As Patrick J. McGinnis writes in “The 10% Entrepreneur: Living Your Startup Dream Without Quitting Your Day Job,” “You don’t become an entrepreneur because you want to be rich or famous. You become an entrepreneur because it chooses you. No matter when you make the decision, you know in your gut you just have to go for it.”
That call is hard to resist, especially as you imagine fleeing your cubicle to follow that gut feeling.
But McGinnis, a venture capitalist and private equity investor, suggests starting small: becoming a “10% entrepreneur.”
According to McGinnis, a 10% entrepreneur invests just 10% of their time and resources into a new venture, while holding on to their full-time job. This way, he says, they have the best of both worlds, rather than throwing all their time and money into something uncertain. He’s for entrepreneurship, but he doesn’t recommend going all-in right off the bat.
Part of the reason he recommends this approach is because it’s impossible to predict whether your entrepreneurial dream will work out. If you aren’t prepared for things to go south, you could be in for a rude awakening. “When you choose entrepreneurship, you accept that the success and the money are terrific if they come, but they cannot be the only drivers of your decision,” he writes.
Here are McGinnis’ five arguments against quitting your job to pursue full-time entrepreneurship:
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The lifestyle is lousy.
When you leave a company to be your own boss, there might be some undesired trade-offs. “You have to rethink your financial goals, your lifestyle, and your definition of success, all while being plagued with self doubt,” writes McGinnis.
You might also find yourself working far more hours than your nine to five, for a fraction of the pay. “Sure, you have ‘freedom,’ but you also have long hours, demanding clients, and the stress of making ends meet on less money,” writes McGinnis.
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You can ruin your finances.
McGinnis refers to a study by Compass, a website that provides automated management reports for small and medium-sized online businesses, which found that 73% of startup founders make $50,000 per year or less.
“Those figures are surprisingly low when you consider how much responsibility they carry on their shoulders,” McGinnis writes.
Along with not getting paid generously for your work, there are also high expectations from investors who expect startup founders to put all their eggs in one basket and make money as the value of their shares in a company increase, he writes.
You’re abandoning status and affirmation.
“Changes in your career affect the way you are perceived by your peers, society, and even yourself,” McGinnis writes. “Endangering this affirmation can mess with your head.”
Having a routine and structure usually comes with working for an established company, but you might have to leave those behind to start your own business, McGinnis says. You will also have to learn to swallow your pride to pitch your business, and shouldn’t be surprised if you run into some rejections along the way.
You don’t have the right idea (yet).
According to McGinnis, you need to have a solid idea or product and a plan to back it up before you start your business, since it’s what you are building your team around and attracting investments with, and ultimately what you’re trying to sell.
Whether an improvement on a previous idea or an innovative product, it doesn’t have to be perfect, but it has to have promise. “Your idea should justify all the risks, costs, stress, and rejections you’ll face as you figure out if it will work,” McGinnis writes.
More often than not, entrepreneurs fail.
McGinnis referred to a study by Harvard Business School professor Shikhar Ghosh, which tracked more than two thousand startups and found that about 75% of them did not deliver promised returns to investors, and 30% to 40% returned little to no capital at all.
“His findings speak to a fundamental reality of entrepreneurship: failure, like it or not, is part of the DNA of building new companies,” writes McGinnis.