The road to entrepreneurship is a bumpy one, so for many budding business owners it pays to keep their day jobs while establishing their firms.
While this can present a host of challenges, it can also give them the freedom to test their ideas while they have some backup income if times get lean.
In fact, entrepreneurs who kept their day jobs had a 33 percent higher survival rate than those who didn’t, according to researchers Joseph Raffiee and Jie Feng.
“They’re able to test the waters and weed out bad business ideas,” says Raffiee, an assistant business professor at the University of Southern California in Los Angeles who co-authored a widely cited study on so-called "hybrid entrepreneurship" with Feng. “They’re able to play around with what’s going to work.”
It’s a way to reduce the uncertainty and learn about the quality of the business idea, but also learn about your fit as an entrepreneur, Raffiee says. The study, published in 2014, tracked entrepreneurs from 1994 to 2008.
Fast-forward and according to the latest available data from the U.S. Bureau of Labor Statistics, of the 142.1 million wage and salary workers in the United States in non-agricultural industries in 2017, approximately 1.1 million had a second job where they were self-employed.
Long Island statistics were unavailable, but according to the New York State Department of Labor, an estimated 81,800 state residents report they usually work 35 or more hours on their main job and have a second job where they’re self-employed.
Jeff Myers, president of Up In Smoke BBQ, did both for more than a decade.
Until June, he worked full time in auto retail sales and ran the St. James-based mobile barbecue catering business.
“I never had a day off,” says Myers, 55.
His partner, Tommy Lawlor, still works full time in auto financing, while co-running the business.
“I try to do it on my days off and in the mornings before I go to work,” says Lawlor.
While Lawlor isn’t ready to leave his day job for at least the next few years, Myers knew it was time to take the leap and leave his job when business really started ramping up.
“The phone is ringing off the hook,” says Myers. “I didn’t want to turn down the business.”
Certain telltale signs point to the right time to consider ditching your day job.
One sign is if the business is gaining traction, says Aaron Foss, founder of Mount Sinai-based Nomorobo, a robocall blocking service, and an entrepreneur-in-residence at Hofstra University in Hempstead assisting students with their business ideas.
It’s not necessarily so much the growth rate, he says, but the fact that you are seeing and feeling the business moving forward; for example, customer acquisition is getting easier.
And of course the financials have to make sense.
In general, it’s advisable to have at least a year’s worth of living expenses saved before exiting your job, says Foss.
Also make sure you're quitting for the right reasons, says Shalei Simms, an associate professor in the management, marketing and finance department at SUNY Old Westbury.
Don’t just leave your job because you hate it or don’t like working for someone else, because then “you’re motivated by the wrong reasons,” she says.
Still, there’s not necessarily a perfect time to take the leap.
“It’s not an exact science,” says Simms. “You have to do your research and be ready.”
At some point you may realize you can't move your business to the next level while keeping your day job, she says.
That’s what prompted Ian Linde, co-founder and CEO of Mineola-based Collectionzz.com, an online platform for collectors to buy and sell items, to make the leap.
After two years of juggling the business and his day job as an equity trader, he knew he had to leave his job to grow the business. He quit in the spring of 2017.
“We had some sales when I left my job, but we were just scratching the surface with our revenues,” says Linde, 39. “I had a decision to make.”
If he didn’t leave his full-time job, he knew raising capital would be difficult, and that was critical for the business to expand.
Since leaving his job last year, he’s raised close to $1 million and continues to raise funds, which he’s using for business development, hiring, etc.
For those not quite ready to make a leap, there are some key considerations to successfully juggle both your job and business.
“Time management is critical, and you’re going to have to realize that you’re actually taking on two jobs,” says researcher Raffiee. “In the beginning you’re going to be pretty tired and worn out.”
Also check with your employer to make sure there’s no conflict of interest or any restrictions on running a business while keeping your job, says Foss.
And make sure you have the right support system, both from potential business partners and family.
“Having a partner was key, and communicating with him was key,” says Myers, noting their families also were supportive. “We knew how to make it work.”
Revenue your business should be generating per founder per month, as a general rule of thumb, before you quit your day job
Source: Aaron Foss, founder of Nomorobo and entrepreneur-in-residence at Hofstra University