Whether you’re one of the 40 million plus Americans who’ve lost their job during the COVID-19 crisis, or the pandemic made you realize life is too short and it’s time to pursue your passion, you might be looking at a career change. Shifting course is never easy, especially during an economic recession. In some ways, the current crisis affords you the unlikely opportunity of extra time to explore options and thoughtfully consider your next move.
No matter when you make a career change, there is a somewhat unsettling period of existing between what was and what will be. Right now, you’re not alone—everyone is experiencing these feelings because the future in general is so uncertain.
If you’re considering testing the entrepreneurial waters, you have the challenge of analyzing your idea in the context of a world where no one is sure what industries will bounce back and which won’t. But you can’t let fear and uncertainty stop you. Taking the entrepreneurial leap still boils down to figuring out the intersection of your talents with a need in the marketplace.
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After Harvard Business School, I took the expected route. In my mid-twenties, I worked 9 to 5 desk jobs at established, big name companies. Jobs I thought I’d enjoy. The only problem was I viewed my job as the thing I had to do in order to fund the things I really wanted to do; like travel, hobbies or my lifestyle.
Eventually, this way of thinking caught up to me. When I was sitting in my little cubicle, I would often daydream about where else I could be. I realized that with all of the time I spent at work, I really didn’t want to be doing something I wasn’t passionate about.
Time to make a change
I’ve always loved formalwear. However, a career in fashion seemed somewhat unattainable. When I started thinking seriously about opening my own formalwear business and assessed the risks of going out on my own, the more appealing it was for me to leave the corporate life behind and actually put my dream plan to action.
Now that I’ve done it, work never feels like “just a job,” and I couldn’t imagine doing anything else with my life.
Ask yourself the important questions
As you contemplate making a change yourself, the first step is to take stock of where you’re at today. Look at your financial situation, and ask yourself how long can you go without work (i.e. a steady paycheck)? What expenses can you eliminate or reduce?
If you decide to start a business, you can expect that it will take some time to get back to the same financial cushion you left. After considering your finances, it’s time to turn inward and see what excites you.
Ask yourself, what aspects of your past jobs did you like? What hobbies do you have that could be turned into a career? Is there something you’ve always wanted to do but haven’t?
Examine the market
It’s also imperative to look at the market. Do your research and work your network to learn about what industries might start to boom in a post COVID-19 world. Even if you’re drawn to sectors that were hit hard during the pandemic, don’t rule them out entirely. This is the perfect time to bring a disruptor idea to areas like travel, restaurants and retail.
Also, don’t be discouraged by the volume of existing competition in your chosen field. The market you are entering is not too crowded for you, and there is always room for new players.
For example, when I started Lady Black Tie in 2018, there were already plenty of established formalwear stores in my area, and tons of online retailers with millions of social media followers. I, however, was starting from zero. Don’t let the brands that have been around longer than you intimidate you and keep you from starting. If anything, use this competition as motivation, and recognize that you can bring a fresh perspective and new ideas to the industry.
Next, start thinking about how your current skills and past job experiences will transfer to your new business. Make a list of your formal education, any certifications, language fluency, licenses attained, technology proficiency or skills learned in a volunteer role. Then, make another list of all the soft skills you bring to your new role.
Consider starting slowly
One of the best ways to find a new career is to try it out before you fully commit. When I decided I wanted to open my own formalwear business, I took a low-paid, part time job in retail while I worked on my business plan on the side. I gained valuable consumer information and, more importantly, learned first-hand what to do and what not to do from this experience.
Current world events may have gently nudged you to take the entrepreneurial leap, but if you embrace your new path with excitement instead of fear, you may find that there are still plenty of ways you can dip your toe in the entrepreneurial waters.
The post Why Now is the Ideal Time to Catapult Into Entrepreneurship appeared first on StartupNation.
Too many entrepreneurs tell me they are looking for an investor, and can’t differentiate between venture capital (VC) investors versus accredited angel investors. They argue that the color of the money is the same from either source. They fail to realize that the considerations are quite different for each, which can make or break their investment efforts, and ultimately their startup.
Let’s consider some basic definitions. Accredited angel investors are non-professionals investing their own money, while venture capitalists are professionals who invest someone else’s money (usually from large institutions). The amounts from angels start as low as $ 25K, while minimum venture capital amounts usually start in the $ 2M range.
That doesn’t mean you should always go for the big bucks first. In fact, the reality is quite the opposite. Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds. Of course, between these extremes is a large overlap of interest and potential.
More importantly, the focus on numbers tends to hide other more subjective issues that could be more important for any given startup. These considerations include the following:
- How much ownership and control are you willing to give up? VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles.
- How big is your startup opportunity? If your targeted business plan opportunity is not at least a billion dollars, most VCs won’t even be interested. Both angel and VC investors are looking for solutions that scale easily (product versus service businesses), and both expect revenue growth that can reach the $ 20M mark by year five.
- How large is the financial return you project? VCs will be looking for a 10X return on their investment in 3 to 5 years, or 30% annual IRR (Internal Rate of Return). That may sound high, but they know that up to 9 out of 10 startups fare poorly, so they are looking for one big win. Angel investors wish for the same return, but may accept a 5X deal.
- How many investment rounds will be needed? Angel investors are usually constrained to making a single investment per startup, but very few entrepreneurs make it to cash-flow positive on a single round. VCs tend to protect their initial investment, and they have the resources to make several multi-million-dollar rounds as required.
- How experienced is your team? First-time entrepreneurs rarely catch VC interest, unless they have one or more people on their team who have a track record of startup success, in the same business domain. Angel investors often have emotional motivation to give-back, and assume their own expertise and involvement will assure success.
- How good are your connections in the investor community? Sending unsolicited business pitches to every angel and VC investor you can find on the Internet is a waste of your time as well as theirs. You need a warm introduction for most VCs, to get their attention. For angel investors, you only need to do some local networking to get interest.
- How much help do you expect and need? Both VCs and angels can and will help you, but VCs are likely to be more “hands-on.” They tend to have partners focused on a given business area, with current insights, executive connections, and the ability to bring in new team members. If you are looking for money alone, angels are the better alternative.
If your startup can’t yet relate for any of these considerations, then your alternative is that popular first tier of investors, called friends, family, and fools (FFF). With these, you are on your own in negotiating amounts, valuations, and roles. These are people who believe in you personally, without evidence of previous startup experience, no current traction, and lack of valuation.
In all cases, investors tend to invest in people, more than the idea, or even the stage of execution. They are looking for a win-win deal, with entrepreneurs that demonstrate a positive chemistry and open communication. The color of any investor’s money may look the same, but it won’t help you if the price you pay is higher than the value it brings.
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