HOW TO MOONLIGHT AS AN ENTREPRENEUR BEFORE YOU GO FULL TIME

How to Bootstrap Your Business

Erica Zidel knew trying to raise funds for her startup would be a full-time job. She worried that chasing after capital would distract her from building the best product she could. So, rather than sweat the investment game, she has spent two years holding down a day job while bootstrapping her new company.

During business hours, the Boston resident works as a management consultant. On evenings and weekends, she wears her startup hat.

“I’ve basically been working two full-time jobs,” says Zidel, founder and CEO of Sitting Around. This online community makes it easy for parents to find and coordinate babysitting co-ops in their neighbourhoods. It’s a hectic schedule–schizophrenic, even–but it’s also thrilling. “When I woke up this morning, I realised that it was Monday, and I got excited,” Zidel says.

Perhaps more thrilling is that she’s been able to self-fund Sitting Around with the money she earns from her consulting work. Besides not getting sidetracked with fundraising, Zidel and her business partner, CTO Ted Tieken, have retained 100 per cent ownership of the babysitting venture.

“Bootstrapping early on means I have complete control over the vision and the product at a time when even small changes can lead to big consequences down the road,” Zidel says. “I wanted the flexibility to make the right decisions, free from a board or an investor’s influence. When just the founders make decisions, you can innovate much faster.”

That focus on innovation has paid off. Sitting Around serves families in 48 states, as well as in Canada, Australia, Hong Kong and the U.K. Since the site launched in June, its user base has doubled every month; the company is on track to have 5,000 users by year’s end. Sitting Around also was one of 125 finalists in this year’s MassChallenge, a Boston-based startup competition and accelerator program. Perhaps most exciting of all? Shortly after launching the company, Zidel was honored at the White House as a champion of change for her contributions to child care.

Money vs. Time

The beauty of moonlighting with a startup is that it lets you test a business idea without jeopardising your financial well-being, says Pamela Slim, business consultant and author of escape from Cubicle Nation: From Corporate Prisoner to Thriving Entrepreneur.

“When you don’t know where your monthly income is coming from, it often sets up a fight-or-flight response in your brain,” Slim says. “And that’s not a good place to be when you’re trying to be creative. So having that psychological cushion is often very important for developing business ideas.”

Zidel will attest to that. Thanks to her day job, she’s poured $15,000 to $20,000 of her own money into her business. Not having to take on debt or live like a monk has been a point of pride–but it has also been a necessity. “Since I’m a mother, I have to maintain an adequate standard of living for my son,” Zidel explains. “While I’m definitely frugal and very conscious that a dollar spent on lifestyle is a dollar not spent on Sitting Around, I’d rather work two jobs than feed my son ramen.”

But as anyone bootstrapping a business on top of a day job will tell you, seed capital isn’t the only ingredient in the recipe.

“When I started my journey as an entrepreneur, I thought the most precious resource was money, but it’s time,” says Aaron Franklin, co-founder of LazyMeter.com. This web-based productivity tool was launched in August.

Franklin and LazyMeter co-founder Joshua Runge began “messing around” with their idea nights and weekends while working full time at Microsoft. After four months of brainstorming and development, the two felt they could no longer do their day jobs justice. With LazyMeter still in the product development stage, they resigned from Microsoft at the end of 2009, trading in their steady paychecks for a more flexible web-consulting client.

“We needed a source of revenue to buy us the time to build the right product. Consulting was really the perfect way to ease this transition,” says Franklin, who is based in San Francisco.

Taking project-based work did more than just allow Franklin and Runge to bootstrap the startup. Because they performed their consulting work under their business entity, they could stretch their income further by putting their pre-tax earnings back into their new company.

Today, LazyMeter has more than 10,000 users. Although a free service, the founders plan to introduce premium subscription features as soon as the first quarter of 2012.

Juggling Act

Bootstrapping a business has its challenges. Besides the long hours and strain on personal relationships, splitting one’s creative juices between two professional pursuits can be tricky.

“Being pulled in multiple directions is the hardest,” says Sitting Around’s Zidel. “It takes a while for your brain to switch gears. And when things collide, it can be hard to say [what] you should be working on.”

To stay productive and sane, Zidel schedules her workdays down to the hour and sticks to a list of non-negotiable items to accomplish each day. Still, she admits, “it’s hard to stop working. I really have to force myself to carve out some personal time.”

Bootstrapping with income earned from not a single employer but a cadre of consulting clients comes with its own set of obstacles.

“Sometimes customers require a lot of attention, making it difficult to carve out time for your startup,” LazyMeter’s Franklin says. Likewise, he adds, “When you start consulting, it can be tempting to work as many hours as they can pay you.”

Either way, your startup loses–which is why it’s important to make an exit plan and stick to it. “If you make enough revenue to last another month but slow down your startup by a month, you’re not getting ahead,” Franklin says. “Make sure your efforts are moving you forward, not backward.”

Continue reading this article at Entrepreneur.com