6 Reasons to Ditch the Startup and Get a Real Job

closing a business deal

The last thing eager entrepreneurs want to hear is that they should reconsider starting their own businesses. Such discouraging feedback might appear to serve no purpose except to put a damper on your vision but it needs to be said if only to help you brace yourself for the harsh reality that many startups — even those that show great potential — fail. The biggest red flag is usually poor financial planning.

“If more of the 80 percent of small businesses that fail had but hesitated and considered why they were getting into business, we’d probably have fewer businesses and more successes in those that did exist,” according to Susan Payton of Forbes.

Before handing in your resignation, here are six reasons why it’s not such a hot idea to dive headfirst into that startup venture.

1. You Have Bad or No Credit

A poor credit standing could negatively affect the type of funding you can receive — if you’re approved at all — and that can trigger negative repercussions. “If you are a small business owner, your personal credit is a major factor influencing your company’s access to capital,” according to Carolyn M. Brown of Black Enterprise.

A 2006 report for the U.S. Small Business Administration revealed that 71% of banks used small business owners’ credit scores as the deciding factor to approve or decline small business loans. If startup owners who are rejected for business loans turn to second mortgages or high-interest personal loans to bankroll their businesses, they can get into serious financial trouble, especially if their businesses fail. Many people would benefit from taking this approach instead: Fix your credit first; go into business second.

Related: How Entrepreneurs Can Improve Their Credit Scores

2. You Have Loads of Student Loan Debt

Some of the hungriest Gen Y and millennial entrepreneurs driven to succeed are also recent graduates with mountains of student debt. Your new startup might generate some profit, but you’ll be faced with choosing between the lesser of two evils: Use the profit to pay down your debt instead of your overhead or let your debt go delinquent and suffer the consequences.

“The reality is banks won’t touch you holding a large note already,” according to retail blogger Bob Phibbs. “Can you handle the stress of mounting debt as you inch toward profitability?” Even if you convince family, friends or complete strangers to invest in you, you’ll still have to make your student loan payments, Phibbs wrote on his blog, The Retail Doctor.

Read: Your Student Loans Just Got Easier to Pay, Thanks to Obama

With too much student debt, “there’s no escaping the fact that you are digging the hole deeper and reducing your financial flexibility,” according to Monica Mehta of Entrepreneur. “The preferred solution would be to find a way to save as much money as you can during the startup phase and leave the structure of your debt unchanged.”

3. Your Money Management Skills Are Lacking

If your accounting skills are merely passable, that might be OK when your business is still starting up in simple mode. But running a company is more than just debits and credits. If you don’t have what it takes to manage complex financial matters, your revenues could quickly become expenses, and your might end up driving potential partners away.

“If you start comingling funds or dipping into the business coffers, or you make a complete mess of your books — or worse, don’t keep books at all — you are sabotaging your business,” said Amy Weicker, director of marketing, editor and publicist for Rock Bottom Publishing. “You can get away with it for a little while, but the first time an investor discovers your financial mess during due diligence, you’re going to have a hard time regaining their confidence.”

4. You’re Only in It for the Money

You won’t be able to hide the fact that you only have dollar signs in your eyes and no other aspirations. “People will see the difference between someone who eats, sleeps and breathes their company and someone who is looking for a quick check,” said Cody McGraw, founder of SCOUT Military Discounts.

If this is you, then you shouldn’t quit your day job. Few people become millionaires, and those who do are one in a million. “A few success stories have put stars in people’s eyes and make them think they can easily start a business and become super rich,” according to Payton. “Think of the average small business: Do you think your plumber is rolling in it?”

“Millionaire entrepreneurs exist, but they’re rare,” Payton wrote. “You seriously need to readjust your expectations.”

Related: Beyoncé to Bill Gates: 24 Millionaires Reveal the Hardest Thing About Being an Entrepreneur

5. You’re Financially and Emotionally Unprepared

Remember the old saying that it takes money to make money? It’s usually true. Starting a business can require a significant financial investment before you’ve even earned your first dime. For solo entrepreneurs, getting startup capital can be difficult without the right people around to help.

“If you haven’t saved enough money and built a support network to help you through the tough times, you’ll probably end up back at that corporate job sooner than you’d like,” said John Boese, co-founder of GoFindFriends. “Ask yourself the question of what you’ll do when everything goes wrong. If you don’t have an answer for this, then you’re not ready.”

Boese said people who want to start businesses need to reflect on their finances and relationships before going it alone. They need to ask themselves if they have enough money saved to live comfortably during the startup phase and if they have someone to talk to if everything seems to be going in the wrong direction. “If you haven’t thought about these issues, then your exciting, adventurous startup life will quickly turn into a life riddled with worry and self-doubt,” he said.

6. You Don’t Have a Solid Business Plan

Even the best-laid plans often go awry. If you have no business strategy in place, then you’re really in trouble from the start. Even a person with the strongest, most innovative startup idea will struggle to get the business off the ground without an actionable business blueprint.

“The best product isn’t always the one that takes off,” said Weicker. “Your customers won’t just magically find you and adopt your product or service because it’s better. You have to be realistic about the work and time required to find a market fit and gain a share of the market.”

“Those who succeed are those willing to work the hardest and the smartest,” said Weicker.

  • Cha Rob

    I don’t know anyone that was in the mess I was in..My Wife took off (Boyfriend)..She is Gone ..Never coming back ..Left two little girls 5 and 7 ..I lost my home No child support..I was Broke ..Trying to work I was a.Truck driver..Baby sitting problems..A mountain of problems ..To add to all this .I got laid off…But I had one thing going for me “.Entrepreneurism”..Long story short ..I came up with an idea of delivering to Offices ..They need EVERYTHING..Paper.Pens Coffee..POP Cleaning supplies I could go on and on…30 years later.That biz makes 20 million a year today….There are lots of ways of making money other than a JOB…Both my kids and I have great lives today..As for their screwed up mother…SAAAAD Case…Goes round..Comes Round..My advice ..Be Self Employed..Stay at it ..The Biz GODS will smile down on ya..,I promise…

    • Donna

      Thanks Rob for those encouraging words. We need more people like you to encourage those of us who want to follow this path. Your words are music to my ears as I am about to embark on a similar path with a small already established business with my family. I am looking forward to it. If there is anything you think might be helpful to a new entrepreneur like me, you can email me.

    • CommieH8R

      Ditto. If everyone took the safe and secure route, we would have no entrepreneurs and would all be working for the government.

  • CommieH8R

    Ever notice how there are virtually no white males in employment photos of people doing business anymore? I mean we have 2 black guys, an Asian and 2 women. Does this in any way represent reality??? Perhaps not, but it most likely represents what some people want reality to look like.

    Take this type of propagandist imagery, combined with racist laws like Affirmative Action, and it is no less than a pure miracle that any straight, white male can even get a job anymore.