Innovation Diary: You can start a company and keep a career – and you don’t need to be a part-time entrepreneur
WORKING 5 to 9 isn’t a Dolly Parton misprint, but the title of a book by Enterprise Nation’s Emma Jones on the growing popularity of part-time startups. Casual entrepreneurship, fostered by services like AirBnB and Rentmygarden.co.uk, can be an opportunity to make some money on the side by renting out your assets. And the already-wealthy are getting in on the act. Hamble Point Yacht Charters allows yacht owners to mitigate against the typically sharp depreciation in the value of their gin palaces by leasing them out. And for more active part-time entrepreneurs, twee online platform Etsy and the more stylish Tictail are useful enablers for anyone operating a retail empire from their bedroom.
The obvious attraction is that, by keeping your existing career, you can slowly build up a business without immediately going all in. But stories of part-time entrepreneurs really making it are uncommon – and surely the ultimate ambition is to create a full-time job in any case. While not detracting from the firms that do very well operating just a few hours every week, if you have a viable business, at some point you will have to decide whether it’s worth scaling up.
N Taylor Thompson of Harvard Business School’s Forum for Growth and Innovation, writing for the Harvard Business Review, could have a better plan. Since most ventures are likely to fail, and this is certain to be emotionally difficult, how can you minimise risk when starting a firm? First, remember that financial and career risks are essentially interlinked. By leaving work, he says, you are likely to be discarding stable long-term employment for the prospect of “spending 20 years in startups with nothing to show for it.” Further, he argues that you should forget any idea that being a startup chief executive will boost your future career prospects. “Your employability strongly depends on your company’s success.” And if you are successful, you won’t need the job.
This isn’t an argument for just dipping your toe in at the weekend, however. Rather, Thompson suggests that, when you start your firm, the key is to adopt a specialism early. This will be difficult, as founders inevitably need to do a bit of everything. But by becoming your company’s specialist in product development, sales, operations, or management, Thompson thinks you can both improve your firm’s chances of success and develop a set of skills to translate into a future role if everything falls apart.
But is this really the right route to take? Research by Ioannis Salamouris of the Hellenic American University has shown that founders tend to be more optimistic than the average person, and this optimism reflects an over-confidence in their abilities to succeed: discounting past failures or ignoring lack of market information, for example. And even if this over-confidence runs against the true odds, Salamouris thinks it’s an important characteristic in boosting success rates. Further, a paper from Lund University in Sweden recently calculated that it is not entrepreneurs who are over-confident. Rather, they may have a more realistic view of the world than the general population.
What does this mean? While Thompson’s approach to mitigating risk is sensible, you’ll never take the plunge if you base your decisions on an actuarial table. Don’t take my word for it. When Suranga Chandratillake, founder of Blinkx (itself going through difficulties), was asked by City PM last year what advice he’d give to budding entrepreneurs, his answer was simple. “Just do it. One of the fundamental aspects of entrepreneurship is that it’s pretty irrational… If you weigh up your well-paid City IT job with starting your own business, the scales will be firmly in the former’s favour. You just have to do it.”
Tom Welsh is business features editor of City PM