Entrepreneurs are often escapees of “the rat race” (employment). They feel employment is a trap that keeps people working for rewards that are not truly rewarding, or as beneficial as running their own business.
Entrepreneurs consider employment to place limitations on their ability to earn and live the lifestyle they prefer. They see enterprise as the solution for reaching this potential.
Making the transition from employment to being an entrepreneur
People who leave employment for entrepreneurship have to wait for the right time when they have enough resources to sustain their startup efforts to develop a sustainable business with ample earning potential.
Usually, they are building their enterprise “on the side” whilst still employed. Then, once they’ve accumulated enough financial savings from employment (“runway”, as in a plane ready to take off) to fund their full-time entrepreneurship for long enough to develop a business that can sustain them financially, then they’ll ‘make the leap’.
Here is a typical path to entrepreneurship from employment:
Small bets
This stage occurs whilst the would-be entrepreneur is still an employee. Through market research, they identify opportunities and design trial solutions to suit an ideal customer profile.
Such solutions are called minimum viable products (“MVP”) because they are good enough to satisfy the customer’s need at the least acceptable level.
MVPs are a trial effort, a way for an entrepreneur to test the market with their idea, without risking too much.
A bit like a bet.
They might launch a few of these small bets at once, to see which ones show signs of success vs. which ones fail.
MVPs that show early signs of success encourage an entrepreneur to invest further.
Trial and error
As certain projects begin to bring a return on their investment, entrepreneurs will analyse why customers prefer them.
Entrepreneurs might survey customers to gain detailed feedback on products and services.
With the data collected, entrepreneurs will decide which aspects of their products and services deserve further investment.
Following each round of investment, entrepreneurs will observe customer response to improvements.
The profitable improvements receive further investment. Those that show no returns are sidelined.
It’s a constant cycle of trial and error.
Product market fit
As projects develop, it can become clear through sales performance and customer feedback that the business is an excellent fit for the purpose.
Such signs encourage entrepreneurs to believe in the business potential of that project.
Revenue growth
Projects that demonstrate a strong ‘product market fit’ will attract further investment from the entrepreneur to grow their revenue potential.
Entrepreneurs will begin to push harder, being confident of seeing profits, given the trading history.
Side hustle
As project revenue grows, the entrepreneur withdraws retained profits as earnings to complement their employed salary. This additional income is known as ‘side hustle’ money.
Full time
When earnings from their ‘side hustle’ provide enough financial security to replace their salary, the entrepreneur can decide to make it their full-time occupation and resign from employment.