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What Can I Do To Get Money: Start A Part-Time Business or Run A Full-Time Business, That Is the Question?

What Would You or Your Small Business Do For Money?

“Don’t quit your day job!” If your best friend says this when you eagerly share your startup idea, you’d probably take it hard, wouldn’t you? Perhaps your buddy is just more tuned in to recent research on entrepreneurship than you think!

A new study that followed thousands of small business owners, reports that those who start a part time business and keep their day jobs during the early stage of business are 33 percent less likely to fail than those who quit to start their companies.

The study, Should I Quit My Day Job: A Hybrid Path to Entrepreneurship, presents some theories as to why “hybrid” startups enjoy more success. The abstract reads as follows...

Research suggests that the risk and uncertainty associated with entrepreneurial activity deters entry and contributes to the high rates of new business failure. In this study we examine how the ability to reduce these risks by means of hybrid entrepreneurship—the process of starting a business while retaining a "day job" in an existing organization—influences entrepreneurial entry and survival.

Integrating insights from real options theory with logic from the individual differences literature, findings from survival analysis suggest individuals who are risk-averse and have low core self-evaluation are more likely to enter hybrid entrepreneurship relative to full-time self-employment.

In turn, we find that hybrid entrepreneurs who subsequently enter full-time self-employment (i.e., quit their day job) have much higher rates of survival relative to individuals who enter full-time self-employment directly from paid-employment. Adding support to our theory that the survival advantage is driven by a learning effect which takes place during hybrid entrepreneurship, we find the survival advantage to be stronger for individuals with entrepreneurial experience.

The implications of these findings for theories of entrepreneurship and real options are discussed.

The research paper basically talks about...

People who are more cautious are more likely to start a part time business and launch their businesses in stages. Cautious entrepreneurs may lay the groundwork for startups better than those who are more impulsive.

Starting a part time business lets you gain experience that gives your business a better chance at success once you do go full-time. Thanks to technology, business startup is faster, less labor-intensive and less expensive than it used to be, which makes it much easier to run a business part time while holding down a full-time job.

Does that mean you should never quit your job to start your business?

Of course, there are plenty of people who do this and make a go of it. Everyone’s situation is different, so as you think about it, here are some factors to consider:

How long will it take for your business to break even and to make a profit? (You’ll need to create a solid business plan and financial projections to gauge this.)
Do you have alternative sources of income, such as a spouse’s salary or personal savings, to tide you over until that time?
Does your job provide benefits, such as health insurance and retirement plans, that you don’t want to lose or that would cost you too much to replace with equivalents?
Do you have the necessary time and energy outside of your job to devote to your startup? If your job is truly 9-to-5, giving up TV and hobbies and working nights and weekends can get your business rolling. However, if you’re in an industry like financial services or technology where 60- or 80-hour weeks are common, you realistically don’t have the time or brainpower to start a business without quitting your job.
Could part of your salary bankroll a business partner to do the day-to-day work and get the startup going; then you can join in later?
What does your spouse or partner think of your quitting (or starting a hybrid business)? Neither option is easy, and you will need his or her buy-in for either one to work without creating resentment.

In conclusion, the question of what would you do to get money?

Bank loans are not an option for most small businesses these days. So what are owners and entrepreneurs doing for money? Well...just about anything and everything they can think of.

Some are using Kipi network marketing to make a passive income, Some are moving to Chile, where the government gives $40,000 to startups -- no matter where they're from. Some are selling breakfast cereal. Some are even holding bake sales. Some are throwing out their TV's and using their spare time to achieve their goals.

You may not find money at your local savings and loan, but it is definitely out there. The trick is using your imagination to find it and raise cash for your business in unconventional ways.

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