Monday Postcard #28 – The Right Time to Start Your Business
The past few months, I have been repeatedly approached by women who are thinking about starting their own business. I am always happy to have a chat, hear about what drives them and share my opinion and advice.
All of these women had been the stars at university with perfect grades, extracurricular activities and internships and later on moved up the career ladder in full speed. I am not sure if it relates to a life stage of being in our thirties but all of us asked ourselves the same questions: What do I really want to do with my life? Is it enough for me to earn a high salary? Why should an organization dictate my life? What is my contribution to society?
In all of the talks we established that the decision has already been made – all of them want to start their own businesses. The next question is how do I know that this is the right time and when shall I quit my job? Drawing from my own experience, I can say that similar to having children, enrolling in an MBA or taking time off to travel the world, there is never the perfect moment. The business idea for my first start-up actually came at the worst time – I was about two years into my job and recently relocated back to Munich from China. My promotion just went through and my corporate career seemed to be on full speed.
However, there was this idea which I could not stop thinking about. I always had ideas about potential businesses but this was different. I became obsessed. Everywhere I went or looked, I saw a connection to the business. I started to wake up at 5 am to work on the project, went to work and as soon as I left the office, I kept working on it until late at night. For almost a year, I effectively had two jobs. It sounds really exhausting but I was so motivated that I just could not stop. I was willing to sacrifice my leisure time and weekends for this project. When I realized that it got bigger and bigger, I had to make a decision – was this still a hobby or should I take it further? I assessed my savings and made a rough business plan. Furthermore, I did not feel that staying in a corporate career was right for me at this point in time. And then I did it, I quit. I was excited, happy and terrified at the same time. But you know what? I do not regret it.
If you are currently thinking of starting your own business, I recommend you to think about the following:
Is this really THE idea?
Is this an idea worth risking your career and savings? Or, is it just the fad of the week? I met a lot of people who had plenty of ideas. Basically every week, they wanted to start another business. Focus only the one which keeps you up at night for weeks. Then, test it, do some research if there is really a market gap, talk to people and assess if there is a real need. You might think it is the best product but maybe for other people it does not solve a problem.
Start It as a Side Hustle
It always takes time to develop the product – whether it is a tech project, jewellery or a service such as consulting. I would not recommend to quit your job right when the idea comes into your mind. Start small and see it as your passion and hobby which you can pursue after work and on weekends. Starting your business involves a lot of risk which is perfectly fine. But take calculated risks. A side hustle allows you to see if you are really made for the life of an entrepreneur without risking your corporate career. Furthermore, you will still receive a monthly pay check which supports not only your project but also your rent. This brings me to my next point:
Have Savings
When I started my business, a friend told me I should think about it like building your own house. Most people get the price quotations and then add 20-30% on top. It is really important that you not only assess the cost of starting your business and product development but also the long-term investments such as marketing. It is easy to get caught up in the moment and run out of capital before you can advertise your product. In addition to the capital you will need for the business, assess your cost of living. Deduct the cost of the business from your savings and calculate how long you could live from that money. In start-lingo: calculate your burn rate (how money months does your money last). I found the house example really useful but I would say after you have assessed the cost you add 50% on top because you will always need much more money than you actually estimated.
Are You Ready for A Lifestyle Change?
Entrepreneurs Nadine Al-Wazzan and Melissa Lim mentioned it in their interviews with me and I can only support that: Being a founder is most of the time not glamorous and always hard work. Unless you have the luxury of a trust fund given to you by your parents or because of having been CEO of a Fortune 500 company, your lifestyle will drastically change when starting your business. Due to my previous job, I was used to luxury travel, buying expensive clothing and eating at the best restaurants without even thinking about what I was spending. As a founder, I was forced to think twice about every cent I spent. A pair of designer high heels equalled several progamming hours and I drastically cut down on holidays. It sounds harsh but this is the reality for most entrepreneurs.
What is Your Backup Plan?
Starting a business also means you have to think about the worst case – what if you fail? What is your backup plan? As I started my business after starting a corporate career, I not only had the capital but also the education and experience. In the worst case, I could go back to a “normal” job. I also had the luxury of knowing that I could always crash my parents house for a few weeks if I needed to start from scratch again. I do know that most of us entrepreneurs are very driven and moving back in with your parents would never be your goal. However, I am really grateful for that, as a lot of people or not in such a fortunate position and it actually took a lot of pressure from me. If you are in a relationship, how do you deal with living only from one income for some time and what happens if you fail? It is important to answer all these questions, but at the same time, do not get caught up in endless “what if”-scenarios.
Set a Deadline and Be Honest to Yourself
Last but not least, set yourself a deadline. It will partially depend on your available capital but also on the course of the whole project. I started saying “I give myself six months.”. Well, most of the founders reading this will laugh about this short timeline. But still, try to set a realistic deadline. I had to promise one of my mentors to be honest to myself. If things do not work out, admit it and pull the trigger and stop chasing a shooting star which you cannot reach. Even if it is tough. Sometimes, you need to move on.
This was quite a long postcard but I thought it might be useful for a lot of you. What do you think or what would you like to add? I am happy to hear about your experiences!