We are in the era of startups that are valued higher than most countries. Case in point, Xiaomi and its 11 digit dollar valuation makes it the 85th largest economy in the world ahead of 105 countries as per data by World Bank - and to think it started only 5 years ago, on April 6 2010! The latest reports and expert consultations estimate Xiaomi will be adding yet another digit to its valuation.
Such numbers would entice Aphrodite herself. Then what can mere mortals do? Wherever you turn, you are bound to hear about someone launching a startup with dreams to be the next Lei Jun, Ben Silbermann, or Sachin Bansal. But what is the one thing common among them? Before they became a household name, Lei worked at Kingsoft, Ben worked at Google, and Sachin worked at Amazon. They all left their corporate career to focus on starting up.
It is never an easy decision. To help you make a start, here is the ready reckoner for deciding the time to take the plunge:
Be Mentally Prepared to Lose it All
In order to gain your time under the sun, you will have to be mentally prepared to risk everything you have. Not just money, but be ready to sacrifice comfort, confidence, social life, friends, and relationships. You might make back the money in the long term, but it will never be the same as before you started. Consider if you're willing to lose sleep over your idea, and if you're confident enough in your to put in your own money.
The Support of Your Network & Family
If you're unable to win the support of the majority of people you care about, understand their concerns and consider waiting. Taking the plunge into entrepreneurship can be a lonely road, necessitating a strong support network. Entrepreneurship tends to take a toll on the strongest of bonds but understanding loved ones will form your backbone when self-doubt creeps in.
Cofounders Taking on Equal Risk
Having cofounder should double your resources and halve the pressure. The one true test of a leader is his or her ability to inspire people around them to join in their cause at great risk. If you can inspire your coworker, you can inspire the customer to buy into your idea. From a different perspective, most early stage funds will invest into teams, not an individual.
Survival Runway for 2 Years of Personal Expenses
Extrapolate your must-have monthly expenses and build your savings until it reaches enough money to last for 2 years. Account for money needed by self, dependents, and extraordinary expenses. A thumb rule is 50% of your current salary multiplied by 24. In case you give it a good run but ultimately decide to close up shop, 6 months required of runway should coverer the time required to find a new job or source of income.
Starting Capital for 6-18 Months
You don’t just need money for personal expenses, but also for business expenses. Things like registration, product development, marketing expenditure, and client meetings will have to be factored into your costs. Bring cofounders on board to share the financial burden. You should have enough seed capital to last for at least 18 months without external funding. Side tip: Don’t assume that you can quit after receiving funding since most funds don’t invest until they see time and monetary commitment.
Maybe you won’t be tested, maybe it won’t be tough. But it is better to play chess than to play dice with your life, especially when others depend on it. No matter what the outcome, it will be a life changing experience. If you have reached till here, wish you the best of luck.