The story of the bright student who ditched school and launched a wildly successful company is popular in the business world. But what you seldom hear are the tales of would-be entrepreneurs left with heartbreak and disappointment after failing to get their startup off the ground.
And in reality, those are much more common.
5 Questions You Should Ask Before Dropping Out to Launch a Company
You’ve got an idea, your business plan is mapped out and you’ve got the itch — maybe you don’t need business school anymore. Your time has come to wade into the waters of the business world on your own and launch your entrepreneurial adventure.
Wait. It’s not that simple.
While business folklore may be littered with stories of successful executives who ditched school, started their businesses and made it big, the actual landscape is far more cluttered with dropouts whose businesses collapsed and left them with nothing to show for their efforts except the bitter taste of failure.
The path to a business degree is meant to do more than simply show you how to operate a business and be successful. The tools necessary to succeed are often lessons learned slowly, through experience. College is a less painful place than the real world to learn the lessons that bring discipline and perseverance.
In measuring up your readiness for life outside college, ask yourself five questions.
How successful is your business idea?
Mark Zuckerberg had already seen success with Facebook prior to leaving college. For Michael Dell, computer kits were on back order and shipped every day before he quit school. Are you at the point that your business is already taking off? Or have you only just hit the launch pad? If it’s the latter, you may want to take the long view and see how things pan out, all the while working toward a degree that can help you land a job should your business fail.
Do you have the money to carry you through tough times?
Outside investment is going to be a key factor in the success of your startup. Dipping into student loan money to support your business has fraud implications, and borrowing money from family and friends can present problems of its own. It’s important to be realistic and take into consideration the vast array of factors out of your control that can affect your business before dropping out and putting all your eggs in one basket.
If your business fails, do you have a backup plan?
According to a report on the Small Business Administration (SBA) website, about two-thirds of businesses with employees survive at least 2 years and about half survive at least 5 years. As one would expect, after the first few relatively volatile years, survival rates flatten out. With these statistics, though not too bad, is essential that you have a backup plan. In other words, before you give up on the pursuit of a degree in favor of taking your shot at the free market, have a contingency plan in place.
Are you ready for startup life?
Entrepreneurial life is far from part-time. It can consume your personal life, destroying relationships and the possibility of a good night’s sleep along the way. From an emotional perspective, startup life is a whirlwind of highs and lows that can be equal parts exhilarating and heartbreaking. Freelancing can help you learn to better cope with these situations. If the worst happens, your education can help you get a job to get back on your feet.
Have you communicated your plans to friends and family?
Along this journey of hard work and emotionally taxing times, you’re likely to need emotional – and possibly financial – support from those you’re closest to. Talking to people you trust is also important because they are more likely to challenge you and point out weak spots in your plan. Making a decision to leave college without consulting your friends and family does them and you a disservice, and could alienate a valuable asset that even incredibly successful people such as Bill Gates have benefited from.