How to quit your side gigs
For bootstrapping entrepreneurs, consulting is often a fact of life. But how do you keep all those side projects from overwhelming your start-up?
Living off of Ramen, instant coffee, and dollar slices is a classic rite of passage for most entrepreneurs. It comes with the territory when you’re bootstrapping. And to pay the bills during these early days takes some serious creativity. The AirB&B founders, for example, raised over $25,000 by selling a limited edition cereal, Obama O’s, during the 2008 election cycle. Most entrepreneurs opt for a more traditional route, such as taking on side gigs as consultants.
That’s how Art Chang funded Tipping Point Partners. Today, Tipping Point incubates a portfolio of startups, building teams and products around its own in-house ideas. In the early days, however, Tipping Point acted as an outsourced consultant, helping others launch startups.
Funding a startup through consulting gigs is trickier than it sounds, says Art. “When you’re smart and do good work. It’s relatively easy to get more [consulting] work. You risk getting sucked into doing more and more consulting work [and end up neglecting your startup]. You get addicted to those paychecks. Eventually, it stops being a good risk/return tradeoff. Yes, you’ve lowered your risk, but you’ve also lowered your return because you’re just covering costs, not growing equity in your own projects.”
When Chang realized that consulting clients were absorbing all of his time and resources, he decided it was time to stop the side gigs, even though they made up 80 percent of his revenue.
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