When To Make the Leap from Side Hustle to Full-Time Entrepreneur

At the beginning of every new year, so many of us come off a couple of weeks of well deserved rest and begin toying with the idea of finding a new job or even venturing out on our own uncharted path of launching a fantastic world-smashing startup.

Seems like the ideas just flow better when you finally have time to breathe.

People often ask how I knew it was time to exit the relative safety of the corporate world.

And fully dedicate my time and resources to inventing a new biotech product and launching a startup venture.

Transitioning from Employee to Entrepreneur

Learned a lot while transitioning from employee to entrepreneur.

Happy to share experiences of what worked well and what flat-out failed.

During that time, I often benefited from some truly great business advice from others.

However, here is some advice I have received numerous times over 20 years of business development and ownership.

Bad Advice

My hope is that you will hear it and then...ignore it.

Goes something like this:

“If it sounds too good to be true, it probably is.”

I’m sure this sage advice comes from a good place when they offer it up.

Kind of like when your mom told you to “be careful” whenever you left the house or to make sure that you put on a hat, “so that you don’t catch a cold.”

It’s not the motive behind offering the advice that makes it horrible.

On the contrary, I would like to thank mothers everywhere for caring so much :)

Why is it such bad advice for a business leader or entrepreneur?

Some of my successful serial entrepreneur friends say “the advice” often betrays a defeatist attitude and soothes the conscience of those who are too anxious to try or even consider anything new and outside of their comfort zone.

I don’t view it that harshly.

Maintaining a “healthy” dose of skepticism can be beneficial.

Cynicism, however, can be downright deadly.

What if Einstein, Edison, Salk, the Wright Brothers, or Howard Schultz had heeded that safe yet misguided advice?

Skepticism keeps us alert to potential pitfalls, but cynicism blocks our natural curiosity and prevents us from imagining the possibilities.

How will groundbreaking ideas ever develop, if we never start down the path of discovery?

Innovative thinking benefits individuals by helping to establish businesses that sustain themselves, their families, and the economy by creating jobs.

But how do you know when to go “all in” on your business idea?

Here are 8 things I keep in mind when considering a new venture:

1. Critical Analysis is Important

Don’t be a sucker. Have a critical eye.

Share your plan with other critical thinkers; friends, accountants, lawyers, and other entrepreneurs.

Be prepared for resistance.

Most will not be overly optimistic about your new venture.

But they are often the best people to see the obvious flaws and weak points for you to address.

2. Know your "why" and build your goals around it.

Why go into business for yourself?

There are lots of benefits:

Increased flexibility and control, independence, personal accomplishment, unlimited profit potential, it even provides tax deductions.

But what reward are you genuinely seeking?

A multi-billion dollar buyout in 3 years?

Or sustainable income with more freedom?

You will occasionally need to remind yourself why you started all this in the first place.

In order to get to where you want to go, you will need to know where you want to be and chart the path to get there.

Even Google Maps needs you to pick your destination before it can guide you there ;)

3. Don’t be overexposed

"Everyone has a plan. Until they get punched in the face." -- Mike Tyson

Hope for the best, but plan for the worst.

If everything went horribly wrong...

• What would be the likely outcome?
• Whom would it affect?
• How much can you afford to lose?

Most people overly emphasize the worst-case scenario.

So it holds them back from starting down the path.

I've learned to temper my enthusiasm for new ideas with pragmatism.

I count the cost before taking on a new project, both in time and resources.

A cautious optimist.

4. Is it worth the risk?

If successful, what would your ROI be?

If your best case ROI is 5x-10x your initial investment.

Then your probable ROI would likely be much lower. Maybe 1.5 to 2x?

Ask yourself if all the increased stress, pain and sleepless nights, that are tightly coupled with entrepreneurial life, are really worth the likely monetary outcome.

5. Threshold for pain

Some of us have an abnormally high pain threshold.

This is an excellent marker for a successful entrepreneur.

However, what is your family’s threshold for pain?

Who is depending on your income?

Spouse, kids, aging parents?

6. Timing

Taking advantage of market timing is very important for a successful venture.

But so is your personal timing.

This goes back to point #5.

• Are you a new parent?
• Do you have any savings to lean on or a large debt load?
• Is this the right time to try something risky?

Is your family ready for the roller coaster ride that you are ALL about to take?

7. Set progressive goals and timeline

Assess progress.

Re-evaluate.

Pivot.

And yes, overcome roadblocks.

It's all part of the entrepreneurial journey.

But I highly recommend you also do this...

8. Set a “stop-loss” point

The number one reason for startup failure is the lack of a market need for the product.

That should be self-evident.

If no one wants your product, your company isn’t going to succeed.

But many startups build things people don’t want with the irrational hope that they’ll convince them otherwise.

Unbridled optimism can be blinding.

Just like successful stock investors, remove emotion from the equation by setting absolute end criteria.

If your business and/or personal finances ever hit a predetermined loss point, you will put everything on hold and pursue another source of income.

For those of us with grit, persistence and a high threshold for pain, setting a “stop-loss” point will save you from disaster.

And enable you to take on suitable levels of risk with less stress.

Over the years, I’ve done this poorly and I’ve done it well.

The sting of doing it poorly can last for years.

You only want to do it well, believe me.

Should You Start Your Own Business?

• Be cautious, but be optimistic.
• Count the cost, but explore new ways of doing things.
• Measure risk, but be bold.
• Watch your step.
• But by all means, start down the path.

You can always adjust your course...IF you venture wisely.

Follow Michael on LinkedIn for more tips on how to grow your business.