Many people are motivated to become entrepreneurs at least partially because of their dislike for their job. So it’s no surprise that many entrepreneurs are in a rush to quit their job.
Many entrepreneurs also become frustrated because working a full-time, day job doesn’t give them the time they need to get their product off the ground. Entrepreneurs often wonder if they could make things happen faster by working more on the product.
There is no doubt that the more time you have to invest in your startup the faster things are likely to proceed. However, this conflicts with the other primary need of startups: money.
Bootstrapping and Outside Funding
You have two options for funding your hardware startup. You can either bootstrap your startup, meaning fund things yourself on a tight budget, or you can raise outside funding.
Bootstrapping is almost always the best choice, at least initially. Later, once you have a real prototype and some market interest, then outside funding may become more feasible.
During those early, pre-prototype days, however, you will likely need to fund everything yourself. This means that unless you have a large amount of savings, you will need a reliable source of income to put into your product.
Of course, you also need to support yourself and your family until your startup can produce a reliable income for you.
If you quit your job too early, you will gain more time but you will lose your primary source of income. This can also be incredibly stressful. Not having a steady income creates a lot of pressure on you and your family.
Because of these facts, I don’t recommend that you quit your day job until you are confident your startup can replace that income. Or at the very least, wait until you are confident that your startup will be able to generate income before you burn through your savings.
Don’t forget that for a hardware startup to grow you will need to reinvest any early profits back into your startup in order to fund inventory. This means it will take longer for your startup to begin generating a significant income.
Also, keep in mind that most entrepreneurs aren’t able to accurately predict when their hardware startup will be able to generate enough money for you to have a take home income.
In fact, as with all things entrepreneurial, everyone underestimates how long things will take. This is an issue regardless of your experience level. Even when I worked at Texas Instruments with a team of experienced engineers, our projects nearly always took longer than planned.
Because of this I highly suggest that you stay in your day job until your startup either starts generating an income for you, or you gain outside investor financing.
Professional investors will not want to invest in a startup where the founder is only working on it part time. They want your undivided attention focused on growing your startup and producing a return on their investment.
This means they will expect you to quit your day job, and pay yourself a small salary from their investment.
Freelancing / Consulting Route
If you really hate your job and can’t wait to quit, then you may want to consider setting yourself up for freelance work or consulting services while you work on your startup.
For example, there are numerous jobs on Upwork.com for everything from engineers to programmers to administrative assistants.
Following this route will allow you to leave your day job, yet still provide you with a source of income until your startup takes off.
But this is still not an ideal solution. Freelancing, especially when first starting out, will consume a tremendous amount of your time. You will need to now juggle your freelance work with your startup work.
Working as a freelancer can also add new types of stress to your life. For instance, you will no longer have a guaranteed paycheck each week.
Freelancing also tends to be feast or famine. There will be times when you have so much work that you won’t have time for anything else (like working on your hardware startup). But then there will be times where you have no projects lined up, and thus no money coming in. This roller-coaster ride can be extremely stressful.
From my experience with freelancing, even if you make the same amount of income as you made at your day job, the unpredictable nature of the income adds a tremendous amount of stress.
If you have no jobs lined up, and your rent is coming due soon, that situation can really impact you in a negative way. You may very well get a new client before your rent is due, but not knowing when your next check is coming in can be very stressful.
Most people don’t think enough about the benefits of a predictable income. You can take more financial risks when your income or revenue is predictable. Predictable income also happens to be one of the main benefits of having a recurring revenue business model.
This is partially why online SaaS (Software-as-a-Service) startups are able to grow so quickly. A service business can also begin producing income almost immediately, whereas a hardware startup will take around 3 years to begin producing a real income.
Another aspect to remember is that when you are stressed and worrying about money you likely aren’t in your best mental space, which means your creativity will be less than optimum. But creativity is essential for startup founders to succeed.
If you are absolutely miserable at your job then consider freelancing or another service business that can provide immediate income while you continue working on your hardware startup.
A hardware startup is many times more complicated to get going than a service business, but the growth potential is much greater.
Once you get your hardware startup to the point of producing significant revenue, you can scale up much faster than if you were running a service business.
You must have a realistic mindset. A physical product business is all about long term growth, not quick short-term growth. Hardware products require a very long and slow development process.
Realistically, I would plan on needing three years before you can produce a descent income for yourself, and five years before you will be able to begin paying yourself an income significantly larger than what is possible with most corporate jobs.
If you make it to this point, then things begin to get really interesting. Within five years you may reach a point of being able to pay yourself a few hundred thousand dollars a year. But as you reach 5-10 years then you enter the stage where you can make millions!
Rarely will a “normal” corporate job ever give you the chance to make millions, and this is obviously the big upside to entrepreneurship.
When deciding when to quit your job, just be sure to remind yourself that everything always takes much longer than you expect.
For my own product, I decided to quit my job after I had a decent prototype and some early market interest. I incorrectly thought it would then be a year or less before my startup was able to generate a reasonable income for me.
My estimated timeline ended up being off by well over a year. Fortunately, my previous employer (Texas Instruments) agreed to hire me back as a remote consultant, which was the best case scenario for me.
I got the freedom of doing freelance or contract work, yet I was guaranteed a certain number of hours every week, so it provided a very reliable paycheck.
This was a perfect setup because it gave me considerably more time to work on my hardware startup without stressing about money.
I didn’t have to spend time finding new clients so I had more time available than if I was doing freelance work on my own.
To summarize, I highly recommend that you keep your day job as long as possible. Having a reliable income allows you to make decisions for your startup that improve the long-term growth potential.
If you are worried about putting food on your table then you will likely make some wrong long-term decisions in an effort to gain short-term benefits. A hardware startup requires a focus on the long-term, but that is difficult to do if you worry you’ll starve before reaching profitability.
Of course this becomes more difficult and more stressful once you are older and have a family to support. Young entrepreneurs fresh out of college can get by on Ramen noodles, but when you are married with kids that is much more challenging.
This is true unless you are lucky enough to have spouse that can support your family while you work on your startup. But that too can put a lot of stress on your marriage, and you may find your spouse angry and resentful at you and your startup.
I wish there were short-cuts or an easy path I could point you to, but they simply don’t exist. There is no easy way to make income from a hardware startup happen immediately, or even quickly. Startup success requires a long, slow, focused grind. But the potential, long-term payoff of a salary in the millions can make it all worthwhile.
In my opinion, even with the stress, running a startup beats working a corporate job your entire life and doing the same thing every day. As an entrepreneur you can guarantee that you won’t ever get bored with life. Personally, I’ll take stress over boredom any day.If you read only one article about product development make it this one: Ultimate Guide – How to Develop a New Electronic Hardware Product in 2020.
Other content you may like:
- How to Quit Your Job and Begin Marketing Your New Product Before You Even Have a Prototype
- How to Prioritize Time-to-Market, Development Cost, and Product Quality
- 12 Requirements to Succeed with a Hardware Startup
- How long does it take to develop a new product and get it to market?
- Why You Need to Stop Over-Focusing on Your Product