Between Funding and Founding

I wrote this article almost a year ago, but never went around to publish it, so here we go.

 

Just a little disclaimer though: I’m not a kind of guy who thinks startups contribute to society (at least most of them). It’s okay to have personal success, but I believe there are more important things worth investing in.

 

However on the other hand, if you are not financially stable, your mind will be occupied by wondering how to pay next month’s rent instead of scaling the impact of your actions. It’s a difficult matter which requires a lot of balance.

“An entrepreneur is willing to work 80 hours a week to avoid working 40 hours a week.”

I blushed when I read that. Although cheesy, it”s true. Good standard 9 to 5 job, with a great wage and stable work environment.

In short: Living the american dream. In long: Not so much.

This trend has started to shift in the last years also. Most who disagree with classic corporate culture or simply dislike being employed, are either freelancers or self employed now. Yet when you think about it, freelancing has a lot in common with launching a startup.

Both come with a huge amount of responsibility (or ideally, should come). This is actually a great aspect for both scenarios: Responsibility should not be given, but taken. Latter makes the learning curve way steeper compared to being employed.Most glamour entrepreneurs you read about (or meet) prefer to “learn flying while jumping of the cliff”. If you’re like me though, you probably prefer to take flying courses before you jump off the cliff and preferably have a parachute on you (of course you tested it before to make sure it works). Sounds boring?

It’s surprisingly exciting enough to keep you awake at night.

Combining freelancing and a startup launch is actually a great mix to bridge the gap from being employed to being your own business owner. If you don’t want to jump into the cold water right away, I have some tips for you, based on my own humble experiences.

Try working 9 to 5

When growing up in Germany, I used to hear the saying “Es ist noch kein Meister vom Himmel gefallen” quite often. It literally means “A champion hasn’t fallen out of the blue yet”. I always giggled when I heard it, as the admiration some people received, was indeed extraterrestrial. It funnily seemed as if they came out of the blue.

Later on, as a freshman, occassions where I’d hold onto my ideals were getting fewer and fewer. Daily life kept interfering my plans in the long run. At that time, I found it plausible to try my luck working part time as a graphic designer at an established consulting company. It lasted for less than 6 months. The wage was low, I constantly did unpaid overhours and my grades at my university course suffered. Working in such a closed environment however, cultivated a twisted rebel spirit in me. It felt weird though to have such a busy yet boring schedule, awaking the urge for alternatives even more.

Amazingly, job offers and freelance gigs started to come in. While working on my everyday job, I jumped back and forth to various freelance jobs here and there.

Why did that happen meanwhile?

I honestly don’t know, but I suspect that’s how psychology works. Give me one month of vacations and I might procrastinate half of the time. Put me into employment for a month and chances are I could do the same amount of work in the same time, while still working for someone else!

I believe that a 9 to 5 job can teach you a lot about your working behaviour and productivity. The lack of inspiration sources will make you crave for inspiration, which most likely would not be the case if you had all the freedom you can get.

To see the light at the end of the tunnel, you firstly must be in the tunnel.

Get indie

Listen to your guts. Knowing when to step back and take a leap of faith into self employment differs from person to person. If you see enough opportunities and/or gigs coming up to potentially cover the double of your initial wage, the moment might be just right (this worked for me at least). Also make sure to have some money aside; the first weeks or months might be a bit rough for you financially (this is self explanatory).

Try to keep at least one steady income remotely. It will give you the needed backbone in hard times (winter is coming!), and a nice boost once revenue is made. It is essential to put all this under your own brand in order for it to serve as an umbrella for all the services you offer. After all, to create a strong presence (online and offline) you will need to be consistent with your brand. What I did with every freelance gig I caught, was branding it under “HELIOS” my personal creative brand. Branding yourself in a consistent manner will help you create the right network later.

Diversify your freelance income

At some point you will have to discuss prices and your hourly rate. If you believed that you can have a fixed rate for every client… I have bad news for you.

Some clients are stressful, some don’t have the budget, while some have serious communication problems, leading to unneeded overhours. You need to take all these factors into consideration before you decide on a price offer for a specific client. Headaches? I found this little tool by The nuSchool very helpful deciding how much to charge for a project. (It’s focused on designers, but the logic is the same).

Something else very important to emphasize, is the need to diversify your income. Too often it happens as a freelancer to get some well paid gigs in a short period of time, yet if they are “one-timers” you will most likely have to look out for new gigs soon, otherwise you might end up relying on a few income sources, which on the other hand is not healthy. Something which has proven to work for me personally, contributing to my flexibility, while still being financially stable, is the access to remote jobs and gigs. Freelancers and sometimes self-employed people have the privilege to do a large chunk of their work wherever they want, as long as they have access to their working tools.

This is often compromised if you work for a client who takes up more of your time with meetings and consulting sessions than with actual work. Of course, apart that you should charge for these usually, it makes you less independent. You will probably be able to handle some of these, but don’t overdo it, otherwise meetings and calls might clash together in your agenda.

Part-time founding

You will most likely tend to forget about the need to grow your startup, once the cash is flowing in. Don’t get to obsessed about making money yet though. You cannot reach exponential growth as a freelancer or someone who offers services. Surely, it is a great financial backbone, which feeds your startup with money, yet you need to invest also a lot of time into the development of your startup, regardless if it’s the business model, legal paperwork or the actual product you want to offer.

Also, as a rule of the thumb: at this stage the cash flow coming in from your startup has a bigger value than cash you bring in as an individual freelancer. Obviously, the network you bring into your startup as an individual is critical, but at some point your startup should ideally live on its own, meaning that your startup’s network and testimonials will detach itself from your personal network sooner or later. This is usually a good sign and indicates improved stability.

Trust & delegate

Do you always have the urge to do things by yourself in order to ensure that the end result is satisfying? Try to change that.

Surround yourself with people you trust and know well, who also could be potentially an essential part of your working environment in the long run. I have learned that people you trust and know well, are more important in the early stages. While finding a great developer or designer is a matter of network and money, having someone you trust needs time and dedication, because it’s based on a personal level. This is one of the few things which can’t be compromised in the business world, no matter the money or resources.

The keyword is “delegation” here. The earlier you get used to the fact that you don’t need to take care of every little detail in the founding process, the better. Hence why creating trust on a personal level is so important.

I found this TED Talk by David Marquet on this topic very insightful. It explains delegation and decentralization very well (also visually).

“The Salami technique”?

Just imagine you’re Batman; at day you are Bruce Wayne, the guy who has this stable job at Wayne Corp. allowing him to live a good life, and at night you’re the Dark Knight, that guy who has a vision and works towards achieving that, no matter what. I admit, Bruce Wayne is a billionaire , but you get my point.

While still being out of most people’s comfort zone, this approach is a much healthier learning curve than most others. I call it “the salami technique”. You cut off little pieces you can work on, one by one.

Did you start cutting salami yet?