Erica Zidel knew that 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 spent years holding down a day job while bootstrapping her new company on the side.
“I’ve basically been working two full-time jobs,” says Zidel, founder and CEO of Sitting Around, an online community that makes it easy for parents to find and coordinate babysitting co-ops in their neighborhoods. It’s a hectic schedule, but it’s also thrilling. “When I woke up this morning, I realized that it was Monday, and I got excited,” Zidel says.
What’s perhaps more thrilling is that she’s been able to self-fund her business with the money she earns from her consulting work. Besides avoiding getting sidetracked with fundraising, Zidel and her business partner, CTO Ted Tieken, have been able to retain 100 percent 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 you have just the founders making decisions, you can innovate much faster.”
That focus on innovation has paid off. Sitting Around serves families in the United States as well as several countries abroad. Since the site launched in 2010, its user base has taken off. In 2011, Sitting Around was also one of 125 finalists in 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.
The beauty of moonlighting with a startup is that it lets you test a business idea without jeopardizing 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 the development of business ideas.”
Zidel will attest to that. Thanks to her day job, she’s been able to pour $ 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.”
Bootstrapping a business isn’t without its challenges. Besides the long hours and the strain on personal relationships, it can be tricky to split one’s creative juices between two professional pursuits.
“Being pulled in multiple directions is the hardest,” says Zidel. “It takes a while for your brain to switch gears. And when things start to 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.”
Knowing when to leap
How will you know when to quit your day job? Author Slim advises that once you’ve tested your idea in the real world and know there’s a market for it, you should set specific, tangible metrics.
“For some people, it can be getting a significant amount of traffic on their website or selling a certain number of units,” she says. “For others, it’s when they have X dollars in their savings. For some, it’s a date — say, ‘Come hell or high water, December 31, 2016, I’m quitting my job.’”
“It’s less the number of users and more the rate of growth. We’ve been testing different components of our business to see what works before we go out to raise money and turn the gas on,” Zidel says. “Now we have a lot of great data: what messages resonate, what products make money.”
To those who say you’re not a true entrepreneur unless you quit your day job, Zidel cries foul. “A lot of people think that to be a successful entrepreneur, you need to be sleeping on an air mattress and working on your business 80 to 90 hours a week,” she says. “But I think that definition of success is silly. I’m living proof that if you have a quality idea and you spend your time well and execute it well, you can wind up with something great.”
Protecting your rep at your day job
Your boss may not be thrilled to learn that you’re cultivating a side business. To avoid biting the hand that feeds you, follow this advice from Pamela Slim:
1. Check your employment agreement and employee handbook. Some companies have a no-moonlighting policy. Others have noncompete agreements that prohibit you from doing your own business with their clients. Others — particularly technology companies — even have policies that nab the intellectual property rights of anything you create even on your own time.
2. Keep quiet about your side project. Unless your employment agreement requires you to come clean about your after-hours venture, Slim recommends staying mum with managers and colleagues. Yes, some might be supportive of your side pursuit. But, Slim says, once the cat’s out of the bag, “Be prepared to be fired as a worst-case scenario.”
3. Don’t work on your startup on company time. Just because you love your side project more than your job, that doesn’t give you license to slack off at work. Resist the urge to use your work phone and email to conduct startup business. “Take the calls on your cell on a break, and, if possible, use your own laptop or mobile device to check personal email,” Slim says. “Remember, everything is tracked and monitored in large corporations.”
4. Don’t burn bridges. Guard your professional reputation as though your life depends on it. “It’s never a pleasant thing to be fired for performance,” Slim says. “That’s not the way you want to go out.” Besides, your current employer might be a future customer or investor.