Very few of the hundreds of entrepreneurs I’ve known have had the financial resources to drop everything else they were doing and devote 100% of their attention to a new business venture. Nor do investors or lenders mysteriously sniff out people with great, new, world-changing business ideas and show up with cash in their outstretched hands, as in the Futurama “Shut up and take my money!” meme.
The practical alternative for many startup entrepreneurs is to start with a side gig — and build up to that awesome world-shaking company.
Yes, I know that this flies in the face of some conventional startup advice to just commit and go all in. There is certainly something to be said for focusing all of your efforts on your startup. But, there are cases where going all in is simply not practical or realistic.
Case One — Young Idealists
I love the enthusiasm of young first time entrepreneurs. “I’m going to build the world’s best airline.” “You’re in high school.” “So?” I’ve noticed over the years that young entrepreneurs are prone to big dreams. They tend to not see lack of knowledge, experience, or money as an obstacle — but rather as just things that can be acquired.
Adults often laughingly write them off as naive. The message is usually very clear — “What? An airline? You can’t possibly do that! Go get a job bagging groceries.” What a stifling message to send someone who could help build your community’s future!
Sidebar. It is true that it is difficult for a young entrepreneur [high school or college age] to get started (school time commitments, extracurricular activities, lack of funds, etc.) — and then even more difficult to become funded enough to go all in. But not always. Some young people find a way (usually through an intense side project) to create breakthrough products that rival or beat what established companies create. I tip my hat to my friends at 1517 Fund who take them seriously and help those exceptional young people start their exceptional companies.
Case Two — World Changers
Every startup community has its fair share of people who have been talking for years about starting the same huge venture with some breakthrough idea, but haven’t taken step one. Often they go into a stall pattern. They keep repeating, “I have this great idea, but I need [insert dollar amount here]. Can you help me get that?” “Well, maybe — what have you done so far to get started or create customer traction?” “I’ve written a pretty extensive plan, but I can’t start. My idea is awesome, but I need [insert dollar amount here] before I can start.” And so on.
After the startup community hears this repeated a few times, they tend to write the world changer off as a wannabe or a crank. It is sometimes not easy to show this entrepreneur how to get started without being fully funded from day zero — some are in fact wannabes or cranks— but the non-wannabes will listen and learn. We live in a time when websites, landing pages, graphic design software, and email or social media promotion are virtually free. The ability to affordably grow customer engagement has never been easier.
Case Three — Shallow Pockets
Like the world changers, potential startup entrepreneurs sometimes simply have an [in this case NON world changing] idea that costs more to start than they can afford. “I want to open a taqueria [or bookstore, or boutique, etc.]. I know I can do a better job than the ones here in town. But, I don’t have the money for building rent.” A good mentor will help this entrepreneur find a way to get started without that investment — and build a following that eventually justifies bricks and mortar.
Case Four — Family First
Some startup entrepreneurs do have the cash resources to start the new business they envision, but taking the leap would drain savings and cause the entrepreneur to leave the safety of a regular salary — all of which could put their family’s well being at risk. I can’t, and won’t, argue with that logic. Family is important — your job or business should be a means to the end of a happy and prosperous family (not an end in and of itself). Yet, that doesn’t mean abandoning their startup idea.
I’m sure you can think of many more cases where going all in is impractical or impossible. But it’s time to switch gears and look at what a side gig can do for a startup entrepreneur who wants to eventually go all in.
Let me be clear. I am not advocating just doing a side gig forever, and forgetting your vision to grow a large venture. Although it may take more time than you want, starting a side gig can be a natural stepping stone to a larger venture. A side gig provides three important benefits for your eventual all in venture.
Benefit One — Market traction and knowledge
An all in (i.e. larger scale) venture requires funding from investors or lenders. Achieving funding requires traction in your market. Unless you’ve already built and sold a couple of multi-million dollar companies and have a Midas touch reputation, investors and lenders want to see a positive track record of customer engagement in your market.
That track record can come from a different product than you expect to sell long term. Quick tip. You get wonderful long term leverage if what you sell today addresses the same market or customer base you eventually want to reach. Can’t start an airline today? Sell that same customer base something that you can create, no matter how small. Sell insider guides to air travelers. Don’t worry about having the exact right distribution channel. Sell tacos at your farmers market on weekends or on the street outside a club. Sell your boutique designs online or at popup markets. Expensive bricks and mortar are not required for sales! But an active customer following is enormously helpful for expansion into new products or distribution channels!
When you do this, you also gain value by learning what your market wants. That market knowledge will likely cause you to refine your product or product line considerably over time. More likely, it will cause you to refine that original big idea as you become more expert about the needs and wants of your customer base. As Mike Tyson said, “Everyone has a plan until they get punched in the mouth.” The startup equivalent is “… until they get in the market and hear directly what their customer base likes and hates.”
You also gain value by establishing and growing your brand. Some will argue that by starting smaller, you are sending a wrong brand message. I’ll argue that your brand is less about the scale of your venture than it is about the quality and attributes of your product, service, and customer engagement. In fact, starting small can be an asset because you can create a brand story of grass roots authenticity. When you do shift gears and expand, your brand (hopefully, a great one) will follow you.
The sales traction you create is magical (i.e. nothing succeeds like success). As you develop a sales following, it becomes clearer to investors or lenders that you can make your projections. Your traction in the form of growing sales, active social media or blog engagement, and a growing email list, and positive reviews all signal that you can replicate that with new products (especially in the same market space). Investments or loans become easier to achieve.
Benefit Two — Cash
Let’s face it — some side gigs lose money [as do some all in ventures]. Better to lose a small side gig sized personal investment than to go all in, bet the ranch, and risk financial ruin. You can try several low cost side gigs for less than the cost of going all in, increasing the odds of finding a winning formula. One way to view a side gig is as an experiment that leads you closer to success, whether it makes money or not.
Of course some side gigs do make money. And that revenue or accumulated profit can grow to the point where you can go all in while knowing you can completely sustain yourself and your family. At the very least, it can partially defray the costs of going all in and increase your runway.
Benefit Three — Self Fulfillment
Once you start, you are in the game.
Until you start, you aren’t working toward your vision. Until you start, your dreams are only words and thoughts.
Once you are actively doing what you love and working toward accomplishing your vision, you are moving forward!
Your energy will change as you feel yourself making progress. Your confidence will grow as you learn more. Your vision will become clearer and more attainable as more customers buy.