By Ed McLaughlin and Wyn Lydecker
When is the best time to start your own business? This is a burning question that I am receiving with increasing frequency from entrepreneurs of all ages. Some questioners are students that want to know if they should work for someone else or start up as soon as they graduate – or even before they graduate. The gainfully employed with aspirations to start up are wondering when they should leave their jobs and strike out on their own. Likewise, retired professionals and seniors are anxious to fulfill their new business visions — but every category of entrepreneurs wants to be smart, sensitive, and aware of the factors that will increase their probability of startup success.
To help you decide the best time to start your own business, I have developed this 4-point Startup Readiness Framework.
Startup Readiness Framework
Where do you fall on the startup readiness timeline?
The Very Rare Entrepreneur with Visionary Talent
In today’s parlance, these one-of-a-kind entrepreneurs are often referred to as Unicorns. These visionary entrepreneurs often choose to start their business ventures right away, even dropping out of school to do so. They see the immediate purpose and potential of their business idea and cannot wait to start up. These are the highly unusual entrepreneurs who have both a vision and inherent ability to create a unique product that may just change the world.
Think: Bill Gates & Paul Allen, Steve Jobs & Steve Wozniak, Sergey Brin & Larry Page, Michael Dell, and Mark Zuckerberg. They had a bankable business idea that fills a new need in a market that is changing. They had no reason to delay. In fact, a delay may have hindered their potential success.
The Entrepreneur with an Adaptive Skillset:
These entrepreneurs have work experience and a developed skillset, but they realize they need more wisdom to further define their market opportunity and to learn how to adapt their skillset to meet it.
Business schools are responding to this group of entrepreneurs by ramping up their entrepreneurial programs. In January, 2015, Fortune reported a Graduate Management Admission Council study that found “45% of 2010-2013 grads started businesses directly after finishing B-school…” and that “Increasingly, MBAs are rushing to apply their business skills to their own enterprises.”
Connor Wilson and Nolan Walsh, founders of Thursday Boots, are examples of entrepreneurs who polished their business skills and started their own business. With a history of interest in the broader fashion industry and boots specifically, Wilson said he “went to (Columbia) business school to become an entrepreneur.”
The presence of entrepreneurs in B-school is becoming so commonplace, Harvard Business School now helps graduates jump-start their businesses by giving out 20 to 25 debt reductions each year at a value of $10,000 to $20,000 each. Wharton runs a Business Plan Competition with $115,000 in cash and in-kind prizes to help students jumpstart their businesses.
The Entrepreneur with Road Tested Innovation:
These entrepreneurs have uncovered a market need while carrying out their day-to-day responsibilities working for someone else. They understand the characteristics of the industry, they understand the needs of customers, and they have had the time to road-test their ideas inside an established company. Oftentimes, these entrepreneurs offer their existing company a stake in their new company– but they are absolutely determined to take the lead and fulfill their business vision.
These entrepreneurs have the confidence and the ability to apply their own road-tested experience and start a successful business on their own. This is what Tory Burch did after working for Harper’s Bazaar and designers Vera Wang, Ralph Lauren, and Norciso Rogriguez before launching her own brand. A year after Ms. Burch opened her first retail outlet in New York, Oprah Winfrey called Burch’s line “the next big thing in fashion.” Ms. Burch is now ranked as the 73rd most powerful woman in the world by Forbes.
The Entrepreneur with Distinctive Competence
These entrepreneurs are the long-distance runners who may carry the desire to start up for many years while working for someone else. Over the years, they build a career and develop distinctive competence – a combination of expertise, experience, and a track record of success. Their years of working for someone else stoke the fires to start and run a better business. During that time, they have developed the unique ability to identify the big idea that can turn into a disruptive business.
Distinctive competence provides you with the proven expertise and experience that enables you to execute your idea, the connections to secure pre-orders and land funding, a strong network of customer relationships, and the vision for the working culture you want to create. When Robert Noyce and Gordon Moore (the Moore of “Moore’s Law”) founded Intel, they had jumped ship from years spent at Fairchild Semiconductor and even more time working at Shockley Semiconductor.
When Noyce, co-inventor of the semiconductor, and Moore founded Intel, they had no business plan, but they did have unique talent for perceiving problems and inventing new technology that could solve those problems and create a new business category. They also had money to invest in their business – something that is very attractive to outside investors. In their years of working for others, Noyce and Moore acquired entrepreneurial zeal, established incredible track records of success, and had long-established contacts that provided them with funding, partners, and customers for their new products. What were these new products? The first memory chip – providing RAM for computers – and microprocessors that could perform logic and arithmetic computations on a new scale. These inventions changed computing and calculating forever.
How to Keep Your Eye on the Prize
I wanted to start my own business since age 17, but I never knew what kind of business I should start. While I worked for IBM and Hewlett Packard, I developed valuable business acumen, but it was nine years before discovering my distinctive competence and developing my new business idea.
To help me keep my eye on the ball and never lose hope in my ultimate goal, I wrote a covenant in October of 1983 stating that I would start my own business within five years, and I had it witnessed and signed by a friend. I carried that promise in my pocket; it became the physical representation of my commitment to start up. I suggest a similar personal covenant may also help you keep your eye on the ball, especially if your startup readiness is more likely to happen someday in the future, instead of right now.
Ed McLaughlin is currently co-writing the book, The Purpose Is Profit: The Truth about Starting and Building Your Own Business, with Wyn Lydecker.
Copyright © 2015 by Ed McLaughlin All rights reserved.