Bootstrapping with a paycheck is a mode of entrepreneurship that has become a major trend. Entrepreneurs are starting companies in droves while still holding onto their full-time jobs.
Two interviewers, Amina Elahi from the Chicago Tribune and Katherine Harvey from Union Tribune San Diego, recently asked me the same question: If you are bootstrapping a startup with a paycheck, when is the right time to quit?
Here is what I told them:
Q: How can an entrepreneur know when it’s time to make the leap to full-time self-employment?
A: This is a personal choice that depends on your life circumstances, but at the minimum, you should definitely validate your business idea and determine whether it’s going to generate money. Talk to customers and make sure they’re buying. And keep in mind that most venture capitalists will not fund you until you’re running your business full-time. Before you go out to raise money, you’re going to need to quit your day job.
On this subject, there are two other relevant questions to consider:
Q: Should bootstrapping employees tell their bosses about their side businesses?
A: A lot of people are actually disclosing, and the bosses are quite fine with it. In the tech industry, employers are encouraging employees to become more entrepreneurial. It’s considered a plus, not a minus.
We are working with a bunch of companies, for example Oracle, where they are running corporate incubation programs. They’re asking employees to become entrepreneurial and call it Intrapraneurship. Corporations are willing to incubate these ideas, give resources and give money [in exchange for a piece of the company].
Q: How can you do this without angering your employer?
A: If you’re working for a tech company or a digital agency and building an e-commerce business on the side, if you tell your employer you’re doing that, the employer’s not going to care, as long as you don’t encroach upon your day job.
You should not encroach on your day job, because then you’re not going to fulfill your obligations to your employer. That is unethical.
Just to reinforce the point that you can and in many situations should bootstrap your startup with a paycheck, I want to point you to an entrepreneur, Girish Navani, of eClinicalWorks, who has built a billion dollar Unicorn company in this mode. I recently interviewed Girish on the subject, please listen to what he has to say:
Photo credit: Lauren Manning/Flickr.com.