In surfing with my internet news reader app recently, I ran across a documentary about wingsuits. Apparently cutting out television a few years ago had deprived me of much knowledge of this insane activity that makes hang gliding and skydiving appear to be the sport of chickens. (Wingsuits give you the simulated anatomy of a flying squirrel so you can jump off a cliff and then either fall to your demise, or preferably glide until you land with a parachute in the last instant.)
I couldn’t resist mentally seeing a comparison to the approach some entrepreneurs take to starting their businesses.
The world of small business already suffers from the confusion and delusion created by the glamorizing of tech startup unicorns or Shark Tank inventors that makes gathering and spending other people’s money seem so easy.
But there is another approach that’s been around much longer and is coincidentally called “taking a leap.” The idea is that you stake your life savings on the brilliance of your idea, your bullheaded determination and intestinal fortitude. You quit a stable fulltime job and put all of your time and energy into your business concept. Some entrepreneurs seem to forget to even put on the wingsuit. Splat.
Alternatively, there are other paths to business ownership which are much more comparable to the kiddie carousel that parents ride with their gleeful toddlers. It’s not nearly as exciting of a way in, but there are some distinct advantages when it comes to risk management.
Step one: Don’t quit your job. Suffer a while longer, perhaps years, and (Step two) perform the feat called capital accumulation. You save up enough money to invest in a venture, while maintaining your other obligations.
Step three: Look for a pretty sure thing. Not every productive business need be a society-changing, heretofore unimagined innovation. The world will not be offended if you choose to buy an existing business or copy another proven idea. Something that you can manage part-time while you keep earning a steady paycheck is best. Yes, this dampens the rush of terrifying excitement, but your odds of success improve immensely. An established, well-vetted franchise system that matches your capabilities and resources is a great choice.
Step four: Only quit that full time job when working in your own business offers you relatively more financial security for a reasonably predictable time into the future. And only then should you consider using your additionally accumulated capital to tinker with new business concepts and ideas to spin off into other ventures.
An alternate route in this kind of journey involves employing a prudent amount of debt capital. A lender will demand a credible business plan which in most cases serves to keep crazy flying machines grounded.
All of these conservative prescriptions may sound like they’re for cowards without the courage to challenge the Fates. But to me it’s more like the choice between the high roller in the casino, or being the house, which enjoys the boring but dependable profitability of a couple of percentage points of advantage over the long run.