I’m getting quite a few questions recently about being an entrepreneur, and a specific recurring question is: so I have put my hopes on this venture, it might not take off soon, should I go for it?
To which my answer is a version of: check if you can afford to give the venture your all for 0.5-1.5 years, and that you have enough money available to last 0.5 years after that. If yes on both of these, go for it. If you’re unsure on any of these, reconsider. Read further for more detail…
This is coming from theory and quite a bit of practice: I’ve had my own company for more than 20 years (since 1995-08-08), and during that time, I have at times been employed with other companies also (see my resume for the details).
I’ve had “Really well thought out!” and “What was I thinking?” ventures over the years, and a significant amount of them did become successful within the specified trial time frame I set for it (this blog and Authentic Europe for example). I’ve also, often with pain in my heart, decided I should and would not go fully with other projects, because I did not have the finances for it.
And at the same time I’ve seen quite some people try things half-baked and fail, I’ve seen too many people run themselves into trouble by not considering beforehand how to stop, and none of them ended well.
All of this to say, that I’ve both thought a lot about this topic, and seen it play out real time.
So this post is about how to determine how long to try to make a venture work, and when to stop, in service of both you and your venture getting a fair chance.
Try the venture at least 0.5-1.5 years…
A venture needs time to be developed, deployed and especially to be marketed and sold. This time frame is best counted in months as there is often a lag time of 3-6 months between a customer becoming convinced he needs the offering, and actually receiving the money in the bank account, particularly for service offerings.
For example, a typical and fairly optimal time frame for a customer wanting a training workshop from me looks like this:
- Week 00: First contact, customer sends request for training workshop, I send clarification questions.
- Week 01: Their partial answer comes in. I make an estimate on what workshop would fit best and send it for discussion/agreement.
- Week 04: My response and some negotiation on terms.
- Week 05: My offer is sent to the client.
- … silence (The contact person is gathering the signatures and budget from within the bureaucracy of the organization.)
- Week 07: Signed contract. (If the legal or financial departments are involved, add 2-3 weeks at least, in mutual negotiation of the planning of the workshop.)
- Week 11: Workshop takes place, at least one month out, as it needs to be customized. (In practice my agenda is nowadays usually full for the first ±2-3 months, but that is another discussion.)
- Week 15-23: Payment received. (Most big organizations have 30-90 days after delivery payment terms.)
The above timeline does not include the time gap between promoting myself and the customer actually coming to me, which is at least a few months, if not a few quarters. At least 30% of my CC training customers decided that they wanted a training from me 1-2 years ago.
Thus, seeing the above timeline, means that you have to give any venture at least 0.5-1.5 years to see if it is going to work out. You should be a “hell YES!” to this.
Anything less than a resounding “YES!”:
- Put the venture idea in your “sometime maybe” GTD file and save up, or
- Consider re-engineering the venture to either feel like a “YES!” or consider running it as a low-intensity experiment alongside an existing job, or
- Hand it over to someone else.
… But make sure your money stretches that long!
So you determined you can give the venture the time it needs to succeed? Now you have to check that you have the money to make it to that end, or safely land if you can’t make the venture work.
“The venture works” when it is sustaining you financially for a good hourly rate. You should decide now to stop the venture if that deadline is reached, and go seek other sources of income such as a job.
You’ll want to have enough finances available now to last you until at least 3, preferably 6, months of living costs after the deadline for the venture. At least 3, because even when you are in extremely high demand on the workforce, it will take a month for you to be hired, and a month for you to be paid at the very least. Realistically you should have more like 6 months of safety margin.
Conclusion: Fail fast or at its due time
So my advice is to look hard at venture ideas and ask yourself if you believe enough in it to commit 0.5-1.5 years to it.
Then set a limit on how long you are going to try the venture, by making sure you’ll have enough finances presently available, to allow at least 3 months of living costs after the deadline for the venture.
Good luck with your venture, and well done if you reconsidered!