From sideline to livelihood
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In a warehouse on a former pig farm in rural England, Matt Lane is packing up boxes of beer. The founder of BeerBods, a beer club that sends subscribers a selection of beers from independent breweries, was a marketing executive at a small UK phone company until he quit at the start of the year to become a full-time entrepreneur. When he started, Mr Lane had no intentions for the club for friends and family to become a business. “I threw a website up and it ran away with itself – in six months we had 1,000 subscribers,” he says.
In the past, executives considering quitting their day job to turn a hobby into a livelihood typically spent their spare time writing business plans, seeking opinions from contacts or potential suppliers and testing the market first. However, this was time-consuming, impractical and slow. The power of the internet means an executive can run an online sideline from home or during a train commute as a rehearsal for the real thing, and move faster once the venture is attracting enough paying customers.
Nevertheless, the timing of when to switch from employment to entrepreneurship is critical. Although both the strength of customer feedback and volume of recommendations gave Mr Lane the confidence to make BeerBods his full-time job, it was still a tough decision. “The transition was the hardest couple of months of my life,” he says. He knew BeerBods was popular with customers but admits that ultimately it was gut instinct rather than subscriber numbers that helped him make his final decision.
Once you turn a sideline into your sole source of revenue, Mr Lane acknowledges, your attitude changes. “I had to work out a way of making money. That wasn’t a priority before,” he says. “Now it’s my job, I have to look at it from a business point of view.”
After Scott Russell sold the UK telephony healthcare business he had founded in 2006, he stayed on but with dwindling enthusiasm. Then his regular Saturday morning espresso led him to buy a second-hand roasting machine with a friend, former café owner Paddy Bishopp, and start producing coffee at home as a way of relaxing after work. Soon friends of friends were asking for his blends, and in 2008 the pair decided to turn it into a business. Paddy & Scott’s supplies coffee to hundreds of retail outlets around the UK as well as workplace cafés for clients including Virgin Atlantic and BMW.
Speaking from a barn in Suffolk, where the business is based, Mr Russell says going full-time with his hobby has not changed his feelings about coffee, which is a fear for hobbyists: that the act of making money out of it kills the enjoyment. “The idea of going off-piste from healthcare telephony to start a coffee business was a breath of fresh air,” he says.
Mr Russell already had entrepreneurial experience, which meant he had more of an idea of what he was letting himself in for. Others, without that background, should consider using side projects as a testing ground for ideas and for learning lessons about entrepreneurship that are not so apparent to an executive whose only commercial experience is within the confines of their organisation, such as how to make more than pocket money from a product or idea.
Luis-Daniel Alegría started a side project as a low-risk way of testing his idea for a start-up without having to quit his job. His idea originated when he was on a business trip to Amsterdam in 2011.
Then a junior planner in an advertising agency, he was struggling to find out about parties in the city. In their hotel room, Mr Alegría and his colleague – who would become his co-founder in the project – started scribbling down ideas for an online “event compass” app that would help solve the problem.
Back at his day job in Berlin, Mr Alegría increasingly used his evenings, weekends and vacations to develop the idea. “It was too risky to quit our jobs, so we decided to prototype our idea and get traction first,” he says. In February 2012, Mr Alegría organised a “hackathon”, a collaborative workshop where app developers and enthusiasts showed up to progress the product rapidly over one weekend.
Mr Alegría and his co-founders decided there and then to turn their idea into a business called Vamos. But Mr Alegría decided Vamos needed money and a user base before he would quit his job, so he continued working while raising capital to build the business.
Five months and €100,000 later he packed in his job. “The transition point was when we saw our beta users try our product. We were getting validation from users, we had investment, so my risk was minimised,” he says.
But it was the funding that was critical to him making the switch from part-time entrepreneur to start-up founder. “A hobby project will always be a hobby project unless you have money to accelerate it,” Mr Alegría says.
New York-based Kathy Cheng is in the process of changing how she divides her time between employment and entrepreneurship. She has shifted from someone with a full-time job at an innovation agency and an online wedding gift service on the side; now she has quit the agency, where she still freelances, to make running Thankful Registry her priority.
She started it when after finding that she enjoyed solving the problems associated with choosing wedding gifts online and left her job six months after launching the site. She says it was a “bittersweet” decision: “Sometimes I miss the nine-to-five and the sanity and stability of it,” she admits.
One danger is to mistake your own enthusiasm for your project for a market. It is helpful but not a guarantee of success. Pamela Slim, author of Escape From Cubicle Nation, cautions against allowing your eagerness to cloud critical analysis of an idea’s viability. She advises executives to adopt a “slow ramp-up” to the full-time version. “Three things are critical to get in place: proof that your market exists by getting paying clients, proof that your business model works and proof that you enjoy running your business, not just thinking about it,” she says. “By working on your business as a side project, it allows you to get all three things right.”
Back at his Worcestershire warehouse, Mr Lane says that having BeerBods evolve on the side while he was still in a full-time job was the best way to start his business. “I shouldn’t say it has been too difficult when I’m drinking beer for a living, but I’ve had to make lots of changes – it isn’t just [for] fun any more,” he says.