The Definitive Guide to Business

18 questions to ask yourself before you quit your day job

Brian Meece, co-founder of RocketHub
Source: Brian Meece
Brian Meece, co-founder of RocketHub

Fantasizing about running your own business and actually running your own business are two vastly different things.

Becoming an entrepreneur sounds glamorous, but in practice it requires sacrifice, hard work and dealing with uncertainty. Are you ready? Do you really know what you're getting yourself into?

We talked to entrepreneurs about what to consider before you take the plunge. Here are the questions they recommend asking yourself before you quit your day job to start your own business.

1. Am I doing this for the right reasons?

"It's not cool to do a start-up. It's painful. CEO on your business card is a massive responsibility, not something fun to pass out at a cocktail party," says Sam Rosen, CEO and founder of MakeSpace, a New York City-based storage company that launched in 2013.

"And if you're thinking this is a get-rich-quick scheme, know that the average start-up takes 10 to 12 years to see a liquidity event."

Sam Rosen, CEO and founder of MakeSpace
CNBC
Sam Rosen, CEO and founder of MakeSpace

"Most businesses fail, and yours is unlikely to be the exception, so make sure that the work is itself rewarding and interesting," says Naval Ravikant, the founder of AngelList, a social network for founders, investors and job seekers. "Also longevity is important, and you're unlikely to sustain something through long and hard times unless you love the process."

2. What stage is my industry at?

"If the industry is really mature, with lots of players, it will be much harder to break in," says Elizabeth Salcedo, CEO and founder of Everpurse, a New York-based fashion technology company that launched in 2012.

"Even if your idea is amazing, if you don't have significant funding or insider connections, it will be very difficult to gain traction. However, if your industry is young, with few large players, it will be much easier to make waves and build momentum."

3. Do I have something unique to offer that gives me a significant competitive edge in the marketplace?

"Having a clear competitive edge is of the utmost importance. Be sure to have an honest conversation with yourself and founding team on what that advantage is, and how it grows stronger into the future," says Brian Meece, co-founder of the crowdfunding platform RocketHub.

"The market is efficient, and starting a company (especially one in tech or with a winner-take-all dynamic) can be like competing in the Olympics," says Ravikant. "You have to be among the best at what you do, on some objective metrics."

4. What's the worst that can happen if it doesn't work out?

"If you confront the worst possible scenario, you'll probably find out it's not the worst thing in the world, and that the need you're trying to fill in the world is worth the risk," says Tammy Tibbetts, founder and CEO of She's the First, a non-profit organization that provides scholarships to girls around the world.

When Tibbetts left her magazine-industry job to fundraise for She's the First, she asked herself: "'What do you really have to lose? Do you really think no one will ever hire you again if this doesn't work out?' The answer was, 'No.' I had a reputation and network to fall back on. So I made the leap!"

Tammy Tibbets, the founder of She’s The First, with the scholar she supported with her fundraising in the 2014 NYC Marathon.
Source: Kate Lord
Tammy Tibbets, the founder of She’s The First, with the scholar she supported with her fundraising in the 2014 NYC Marathon.

5. Does my passion to solve the problem my start-up would be solving outweigh the uncertainty and instability inherent in launching a company?

"If you don't love what you are about to dedicate your life to and you might want to do something else, then don't do it. You need to be in 100% or else it won't work. Go all in or do something else," says Charles C. Nelson, co-founder of Nelson's Green Brier Distillery in Nashville, Tennessee. "Starting your own business is too difficult to do halfway. I'll take passion over experience any day."

"You need to be in 100% or else it won't work." -Charles C. Nelson, co-founder of Nelson's Green Brier Distillery in Nashville, Tenn.

"You're going to run into a thousand issues," says Aaron Schwartz, founder and CEO of Modify Watches, a San Francisco-based custom watch maker. "Having true passion to solve a problem will get you through many hurdles. 'Change the world' might be a cliche, but you want to make sure you're working towards building a business that at least changes your life for the better."

6. Is this the right time?

"Customer discovery is key," says Delphine Braas, the co-founder of boat rental marketplace Sailo. "It was important for me to understand and speak to the key players in the boating industry. I needed to ask the right questions to come to my conclusion that the timing was, in fact, right.

"Having enough data and evidence that our company is going to be successful was crucial in my decision-making process."

7. Do I have a product and customers?

"A business plan these days means nothing," says Rosen. "The costs have come down so much in terms of launching a business that it's almost unforgivable to be seeking to raise capital without having a product in customers' hands that they are using (and in most cases paying for)."

8. How can I bring my current colleagues and industry network along as my champions?

"Assuming you're not going off to launch a competing company, get your colleagues excited about what you're doing, so that they're your champions," says Tibbetts. "When you resign, help your employer find and train your replacement. Leave them in a good place."

9. Who can I turn to when things at work are rocky?

"Starting your own business can be lonely," says Salcedo. "Make sure you have a group of other entrepreneurs who understand what it's like and can give you advice when you're struggling with something new."

"This might be a spouse or partner, but bringing work home might be bad for your relationship," says Schwartz. "In that case, do you have business advisers who care about you first, and the business second?"

Aaron Schwartz, founder and CEO of Modify Watches, with his business partner and creative director, Ashil Parag
Source: Modify Watches
Aaron Schwartz, founder and CEO of Modify Watches, with his business partner and creative director, Ashil Parag

10. How long can I go without a paycheck and still pay my bills?

"If you can't provide for your basic needs, you will not be able to give your start-up your best self, and that's what it needs to thrive," says Tibbetts. "Make sure you can keep a roof over your head and food on your table. If you can't, continue working on your side hustle while having a more flexible or part-time job."

Before deciding to launch Sailo, says Braas, "I considered my financials, including living expenses, rent and health insurance."

Delphine Braas, cofounder of Sailo
Source: Sailo
Delphine Braas, cofounder of Sailo

To be safe, adds Schwartz, "whatever you think you need, double it to account for the fact that nothing in a start-up goes to plan!"

11. Do I have the right team?

"People and relationships are the absolute most important part of business," says Nelson. "One person can ruin the whole vibe of a company, especially a small company. Make sure that you are bringing in people that are passionate, believe in what you are doing, work well with you, and are trustworthy."

Brothers Andy Nelson and Charlie Nelson, co-founders of Nelson's Green Brier Distillery
Source: Nelson's Green Brier Distillery
Brothers Andy Nelson and Charlie Nelson, co-founders of Nelson's Green Brier Distillery

Braas also considered what skills she and her three co-founders each brought to the table. "In our case, we had tech, marketing, sales, project management and an overall passion for hustling, which convinced me we were right," she says.

12. What am I willing to sacrifice?

"Know your non-negotiables," says Tibbetts. "For me, sleep, fitness, and time with my best friends and family are the most important things I will never give up, no matter how busy I get."

"I do have to make sacrifices though," she adds. "I don't take Ubers and cabs, I rarely go out for dinners and I bring my lunch to work as often as I can. In the beginning, I didn't take real vacations. (I only just started doing that last year!) To me, those are very small sacrifices compared to the audience I serve — our Scholars. You have to figure out what those are for you."

13. What "pain point" am I really solving in the market?

"This question helps keep you and your team focused," says Meece. "Focus is crucial, especially in the early stages of a start-up. This question also helps you manage 'pivots,' or changes in strategy, by maintaining focus on your core mission."

14. Can I handle an increase in stress, both physically and emotionally?

"Running a start-up or small business is hard. Really, really hard," says Schwartz. "You may have 'given your all' to your last company, but when you're the boss there is a different level of pressure. All of a sudden you become accountable.

"And until you build your team and create great systems and processes, progress will only be made when you are working."

Liz Salcedo, founder and CEO of Everpurse
Source: Everpurse
Liz Salcedo, founder and CEO of Everpurse

"Most likely you'll have to take on many roles and wear many different hats," says Salcedo. "As they say, everything that can go wrong, will go wrong. And you'll have to be the one to fix it, even if it's after 5 p.m."

15. Would I look my grandmother in the eye and say, "I think this might be a good investment for you?"

"Making the transition from part-time to full-time is a major step. While I don't recommend taking any money from family, set an extremely high bar before you make the leap," says Schwartz. "Have you built out your full business plan? Tested your idea with customers and tough-love advisers? Found other people (your future cofounders or employees) who are also excited about this problem and will trust you to lead them?

"If you can't answer all of those — and then some — you probably wouldn't feel comfortable asking a loved one to invest. Think twice and maybe keep making progress before you take the leap."

16. Will I be happy working on this one idea for years?

"Success never comes easily or overnight, and you'll need to make sure you're passionate enough about your business to stick it out when things get tough," says Salcedo. "Launching a start-up also requires constantly educating people about the great new product or service you're offering, so you need to make sure you're excited enough to talk about your start-up all the time!"

"It takes five years minimum to build a basic business and 10 years to get to an 'exit,'" says Ravikant. Be sure you're committed for the long term.

Naval Ravikant, founder of AngelList
Source: Naval Ravikant
Naval Ravikant, founder of AngelList

17. How big is the market?

"Most initial approaches to the market are incorrect, and you'll need to pivot. Larger markets give you more room to pivot," says Ravikant. "And it's just as hard to build a small business as it is to build a large one, (there are only so many hours in the week) so you might as well build a large one."

18. Do I have buy-in from people who have successfully built real businesses before?

"This is a check and balance on your own hubris," says Ravikant. "Entrepreneurs have to be irrationally optimistic, but can't be delusional. It's a fine line. This is a check on your delusions of yourself."