This is an archival post from my newsletter. Join the newsletter to get in the loop.

Don’t be Afraid of Contract Work

In the MicroISV world you hear alot of talk about people trying to quit their day jobs and start small companies. What usually follows that is a bit about staying on a laser like focus and spending every waking hour working on their product until it’s out the door. Here’s why I don’t totally agree with this philosophy and why I think you need to do some contract work along the way.

Doing contract work while working on a product that is supposed to support you for the next X years seems silly. Why take gigs for a few thousand dollars here and there when if your product is successful you should be able to make that money back quickly. And the quicker you get your product to market the quicker you’ll start making money.

Ah here’s the first rub, getting your product to market quicker will have very little if anything to do with it’s success. Rather the two biggest issues I’ve observed (for microisv’s) are not being able to keep your company around long enough to get into the game and not having sufficient funds to make smart strategic advertising decisions when the opportunity presents itself.

Let’s look a bit closer here. Having enough money to keep your company in business long enough to get noticed is probably the biggest factor in a successful ISV (except maybe the quality of the product, maybe). Getting mentions on weblogs, in relevant magazines, around the office water cooler all take time. It takes a long long time for your company and product to work it’s way through the market and start to get noticed. If you don’t have the funds to wait the year it’s going to take then your product probably doesn’t stand a chance. Sure there are the few Delicious Monsters, which become hits in the first 10 seconds, but that’s not going to be you or me.

Strategic advertising is the other big opportunity that MicroISV’s miss out on and hence why they often fail IMHO. I’m not talking about putting an ad in Wired here. I’m talking about the $500 – $2000 investments you can make in certain areas at just the right time. These type of reasonable opportunities can be huge to a MicroISV just starting out. Maybe you could sponsor a small but influential community event like Gnomedex. For a reasonable amount of money (sponsorships start at 1K) you’re name is out there with hundreds of the top people in technology and on top of that over 150 of them are bloggers. Do you have a better way to get your product in front of 150 people who are very influential and love talking about new cool ideas?

What about just the opportunity to go to a conference and give a talk or participate in a panel. Do you have the extra $1500 on hand to do that?

How about running a promotion to give away 10 iPod Shuffles, got the extra $1000?

What about buying 3 or 4 key phrases for your product from Google adWords a month before the business budget year/quarter ends?

Can you afford a designer to do your logo’s, site design, and business cards?

It’s these type of small investments that make or break alot of small businesses. That’s why doing contract work while building your MicroISV is essential. It’s scary because you feel like you’re losing focus but if you pick the right gigs you won’t.

If you’ve left your day job to start your own business you’ve probably already cut back on alot of daily expenses. Trust me it’s amazing how far I can make $1000 last me now. Before I left my job I’d go through that without even thinking, now I don’t spend that in 4 months. You’ve also probably saved up enough money to live for at least a year or so. That means money you generate from contract work provides some big opportunities.

  1. At the very least it will extend the amount of time you can afford to not go back to your day job. That might be the critical extra few months it takes for your business to go from bust to boom.

  2. You can use it for the type of opportunities above like smart advertising, business travel, etc

  3. It can extend the time you have to develop your product. I could have built HelpSpot in 3 months, but I’d rather take 6-7 and get it right and feature complete.

  4. It’s a great morale booster. Having no money coming in for months at a time is fairly depressing (I know about this 🙂 ). Having a few thousand dollars roll in now and again really lifts you up and I’ve found greatly reduces overall stress and family stress (my wife will have to comment on that).

  5. Go out to dinner! Use that extra money for a bit of relaxation, it’s OK. The less stressful your situation is the more productive you’re going to be.

  6. Contracting can help you be more focused on your primary project. When you’ve worked for 16 straight hours on your project the code you’re writing on hour 16 is garbage. I can practically guarantee you’ll be rewriting it. So having a contract job gives you something to take a break with. Take your mind off why that regular expression isn’t pulling out the right data and go write some flat HTML instead.

All this good stuff aside there are a few pitfalls to watch out for.

  1. Picking the right projects is critical. Ideally you should try and do work for organizations you’ve worked with before. This will usually allow you to build the most accurate time estimates.

  2. Do projects you can work on during nights and weekends. If it’s going to take you 3 days a week or lots of half day meetings and such then stay away.

  3. Don’t do it for too little money! This one’s important. Often a $500 job can cause as many headaches as a $5000 one.

  4. Don’t do it for too much money! This one’s important :-). If you’re taking on a $40,000 gig that’s great but now you’ll definitely be distracted from your primary project. Don’t get caught up in the dollar signs this one is too big for you.

  5. Don’t do any contract work that is a derivative of your primary project!! First off you get into some intellectual property issues here, but also you’ll end up making all kinds of special adjustments and “minor” modifications for the client. No good. You need to keep your original vision clear and not get off track with custom one offs of your product before it’s even complete.

  6. For goodness sake only take 1 contract job at a time. No if’s and’s or but’s.

So am I eating my own dog food on this? Yes!

I’ve been doing some contract work since I left the day job and just took on a new medium size project. It’s for an organization I’ve done alot of work for before so I have a good idea of the time I’m going to need for meetings, phone calls, and general hand holding. I’m also very familiar with their current situation, the key people, etc.

Will this delay HelpSpot a bit? Yes. It is worth it? Yes. Will it make HelpSpot be a better product when it launches? Yes.

As always I look forward to hearing your experiences and thoughts so comment away!

[cm_simple_form id=3]