How do people survive financially after quitting their job and pursuing the entrepreneur route of a startup? originally appeared on Quora – the knowledge sharing network where compelling questions are answered by people with unique insights.
Answer by Daniel L Jacobs, CEO and cofounder of Avanoo, on Quora:
How do people survive financially after quitting their job and pursuing the entrepreneur route of a startup? I’ve done it twice. Both times I went into massive personal credit card debt (US $50,000 and US $70,000). Both times the company I founded eventually raised investment capital, and things worked out. Here are the few pieces I’ve learned about surviving as a bootstrapped entrepreneur after quitting my job:
1. If You Aren’t 100% Sure, Don’t Even Try to Survive Financially. Get Your Job Back.
Being an entrepreneur is painful… and not the romanticized pain that ends in two hours and gets packaged like a Disney Special. It’s a dull, lingering, financially disastrous pain that is only worth it if there is nothing else you can see yourself doing. If it isn’t that black and white for you, get your job back. Now.
2. Plan for At Least Two Years of Financial Suicide. That’s a Bare Minimum.
Most entrepreneurs begin their entrepreneurial journeys with rosy forecasts. If they can just do these four things, well heck, they’ll be the next Facebook or at least Instagram. That’s the fairy tale. The reality is you’ll probably be trudging through financial quicksand for years. So plan for it!
3. Find a Cofounder As Wildly Passionate As You Are. Ideally a Rich One.
When you’re lost and alone in the desert with no directions for how to find water, it is easy to let the hallucinations and ramen-inducing vitamin deficiencies take hold. But when you have a cofounder, an advocate, a best friend who needs it as much as you do, that person can keep you sane. If the person is wealthy, he or she can also take you out to dinner now and then!
4. It Doesn’t Matter if You Once Lived Like a King. You Are Now a Pauper.
Before I took the social entrepreneurial plunge, I was making easy money, driving a nice Mercedes, staying at 4-star New York City hotels, and enjoying life. It took me a few months to realize I was a pauper when I started my first business. The result: I used what could have been three years of savings in five months. Don’t be as stupid as me.
5. If You Hit Zero, Credit Cards Can Be Your Best Friend. But BEWARE.
The only thing scarier for an entrepreneur than losing money every month is losing money you don’t have every month. But this is part of the financial suicide referenced earlier. When you’ve hit zero, 0% interest credit cards (readily available in the US for the first twelve months if you have good credit) are your best friend.
** Use with caution: If you aren’t idiotically sure things will work out, return to step 1. Ask for your job back.
6. (Final Financial Survival Step): Work On Your Mental Game. It’s the Most Valuable Asset You Have. It’s More Important Than Money.
Entrepreneurship is oftentimes a war of attrition. Those who can take the most pain and stay in the game the longest are often the victors (if they are smart and adjusting all the time). The key to staying in the game isn’t money. It’s knowing the truth about yourself and your team: you are immensely capable and resourceful, and you will find a way. After all, there is no other option!