Part time entrepreneur?

As someone working on a startup venture in addition to my freelance consulting, I was interested recently to see a 37signals presentation that mentioned the virtues of being a part-time entrepreneur (see the video here).

"Surely not!" some of you may be thinking. "If you could get funding and go at it full time, why wouldn’t you?" 

Well, it turns out that working part-time on a venture has some important advantages:

  • Allows your day job to help fund the startup and therefore to (i) retain greater control (ii) avoid or defer the distraction of raising capital in the early stages
  • Encourages a scalable business model – i.e. revenue flows as the business grows, and everything still works you’re not there (which may be often)
  • Keeps you remarkably focused on the important tasks. You simply don’t have time to waste on ‘nice to have’ stuff.
  • Makes you far more likely to talk with customers before you invest your scarce resources on ‘building something’
  • Lowers your capital requirements because you’re not burning wads of cash as you evolve and refine the company direction and product/service offering (which often happens in the early stages)
  • Allows you to match your time input to the business needs. Sometimes there is a natural pace to growth, and being part-time stops you wasting time and energy for low marginal returns.
  • Gives you a broader, more strategic perspective because you’re not all-consumed by the startup.
  • Lowers the risk of being involved in a startup – success is arguably more likely for the above reasons, and failure isn’t as devastating.

But of course there is a downside too – very little spare time, frustrations about limited resources, scheduling conflicts, and various other issues trying to balance your day job with your startup venture. 

Your views? 

What has been your experience as a full-time or part-time entrepreneur? Are there other pros or cons that should be added to the above lists? What would you recommend to others?

Fact or Fiction in Startup Land

It is easy to get a distorted view of what startup success looks like. After all, we hear so much about the tiny few that capture media attention, such as Facebook, YouTube, etc. Not surprisingly, this sample skews towards consumer-facing, mass market companies that are bought out or invested in for megabucks.

The reality is very different. Some industries just aren’t newsworthy, even if they are lucrative. Not all opportunities are consumer-facing:  business-to-business is, well, big business. Many startups remain privately held and below the radar. And most don’t end up being worth billions, even if they are very successful.

The latest BRW Fast Starters edition ("the 100 fastest growing start-up companies") gives a more representative sample of "successful" startup profiles than we typically see. A few of the interesting factoids that jumped out include:

  •  57% became profitable in the first year
  • only 29% started the business with a planned exit strategy
  • 67% say their long term goal is to retain ownership, with only 13% aspiring to list on the stock exchange
  • About half spent 1 to 6 months planning the business before starting, and a further 20% took 6 to 12 months
  • Average age of the company founders was 38 years old
  • 78% used their own savings to start the business, rather than taking money from banks or outside investors

No doubt the BRW statistics have their own biases, but they are still a useful antidote to the urban legend of "20 year old founder scribbles business plan on beer coaster, raises millions in venture capital, and is now worth billions". Nothing wrong with aiming high, but you need to keep things real as well.

Perhaps Jim Collins of Good to Great fame put it best when he advised: "Confront the brutal facts yet never lose faith"