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Taking the Leap from Corporate to Startup

Taking the Leap from Corporate to Startup

People who have spent years climbing the corporate ladder often dream about jumping ship and starting their own venture. The transition from employee to entrepreneur is a tricky move full of risk and uncertainty. And when the job market is in flux as it is today, your fallback options are limited. So be sure to do your homework before taking the leap.

An article in the Harvard Business Review, Five Ways to Bungle a Job Change, listed five common mistakes professionals make when moving to a new position. These five mistakes also apply to those planning to start or join a startup:

  1. Insufficient research: When changing companies, you need to do your research about cultural fit, job responsibilities, expectations, and financial stability. These also apply to startup situations. Find some experienced entrepreneurs and ask about how they managed these issues. Their input will help you formulate a realistic view of what your startup experience might be like before you leave your current job.
  2. Doing it for the money: The grass always look greener on the other side. The first few years of almost any startup means making financial sacrifices. In fact, most startup founders pay themselves zero salary for up to two years. Only a small fraction of startups ever succeed in raising money from investors, so your Plan A should be to subsist on very little until you can bootstrap your company to positive cash flow. Many entrepreneurs can’t afford to quit their “day job” until the startup has a few paying customers.
  3. Leaving, rather than starting: Hating your job isn’t the right reason to quit and start a company. Startups are as stressful as any corporate job. You should start a company because you believe the market will truly benefit from what you have to offer.
  4. Unrealistic expectations: Most corporate types don’t know what they don’t know about entrepreneurship, and take the leap without a strong appreciation for the skill set necessary to make it as an entrepreneur. Success requires a lot more than good ideas and passion. You need to be prepared to handle the nuts and bolts of every aspect of the company, including recruiting co-founders and employees, product development, sales and marketing, finance, investor relations, operations and administration, and even basic legal issues. Some books by Guy Kawasaki including The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything and Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition will help you get started.
  5. Short term thinking: The move from corporate life to a startup is a massive lifestyle change. It’s not a quick road to riches, or an escape from a problem. Starting a company is hard work, requires a ton of learning, has a high failure rate, and the payoff is in the distant future.

Many of these mistakes are inter-dependent. When people overestimate their abilities, their corporate life can be dissatisfying because of less-than-stellar performance reviews and bonuses. If this is why they take the leap into the startup world, the mismatch between perceived and actual talent could make them even unhappier.

Before taking the plunge, ask yourself: “What if I’m wrong?” Have a Plan B that allows you to cut your losses and move on. Make sure you have an honest view of your strengths and weaknesses. Few executives have an accurate view of their own weaknesses, so find a mentor who can give you honest feedback.

Most importantly, you must truly understand what you do and do not like to do, and decide what work-life balance works best for you. You spend most of your adult life at work. Life is too short to let career missteps make it unhappy.

Akira is the Founder & CEO of Cayenne Consulting. He has over 30 years of experience both as an entrepreneur and helping other entrepreneurs succeed. Akira earned his BA in Engineering Sciences from Harvard University. View details.

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