Should I quit my job to start a business?

Many people picture the leap: hand in your notice on Friday, start the business on Monday. The research suggests there is often a better path.

1. Keeping your job a little longer can help

Researchers Joseph Raffiee and Jie Feng at the University of Wisconsin-Madison studied people who started businesses over many years. Their 2014 study in the Academy of Management Journal found that people who kept their day job while starting out were about a third less likely to fail than those who quit first.

One likely reason: keeping your income lets you test the idea before you bet everything on it. You find out whether people will pay before you need them to.

2. Know the odds

New businesses are hard. Of all U.S. business locations that opened in 2013, U.S. Bureau of Labor Statistics data shows:

• 79.6% were still running after one year.
• 50.6% were still running after five years.
• 34.7% were still running after ten years.

That is not a reason to stay put. It is a reason to go in with a plan for the hard years.

3. Answer five questions before you quit

1. Has anyone paid you yet? A paying customer tells you more than any plan.
2. How many months can your household run with no income from the business? Count it in months, using your real monthly costs.
3. What is the number that would let you quit? For example, three months in a row where the business covers your basic household costs.
4. What does your family need to know? A move like this changes their life too. Talk about the plan, the timeline, and what happens if it takes longer.
5. What is your way back? If it does not work, what would you do? Knowing the answer makes the jump less frightening.

4. Pick your date in advance

Set the number in question 3, write it down, and agree on it with the people it affects. Then the decision to quit is made once, calmly, and not on a bad day at work.

The short answer

For most people, the safer path is to start while still employed, prove that people will pay, and quit on a number you set in advance. The leap feels braver. The staged path is more likely to still be running in five years.