $2mil between what they owe the bank and what they borrowed from their life savings (ie all of it).

These guys had been junior executive types with hefty savings before they set out on their own. Since then, their wives have been working full time to feed the kids & keep the mortage more or less current.

So, no, it isn’t easy. And hating your job is the WORST possible reason to start a business.

5

Funny you should ask this. In January me and a coworker are going to start our own computer business. We’ll work primarily in Pickaway County, Ohio. We’re going to keep our current jobs (technology for a school district). The business will start out doing tech support (break-fix/upgrades, etc.) and eventually branch out to be more.

Keep your job. If this business of yours fails you will still have something. I don’t mind running the risks of starting a business because I have no family to support.

$80-100k for startup capital seems kind of high. We’re doing our business with just $2000 in startup capital. For your first year or two try to run this business without hiring any employees. They eat up too much money.

If you want to talk about it more feel free to e-mail me.

6

Along those lines, let me relate something I told a classmate in Calculus a few weeks ago when I asked, “would you rather have a job?”

He turned up his nose and said, "I not going to have a job, I’m going to have a career!’

To which I replied, "Well, I’m 41 years old and whenever I had a job and my shift was up, I clocked out and didn’t think about it for 16 hours. The one time I had a career, I laid awake at night and worried about what I was going to the next day to keep it. The guy didn’t understand me.

My father was a heavy equipment operator, a notably good one. When I turned 10, he went into business for himself (everyone dreams of having his own equipment and being his own boss). I remember times when he would have to beg and borrow to make payroll and pay the bills (they don’t wait) and then turn around the same day and try to collect money from the people he had completed jobs for (collections is something budding entreprenuers seldom think about). I remember times when the work wasn’t there and dad had to get degrading jobs just to feed the family. Business decisions plagued him all hours until he died, when you are the owner and the boss you cannot clock out and you are never owed a vacation. That’s part of the life of an independent construction contractor, though, maybe computer-related businesses are different.

7

You’re in Cincinnati? May I take a moment to plug Northern Kentucky University’s Small Business Development Center? They’re a spectacular resource for figuring out the details and feasibility of your business idea. Very good people and it’s free.

(says the soon-to-be NKU grad :slight_smile: )

8

If possible, find investors instead of debtors. If the bank loans you money, they’ll want it back, and to make sure, they’ll make you co-sign on it. And that means you’ll have to put collaterol up to back it, such as your house. If you don’t have the collaterol, you won’t get the loan. And if your business fails, you’re out what you put up. Like your house.

It’s bad enough that you’re going to put in a year or two of 16 hour days with no pay. Don’t put your assets on the line as well if you can avoid it.

If this is your first business, and you’re estimating you could make money after the first year, it’s likely you won’t see anything until after your second year. There are always unforeseen things that come up, even with experience. Make sure you have the cussion to make this happen, not just enough for you to make no money, but enough so you can spend on additional things that are bound to come up.

Not to be discouraging here. Starting a business is one of the most rewarding experiences you can have. It’ll really change the way you view business and the world in general.

I’ve had the good fortune to build a few businesses in the high tech space that have done well. If you’re interested in talking, drop me an email.

9

I agree with a lot of Bill H.'s statements. Two items should always be in your mind during your first few years:

  1. Play with other people’s money - A loan is not another person’s money. It is your future money one way or another. Besides, until you are out of the start up phase, banks and venture capitalists aren’t going to want to touch you without some major collateral on the line. Family and friends would be your best bet to look for investment. This is another reason why you should be sure about your idea’s feasibility! Also look around the area for small business grants that may be available from foundations or local government. The chamber of commerce is an excellent starting point to investigate these things.

  2. Minimize and control vs maximize and own - Always analyze very carefully an out-and-out purchase during these first few years. A lease can often get you the same amount of control as buying property and doesn’t cost you as much over the short term. Minimize your ownership while keeping control, that way you can keep your scarce free capital for where you need it. If you’re going for high-tech, investigate incubators around the area (there’s the Madison E-Zone in Northern Kentucky, for example). These locations are generally sponsored by local organizations and the government. They are basically low-cost spaces for business rental where you share common resources (a paid secretary, copier, fax, conference rooms, high speed internet connectivity) with other start-ups.

And before you launch anything make sure you know your product and your market. Don’t just assume you’ll do well based on gut instinct! Do research. Do more research. When you think you’ve done enough? Do more. If there are going to be any problems, you need to know that now so you can plan ahead. Why? Because there will be problems no matter what. Minimize the number of them so they don’t end up squashing your business.

Finally, and attached to the above paragraph, don’t be too proud to admit your idea won’t work. Some of the best concepts in the world end up not working out. Sure you might be able to build a better mousetrap, but what if your region doesn’t have a mouse problem? What if the current mousetrap isn’t the best but is good enough? What if there are just too many competitors? These are all factors outside your control that can scuttle solid business plans.