Reflections on 2017 - Implications of Building A Lifestyle Business
Sunrise over San Francisco Bay. Photo Credit ftchris on Flickr
A lot happened in 2017.
I started the year working at ZURB, focused on leading Foundation, and was excited to plan out the future of Foundation with a 7.0 release. My lead at ZURB, Bryan, spent a ton of energy helping me learn, grow, and work through the places where I was stuck. I found myself wrapping my head more and more around the ways in which product planning, design, development, and marketing all work together to advance ideas and create breakthrough products.
Then things hit the rocks - ZURB ran into cash trouble, and in July they laid off about a 3rd of the company, including me. I was thrown into a tailspin - should I look for another job? Should I return to freelance development? Should I indulge my entrepreneurial itch and try founding another startup?
I'd sworn off founding tech startups after an epicly challenging time in 2013 - in the course of 1 year my co-founder and I pivoted a failing business into a new one, went through the Mucker Labs accelerator program, and my first son was born. I spent months commuting from San Diego to LA for the accelerator, pouring my energy into a new business, and trying to come to grips with what it meant to be a parent, all at the same time.
Yet still, the entrepreneurial itch continues... nothing fascinates me quite as much as trying to figure out how to put a new business together. Learning a new market, wrapping my head around the problems and constraints, and exploring what sorts of products and services might make sense.
After taking a month to think about it, talking to dozens of friends and learning about tons of interesting companies, I decided to give it a go, this time on my terms. This time around, I'm not going to sacrifice my life, family and friends for business, I'm going to make my business decisions around what make sense for my life. While the tech startup crowd often sneers at a "lifestyle" business, that is exactly what I want for this time of my life.
This has a number of implications, some of which I knew up front and others which I'm discovering as I go.
Implication #1: Start With Cash Flow Via Consulting.
Organizing my business around what makes sense for my life means that first and foremost, I can't go months or years without generating significant cashflow. Unlike the last time I started a business, I'm coming into this with significant fixed expenses, and while I have the savings to not be desparate from a few weeks without income, I also needed to generate significant cashflow in fairly short order.
This has meant working my network quickly to build up some consulting revenue, and focusing the majority of my time at the beginning of my business on consulting work. While I intend to create products, and in fact have some very specific products in mind, I have put almost no time into their development as I focus first and foremost on building up a cash reserve.
Implication #2: Gradually Increase Time Leverage
In order to grow my business while working it around my life, I need to create time leverage - the ability to generate more revenue in less time. This is one of the key perks of a successful product business - your revenue becomes a highly leveraged multiple of the time you put in, or ideally completely decoupled from time invested.
I need to get to this place of time leverage, but without the long period of minimal cash flow often associated with new product businesses.
When I've previously worked as a freelance developer, I've done so on an hourly basis. Having an engineering background and knowing many people in the industry, this approach is easy to sell. Most technical hiring managers have in mind a rough cost for engineering time, and with my experience I can price myself between the middle and top of that range with minimal pushback.
A glaring problemw ith this approach is that it has almost no time leverage. If I want to develop products, I need to free up time in order to do so. But under an hourly consulting model, any time I free up is lost revenue.
The solution came to me in the form of a book by Jonathan Stark, Hourly Billing is Nuts. Jonathan highlights the many ways in which hourly billing models create misaligned incentives and prevent you from scaling your business, and begins to educate on a way out via project and value based billing.
While I am still new to this approach, it is forming the key of how I create time leverage for myself in the early stages of my business. By billing by project and taking on more project management, I can create more value and charge higher prices, while simultaneously spending less time by subcontracting out portions of the project. I'm able to leverage my expertise, not just my time.
Implication #3: Leverage My Existing Brand
While I have tons of ideas for markets I might enter and products I might build, making business decisions that optimize for my quality of life means I can't afford to spend tons of time and energy building up a new brand and reputation in a market I don't have any prior traction in. Perhaps down the road, when I have built up a large cash reserve and some steady sources of recurring revenue, but for now I need to maximally leverage the resources I have already.
For this reason, both my consulting business and my nacent training business are focused on front-end web development. I've started the Friday Frontend newsletter to help keep developers up to date on this world and begin connecting to the audience, have given my first custom corporate training focused on front-end development, and and am working on plans for my first course. I've been able to reach an audience far faster than I would have had I focused on a brand new market.
Implication #4: Say No To a Lot Of Things
This one is really hard for me. After I was first laid off by ZURB, I held on to the hope that I'd be able to keep working on and leading the ZURB Foundation project while consulting and building up my own business. Unfortunately, I quickly discovered that I was unable to do that and bring in enough revenue to support my life and family. While I'm still hoping to find time as a contributor and keep nudging the project forward, I've had to step back and admit that I can't lead the project and build a business at the same time.
I'm also beginning to have to turn down more and more projects working with teams that I'd really like to work with. When I first started going out on my own, I had a lot of extra time and could explore tons of possibilities. Nothing is more exciting to me than exploring a new possibility! But now I'm having to say 'no' a lot more. Projects where either the engagement model doesn't make sense - hourly vs project based engagement - or where I simply don't have the capacity to take on another project.
Implication #5: Let Things Take Time
As a part of the end of the year, I've just spent a fair amount of time planning out goals and timelines for 2018. This is something I haven't historically been very good at, and I credit Bryan Zmijewski from ZURB for putting a lot of time and energy into breaking down my resistance to long term planning.
As a part of this, one thing I've had to internalize is that things take a lot of time! And approaching my business in a way that fits around my life and supports continous positive cash flow makes this problem even more challenging. One of my most important goals for 2018 is to launch an online training course, but as I planned out the year I realized that my consulting pipeline doesn't make it realistic to launch before the second half of the year! Talk about frustrating!
But one of my favorite statements about startups is that they are marathons, not sprints. I'm finding this even more true of a bootstrapped, lifestyle focused small business. My time horizon needs to be months or years out to accomplish anything of note.
This doesn't mean losing a sense of urgency - if you drop that, you never make any progress - but it means breaking down my goals into bitesized intermediate steps and making daily progress around the edges of my consulting work. Reserving 30 minutes each morning for writing and working on the course, carving out time in the afternoon and evening for marketing and market testing, and staying extremely focused in the time that I have available.
Looking Forward to 2018 - The Year of Stabilization
In the second half of 2017, my perspective and focus completely shifted. From thinking I knew where I was going and working on, I was spun into limbo and spent a ton of energy spinning up a new business to sustain myself.
Now looking into 2018, I'm starting from a much better place. I have a full consulting pipeline, cash flow to sustain myself, and the beginnings of a reserve to bridge me over challenges or time spent on creating new business.
I've also got some targets figured out. I'll be continuing to grow the Friday Frontend newsletter, launching a free new educational series focused on Vue.js in February, and building towards a full-featured course launch in the second half of the year. I'll also be looking to take on a few more corporate training clients over the course of the year.
Of course there's much to be figured out as well. So far the vast majority of my consulting projects have been via referrals - will that be sustainable? Or will I begin to see more leads coming in from marketing? Additionally, it remains to be seen if I'll be able to successfully manage the buildout of the course and do a successful marketing campaign to launch it, all while maintaining consulting projects for cash flow.
But at least now I know where I'm going, have a plan to get there, and have built out some momentum in the right direction.
After almost 4 years away from my last entrepreneurial adventure, I'm back in the game. Excited to see where it takes me in 2018.