When is it Time to Take the Plunge?

One question all entrepreneurs must face is, “When do I begin working for my new venture full-time?” For some, the answer may be easy–if you’re independently wealthy, you can start tomorrow! For others, such as Andy and myself, the answer is a bit more elusive. Financial considerations aside, though, we thought it would be handy to take a look at the other factors involved in making this decision.

First, it’s helpful to ask, “What can I get out of the way while I still have an income stream?” When starting a new web service business, there is a lot you can do while still working at your “day job.” While you can’t crank out endless hours of development work, there is a lot that can be done with an hour here or an hour there.

Clarify Your Vision

With us, our vision began as, “build the GTD web service we’ve always wanted.” That’s great, but you soon start to realize how many questions need answering to do that. What, exactly, have we always wanted? How will it look? How, _exactly_, will it work?

If you allow yourself to speak in generalities, it may seem like you’ve got this part in the bag. “It will look sleek and sexy, and support the complete GTD workflow!” Not quite. What does it mean to look sleek and sexy? What is the complete [GTD workflow](http://www.davidco.com/store/catalog/WorkFlow-Diagram-Advanced-p-16193.php), and what does it mean to truly support each part?

As you start to dig and find answers to these questions, the real work of design begins. First, we had to figure out how we were going to use the system. Again, in specific terms. So, we developed a list of use cases to keep handy as we discussed the system. Then, over lunch with pencil and sketch pad in hand, Andy and I drew screen after screen, working through the different usage scenarios we came up with.

In our case, this process took months to get through. But, it was those months spent in heated debate that crystallized our vision. By the time we were ready to start discussing the project with others, we _REALLY_ knew what we wanted to build and why.

Write a Business Plan

Once we had the complete vision in mind, we knew we’d need help to pull it off. Not only would we need more developers than ourselves, but we would also need graphic designers, accountants, lawyers, and a host of other disciplines. We knew, if we wanted to do it right, we couldn’t go it alone.

Unfortunately, those people cost money. So, we quickly realized that finding one or more investors who believed in our idea would be a top priority. After a bit of Googling on the investment scene, it was obvious that we needed a business plan. At the time, we weren’t really keen on the idea; after all, it isn’t very “[Getting Real](http://gettingreal.37signals.com/).” We’re Rails developers, aren’t we supposed to just start coding?

For some projects, in some cases, maybe. But, with our vision, and the financial need created by that vision, no. The average angel investor is going to require a carefully written plan before writing a check; we really did need a plan to get the money we need to pull it all off. And so, we learned about writing a business plan, which will be the subject of a future article.

The process was very useful, though. As we worked on the plan, we had to describe our vision, model the financial projections, research our competition, estimate the costs of developing and running the service, and so on. Our plan includes a tremendous amount of detail, much of which we had not considered before writing it.

Develop Your Pitch

Once you have a plan, you’re going to need to know how to summarize it, verbally, to potential investors, employees, and so on. There are two versions of a “pitch” that you’ll need: your elevator pitch, and the full pitch.

You’ve probably heard of the elevator pitch before. “Say you’re at an important conference and find yourself in the elevator with a VIP. He says, ‘So, what do you do?'” You have 30 seconds to impress him before he reaches his floor. What do you say? There are many other scenarios where having a good answer to this question comes in handy. Make sure you know how to represent your idea clearly and quickly to someone you just met.

Then there’s the “full” pitch. If you are going for investment, or trying to convince a developer to join your team without pay, or asking anyone to make a big decision about your business, they’re going to want details. I wish the 30-second pitch would suffice, but it doesn’t. So, you need to script and rehearse a more complete discussion of your venture. Be careful of explaining too much, though. The business plan is there to capture all of the details, you’re just trying to highlight the good stuff. [Ten slides](http://blog.guykawasaki.com/2005/12/the_102030_rule.html), 30-45 minutes.

Lay the Legal Foundation

With a web service, like many other ventures, it’s important to have a good legal foundation in place. Will you be an LLC, or a C corporation? How will you protect the name you’ve chosen for your company, so that others don’t steal it? How will you protect your product’s name against the same? If you have contractors working on your project, who owns the intellectual property? Is it in writing? When it comes time to bring an investor in, what terms are you looking for? Who will do the negotiation?

All of these questions need answers, and if you’re like us, you’ll need good [legal counsel](http://www.williamsmullen.com/attorneys/attorney_detail/mirkinm.htm) to answer them correctly. This doesn’t take a lot of time (in terms of man hours), but is very necessary to protect your new baby. Do yourself a favor and get the things you can out of your way early in the game, and be ready for the rest when it comes.

Design Your Brand

A great product is critical; without it, your new venture will have a hard time succeeding. Almost as important, though, is a great brand. What do I mean by brand? A [name](http://nuancelabs.com/2007/01/23/weve-chosen-a-name/) and a [logo](http://nuancelabs.com/2007/04/30/liquid-minded-logo/), in the most simple case.

People will be talking about your product to their friends. They’ll be showing your logo on their blog, or wearing it proudly on a t-shirt. Don’t be too casual when choosing a name, or designing a logo. Marketing matters, and all of your marketing efforts will build on the work you do here, in developing a good brand.

If it weren’t for the business plan and funding process, I might say this could wait until you’re almost ready to launch your product. You might think, “I’ll just leave a space for the logo and we’ll figure it out later.” But, not having a solid brand will make it harder to write your business plan, and harder to make it look attractive. If an investor has two plans on their desk, one with a great name and logo and one without, which do you think he is more likely to read? The same goes for your pitch; having to refer to your nameless product as “our product” throughout is not going to be ideal.

Network, Network, Network!

Successfully starting a new company cannot be done [alone](http://www.paulgraham.com/startupmistakes.html). Well, I suppose there are a FEW exceptions, but not many if you think about it. Inevitably, you’re going to need help. Before you leap into your new venture full-time, get to know the types of people who will be able to help you ensure its success.

For us, in the GTD web service business, this means developers, graphic designers, lawyers, accountants, personal productivity coaches, online communities, investors, and so on. We’ve been lucky to have met some really great people who have helped us immensely along the way. The sooner you begin reaching out to others–even if you’re not ready to discuss your project with them, yet–the better.

Cultivate Your Team

As I said above, it’s nearly impossible to start a great company without help. While networking is important (so you either know people who can help, or know people who know people who can help) eventually you’ll need to bring certain individuals “into the fold,” so to speak. Networking, alone, is not enough.

Before you’re ready to leap into your new venture full-time, you should have a good idea of who’s going to help you make it a success. Have a clear idea of where each person fits in, and make sure they’re as passionate and committed as you are (very important, at this early stage.) Also, make sure everyone’s on the same page as far as compensation goes: will each person be paid hourly, on a salary, or with equity? Or maybe a mix of those? Now is the time to figure it out.

Having your team in place is critical to writing the business plan, and securing funding as well. Any investor worth his salt is going to carefully examine [the team](http://strategis.ic.gc.ca/sc_mangb/stepstogrowth/engdoc/step4/ssg-4-2.php) you’ve assembled. You may have a brilliant idea, and a carefully written plan, but if you don’t have the team to get you there it’s pointless. That’s not to say you need the ENTIRE team ready to go, but you need to have a good core in place and an idea of who can fill the gaps (if you can’t name a specific person, what type of person is needed?)

Conflicts Arise

You’ve honed your vision, written a business plan, developed your pitch, built the legal foundation, designed a brand, networked with people in your industry, and built your team. Now what? This is the question Andy and I are faced with.

After putting a huge effort into the business plan, you need to leverage that work as quickly as possible; it will begin to age and become outdated almost immediately. New competitors will arrive that change the market landscape, people who are now committed may change their mind as their life changes, and so on. Though you should never consider a business plan “done”–all business plans are living documents that need constant revision–you don’t want to make any more work for yourself than is necessary.

Given where we’re at, and the above considerations, it’s obvious to us that one factor takes precedence above almost all others: time to market. We need to build this and launch it as quickly as we can. So, what is standing in our way?

Scheduling Conflicts

If you want to deliver a product to a real market, not just throw something out there and improve it as a hobby to (one day) create a profit, you have to dedicate everything you have to it. Early in the game, the shared load of working a 9-to-5 and using the time in between to make weekly calls, lunch time pow-wows, and handling the big stuff on the weekends worked. But, sooner or later, it’ll be obvious that your new baby is suffering from neglect.

As our project grew it has demanded more from us. People want to meet at normal business hours. Consultants in different time zones need a phone call when your boss schedules an all-hands meeting. Juggling the job and the new venture gets more and more complicated. You can get fancy and shuffle things around the lunch hour but that only buys you some time.

Interruptions

How many times through the day do you get a phone call, instant-message, or e-mail that derails your thoughts. How often do you have a fresh workload passed down to you at 5pm? Even better, it’s the weekend and a server has crashed–instant emergency. Every time you think you have a moment to yourself there is something or someone who wants to break your zone of concentration. Multiply this times two (day job and your new venture) and the problem is compounded. Switching context is expensive–once you lose “[the zone](http://en.wikipedia.org/wiki/Flow_%28psychology%29)” it can take hours to recapture. Sooner or later, you’re going to want all of your “in the zone” time focused on the new venture.

If it were not for living two lives this might be just your normal ill workflow that many suffer through daily. However, when you’re trying to squeeze all the effort out of each day each interruption has the potential of dislodging any side momentum for the day. Stack a few of these in a row and you’ve lost a week.

Mind-share

We like giving 100% of our efforts to that which has our attention. Once you’ve made the decision that you have something you’re passionate about and want to make a reality; add to that the pressure of a time to market and very quickly you’re going to have [competing thoughts](http://headrush.typepad.com/creating_passionate_users/2005/03/your_brain_on_m.html) on where your time really belongs.

This isn’t going to make either party really happy. You can’t give your all to your main employer and that will start to show. You can’t give your effort to your new company, which creates a lot of tension. If you’re not careful there is the potential to lose both. So, pay careful attention to what remains to be done, and the timeline as you go forward. Having a solid grasp on both will make it easier to decide when to take the plunge.

Run Like Hell

With the above pitfalls in mind, every entrepreneur is going to consider making the transition sooner or later. By completing the things that you can as a part-time entrepreneur, you’ll have a big head start ensuring that you can focus on producing income as quickly as possible once you transition. For us, this is key; we have a fixed amount on money on which to “float” until Nuance Labs can afford to pay us. I imagine most of you are in the same boat.

Having completed all of the above, Andy and I have decided to pursue Nuance Labs full-time. It’s all or nothing time! In the coming months, we will be focusing exclusively on fund-raising and the development of our first product, [Liquid Minded](http://www.liquidminded.com/). Of course, we’ll still be writing on the blog, and will have some neat things to show very soon!

Overall, we couldn’t be more excited. We’ve put so much time and energy into this project, and the enthusiasm of our entire team is, we hope, a reflection of the excellent product taking shape. Hopefully, this discussion of what we were able to achieve while still employed full-time, and what we considered before leaving to focus on our own project will be helpful to some other entrepreneurs.

Stay tuned!

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  • Jeff and Andy, thanks for an insightful article about a behind-the-scenes view of something many of us (including me!) have dreamt about, but haven’t (yet) accomplished. I’ve seen my share of offline and online GTD solutions, but I must say that I am getting ever more curious about Liquid Minded!

  • Thanks for the nice summary! I’ve actually done it completely backwards, I think:
    1. Get excited about something (GTD+)
    2. Throw self into it (learning everything I can about personal productivity)
    3. Decide to quit job
    4. Get clients
    5. Decide if there’s a market.

    🙂

  • Phil

    nice one guys. dreams tempered by endless procrastination and waylaid by displacement-activity tasks continually keep me from opening myself to a long sought-for challenge. will follow your progress with great interest. all the best & be lucky!

  • Thanks all. Baby steps take you everywhere so as long as you keep walking you’re going to get to your destination. We’re getting closer and closer to showing the public something. Being that we’re in a usable state locally it’s hard for anyone to stop working now that there is tangibility in front of them. Yay!