Starting a new company – should you quit your job?

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Getting a job has always been one of the dreams of many of us. Our teachers and family acted as our trusted advisors in guiding us to select the career path that we needed to follow. When you ask many people about their purpose in life, they will describe their roles at work. It is very true that our self-esteem is boosted by the kind of job we are doing. Believe it or not, the kind of husband or woman you marry is directly correlated to the type of jobs they do. This topic is very important because the school system was built on this ideology. You spend many years of your life studying and writing examinations so that you can get a job. Our teachers sometimes used to make a prediction about our future success based on our grades. How far true is this? Does this seem to suggest that starting a new company is not a recipe for success?

However, there is also a saying that we have been told that you can not be a billionaire by working for someone. How far true is this? Does this contradicts with the belief system that success depends on the job you have? I do not subscribe to a belief that the only way to be a billionaire is for you to start a company. People are different. Each person brings something unique to the table which makes a combined effort more productive. Team work is what makes people succeed. What I know is that success and money will follow the vision. You can start a company today and become worse off if you lack the vision of where your company is heading.

Reverting back to the discussion, you are starting a new company – is it a good idea to quit your job?

Rewards for starting a new company without quitting your job

Can someone benefit from both the new company and a job? A job is very important and it may be wise to have a job before you start your own project or a company. We can not deny the fact that most start ups require money to thrive. Suppose that you are a fresh graduate from the university with a poor financial background, where do you get this capital from? If you apply for a loan from the bank, they will probably reject you because you do not have a job. Even if they want to gamble on you, you might not have a credit score which makes it difficult for them to lend you money. Some credit facilities will be available for you at a very high interest rate (greater than 27.5%) which may further stop you from making net profit on your business for several years.

Elaborating on that, having a job before starting a company may benefit you in the following ways:

1) Gaining soft skills

It can be agreed that university life is completely different from the corporate world and you need soft skills to thrive in a work environment. You need to develop your team work skills. Before you start your company, you need to know how to share ideas with colleagues for a common goal. This skill is often missing from university knowledge.

Furthermore, one of the most important skill you need from work is communication skills. For your business to thrive, you need to convince the people that the product you are offering is worthy to be on their bucket list. Your ability to sell depends on your ability to communicate and the knowledge of your brand. This is a skill that work will teach you in the first 2 to 3 years.

More to this, your ability to handle pressure is one of the most important tools you need to be successful on your start up business. There are times when you need to deliver a service or a product with limited time. This is very difficult especially when you can potentially lose the clients if you fail to meet their demands. Work will teach you that skill.

We are not going to list all the soft skills you will be getting from work but in addition to the above, work will help you to develop your time management, improve your adaptability, boost your work ethic and also improves your attention to details. Starting your company with these soft skills will give you an advantage.

2) Building a good credit score

One of the questions the lender will ask you when you apply for a loan is your employment status. It is very easy to get a loan if you are a salary earner because the lender knows that your chance of default is minimum. As you work, you apply for small debt like a cellphone data contract to build your credit score. They will deduct a debit order every month and you will be able to build a good credit score in the process. You can also apply for a credit card to accumulate a credit history but this is often a trap that you may need to avoid completely if you are not self-controlled in terms of money management.

A good credit score will help you to get lower interest rates on your loan. This will allow you to fund your business with a loan without having to worry about high interest rates.

3) Raising capital

For a fresh graduate from a poor financial background, there is a higher chance that your family will be looking up to you for survival. You need to raise your little siblings and take care of the entire family’s needs. But you can not remain trapped in this poverty cycle, so you need a job to give you a salary that you can split into two main portions. The first portion being for investments while the second portion being for your family and your needs. Starting a company does not guarantee you income and this may make your life difficult if you are the breadwinner of your family.

In addition, it is possible to have a good attitude towards your money. You can set aside a fixed percentage for investments and savings. Make it a regular deduction and make sure your investment is properly managed so that you will not have to lose the money. You can put the money in a savings or less risk investment account that restricts access to your money until you have accumulated enough to inject into your new business. Make it a debit order so that the same percentage is withdrawn immediately after getting your salary to avoid temptations. You can read more about this on the post about how to build a habit of saving and investing.

In conclusion, when you have enough savings to start a business adventure, start small. This will allow you to properly manage your expenses while you are working on building your assets. If your business fail, you can still have the salary to rely on. I consider this to be the best way of starting a company when you are still very young with little or no capital. Getting a job will often allow you to learn from your employer’s mistakes and you are likely to avoid making the same mistakes on your new business. This is likely to reduce the failure rate of your company. You may not have to do the two simultaneously but at some point in life, you have to be employed so that you will give your business a boost.