Keep Your Day Job, Tech Startups Stink
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Dreaming of being your own boss? Keep it between the sheets because this is no time to leave your employer to start up your own shop, say the brains at Challenger, Gray and Christmas, an executive placement and research firm. Credit is tight, inflation is driving the cost of doing business out of control, consolidation makes for cut-throat competition and potential customers are facing squeaky budgets. High risk, low reward, said CGC in a recent note to reporters on the topic. And few dare to try. The CGC Job Market Index released July 17 found very few among the unemployed management ranks willing to leave the job search for their own venture. CGC polled 3,000 recently "discharged" managers and executives. The startup rate among unemployed managers and executives fell to 4.3 percent in the second quarter, compared to 7.2 percent in the first quarter. Last year, 6 percent of job seekers abandoned the traditional job market for entrepreneurship in the second quarter, according to Challenger report... The second quarter figure was the lowest since the fourth quarter of 2000, when only 3.5 percent of job seekers started their own firms. 
The challenger survey backs up news from the National Federation of Independent Business, which reported the confidence level of entrepreneurs, what it calls the Small Business Optimism Index dropped in June to a "recession level 89.2... as bad as recorded in 1980-82, the worst recession in recent decades." Keep Your Day Job and Your Dream of Not Having One A poor economy makes it a tough time to start a business, keep a business or even work for one, but I wouldn't say it's a discouraging factor. Innovation, good products and good services always stand a chance of success. For the guys and gals polled by CGC, I'd keep looking for that new employer. For the folks in the cubicle quarries, keep slogging away. But don't let it keep you from planning or even starting your own startup. That's easy to say, but what better time to take on tight credit, high inflation and tough competition than when someone else is paying you a salary and benefits? |
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Comments (9)
Not so surprising a comment from a headhunter. After all, how many startups can afford their fees? We hire on craigslist, thank you.
Don't let all that negativity discourage you, potential entrepreneurs. There is opportunity, even in down markets. Perhaps more so than in a boom: cheap used equipment, customers that appreciate the low overhead of low-rent offices, wages that remain reasonable.
Posted by Mixie | July 22, 2008 12:40 PM
In reference to your posting "Keep Your Day Job, Tech Startups Stink"
I am one of those in the 4.3%. However, we are very confident in our start-up prognosis. I believe that it depends upon what executives or management types you ask. The majority of executives in technology companies (the $2 bil and up) seem to have lost touch with the field and how to execute. Most are caught in the quarterly profits reporting and XLS shuffle to the point they have lost the ability to think strategically and execute. The emotionally weak and political animals could not make a start-up successful. The strategic thinkers and execution masters can start-up and be successful, given focus, a healthy market and need, and a better mouse trap.
Posted by John Orr | July 22, 2008 4:51 PM
As with many things there are usually many shades of grey to a situation. You can't just by fiat state that it is a bad time to start your business if you first don't qualify the type of business that is being started. Many types of businesses thrive in a down economy, anything that has to do with providing ways for existing businesses to *save money* will thrive. If you have a product or service that allows existing businesses to work more efficiently and at lower cost, you have a potential gold mind waiting. So people starting businesses in collaboration are going to do very well in a down turn as businesses turn to them in lieu of buying air plane tickets to shuttle their employees to client and customer sites as would probably be done in better times. Any business that saves businesses money is going to thrive. It is a shame that articles like this go for the thrill factor by generalizing the situation to get some buzz but miss the subtleties in the market that leaves lots of success waiting to happen uncovered.
Posted by david saintloth | July 22, 2008 5:48 PM
Why would anyone looking to get out of the rat race take advice from a headhunter. /one of the hardest parts of starting your own business is avoiding all the recruiters, headhunters, and placement firms. I get scads of calls and emails everyday offering 6 figure, 6 month contract to hire placements in timbuktu. There are plenty of prospects out there is you can get to the actual clients. Tight credit and inflation are good reasons to go out on your own. If you can not work better, faster, and cheaper, then you need a different career anyway. It is tough times that push businesses to look for opportunities to save costs. Employees come with overhead, and are an ongoing expense. A contractor should be a known fixed cost, ending with the completion of the project. Contractors that do not perform do not get paid. The hard parts of consulting is getting past the headhunters to the clients, and that many middle managers wmeasure their importance by the number of seats they fill rather than what they accomplish.
Posted by Dave Lynch | July 22, 2008 7:25 PM
As far as I see from this graph, they've got it backwards! Take a good look at 2001 and into 2002.
A gigantic spike, right? Anybody remember the dotcom implosion? I know I was one of the walking wounded, looking for anything to latch onto. A bunch of people struck out on their own, because they didn't have much choice.
Just because fewer people are jumping ship, doesn't mean it's a bad time to do so. It simply means to me that it's a better time to earn in the bigger companies.
Posted by Brian | July 22, 2008 10:54 PM
I would counter with my own path/personal experience. Take this as advice or not - it's your choice.
This is the timeline I followed...
August 2006: incorporate and started my own business. I started offering services that were in my background, and that I had alot of experience with. Then it grew. Caviat - I knew what was and was NOT acceptable to my employers as far as my business venture went. Most have rules that govern outside work or second jobs.
April 1989 - July 2007: I was working as a "regular full time employee" at the same job of 18+ years. Note the end date is almost 1 year AFTER I started my business. This gave me time to refine and work on my business and service plan.
July 2007: Landed a large contract for my business - big enough to support business expenses and personal expenses with some left over for the foreseeable future. This contract was in addition to other work that I had been doing "on the side".
July 2007: Left my employment as the large contract demanded so much of my personal time and have grown my business quite a bit since then. I am in the process of branching out into new directions now.
Bottom line: have a plan. Act when it is appropriate to that plan. Anyone foolish enough to leave a job in this climate WITHOUT the financial capability in place to do so is asking for trouble - no matter what their industry or the timing. I only left my position when I knew I had the capability of paying for not only the business needs, but my personal needs along with a handy extra income besides.
If you do have a plan, with data to backup the results, then I highly recommend it. I get a rush from being a business owner, and look at the world and life in general in a completely different way. I can honestly say I love getting up and working every day.
Posted by Angela | July 23, 2008 9:41 AM
I agree with Angela. Without a plan its hard to forcast where one will be headed. I do agree about keeping your day job only until your business makes double or triple what you make in your current job.
This sounds like an article written by an employer trying to keep people from looking for their goals. Dream Stealer if you ask me.
Simply put have a dream and make it happen.
Posted by Jason | July 24, 2008 10:01 AM
I agree with the last post ... if possible, try to keep your day job and also start a business (my humble, ALWAYS have a business, even if part-time ... the tax benefits themselves are a good reason). Good Lord willing, there will come a day when the business will have grown to a point where you either have to decide to quit or jump ship (job-wise). If going into the business route ... please ..please ..please .... learn to save atleast 1/3 of whatever you make (for a rainy day) ... my personal experience ... most business may not go down due to lack of expertise ... usually, the owner cannot ride out the financial storms that oft come ... thanks and see you on Wall Street ....
p.s. on a personal note, when you get your first check from the business ... it's a keepsake ... the feeling of getting paid directly for something you provided on your own ... is an awesome (and addictive feeling). Remember, your employer is also a business owner !
Posted by al | July 29, 2008 2:33 PM
A quote from Tony Blair: 'The art of leadership is saying no, not yes. It is very easy to say yes." When our politicians are wooing our votes by promising everything it's important to note what true leaders are made of.
Posted by Forbes on Leadership | August 21, 2008 7:39 AM