VentureTools: Moonlighting while Starting-Up
By Milt Capps
WHETHER you're the owner, or not, your Startup may be imperiled by someone "moonlighting" in second employment.
That's one of the tidbits found in scanning articles on the topic: A startup was being sold, but the deal got hung-up when the bidder discovered that intellectual property associated with its software product might be vulnerable to a claim supported by one software developer's employment contract at his dayjob.
Based on our interviews with entrepreneurs during the past 10 years, it's readily apparent that moonlighting is still viewed as a first resort for many, rather than seeking money from tapped-out friends and family or launching a Kickstarter campaign. At least half the time, it seems, co-founders of ventures we hear about are still plugging-away in dayjobs, full- or part-time.
On Jan. 31, we asked Cornwall, a staunch advocate for bootstrapping businesses, for his thoughts: "If a startup's founders are keeping themselves afloat via 'dayjobs', do you consider that the startup is successfully bootstrapped?" we asked him.
The response? Sage comment, as usual: "It is not uncommon," he wrote, "for entrepreneurs who are bootstrapping their start-up to keep their 'day job'. Doing so helps reduce the pressure for the new venture to cover living expenses for the founders, which keeps overhead lower and helps shorten the time to breakeven.
"The trick is to know when to focus exclusively on the new business. It is never the smooth transition that entrepreneurs seems to assume. Rarely do you have the luxury to wind down your job as the new venture gains momentum. At some point, most often before the new venture has a healthy cash flow, the entrepreneur will need to abruptly pull the plug on the "day job" and focus their full attention on their business. So even when using a day job to help bootstrap, it is imperative to have savings that can cover your personal expenses until the new business can pay a reliable salary."
In his blogpost on Feb. 6, Cornwall said he often recommends entrepreneurs consider keeping their dayjob and refers readers to Butler University's Erin Albert's book, Plan C: The Full-time Employee and Part-Time Entrepreneur.
Most online resources found in a brief search quickly note that the DayJob/Moonlighting dilemma-opportunity is best approached by first reading your employment contract or related material provided by your employer. Then, do the right things.
VNC's search indicated there has been plenty written on the subject during the recent Recession, which recently (a) ended or (b) paused.