Ask HN: Advice for turning my side project into a real business

I was you about a decade ago... I can't stress enough that if you don't have serious money in the bank or rich friends, you need to keep your day job and bootstrap. One approach I've seen work well even though it may be slow and frustrating - use the proceeds from your day job to hire a developer to do the work. You create the work plan, let someone else fill in the gaps. You focus on marketing / customer interaction to grow the product. Alternatively, keep burnin the midnight oil.

I do not recommend anything that smells like a "loan." This is speculative stuff you are doing, and a loan means you'll be on the hook to pay it back regardless of how it works out.

For any 20+ years-old readers here, if you ever think/dream about starting a business, you should learn from OP that cash and savings is paramount for freedom and creating a business later on.

> product-focused dev with 10 years experience at a-list startups [...] I don’t have enough cash saved up for significant runway. I’m 35 with family and living in the US.

The earlier you start, the more you accumulate, the more flexibility you have later. I had 12 months runway when I started mine, and it is so valuable not to look for investors and just work on your product/company when you feel pretty confident.

From OP's comment history, I'm going to assume this is about https://www.fretboardhacking.com/fretpro-app/

As a guitarist myself there is incredible saturation in the market right now for learning guitar, whether it be apps, courses, or other content out there on YouTube/Ticktoc/etc. My first question is why to you is why you think "the path to something like ~$1M/yr seems very clear to me."? My second question is what does your app do to distinguish it from any other of the readily available guitar learning/fretboard apps (from quick google https://guitar.com/guides/buyers-guide/best-guitar-learning-... and https://americansongwriter.com/best-guitar-learning-app/)?

If you're looking to potentially quit your fulltime employment or potentially take some extended time off, that it feels like you should have some pretty solid answers to those questions before doing so.

At $600/mo, there's about a 10X gap between where you're at and revenues you could actually sustain yourself on, and ideally you'd like to hit 5 figures recurring revenue a month before you start seriously thinking what this would mean becoming a "real business". Assuming you have ideas on how to grow that revenue, I'd suggest focusing on some of those strategies. I'd also start making strides in marketing that can start to grow market share and get some exposure.

While I don't want to discourage you, it's also okay if a side project stays a side project. You can continue to invest the side time you have and grow your passive income to supplement your 9 to 5.

I did this. I grew my project, Buttondown [https://buttondown.email] from high three figures to low five figures while doing it as a nights-and-weekends thing at Stripe and then quit to work on it full time. It was a great decision and I'm happy I did it! (I also did it, frankly, with significant runway in the bank if I needed it, and no dependents besides my wife so the tail risk of "this goes to zero and/or I hate it" was not particularly painful.)

My advice would be: it reads like you're commingling two questions that really should be separate, which are:

1. Do you want to start a business and pursue independent employment?

2. What are the quantitative parameters and conditions under which such an enterprise is sustainable?

If the answer for 1. is yes (and interrogate yourself a bit! how many of the things that you are imagining are less "working on your side project full-time" and more "not working on the day job that you hate?"), get as concrete as possible with 2. What burn rate _is_ acceptable to you? How much savings are you willing to use during build-out, if you were to start now? What growth do you need to hit to feel like you're financially on the right track?

There are lots of funding tools (using the term 'tool' loosely) available to you — SBA, subsidy via full-time job, subsidy via contracting, lifestyle-friendly firms like Tinyseed. But you need to start with the numbers.

(Also always happy to chat more: I'm at justin@buttondown.email.)

Stick with your job as long as possible, there isn't any better bootstrap funding than being employed at a software engineer rate. Sounds like a good transition would be to apply to https://tinyseed.com/

“ I’ve recently put a lot of thought into the product and realized that there is a real gap in the market that I can fill and make this into a real business”

Was the market gap realization from conversations with current/prospective customers? Or was it from solo hammock time? It sounds like you have a lot more the build, and because you have dependents, I would try to reduce risk as much as possible by making sure you have a list of customers (emails?) who, in some way, showed strong interest in paying for your product. Ideally a long list.

We all after 30 more or less in your position, if don't have some spare capital, like father's house (as in Ghost busters, btw, old good cinema).

Unfortunately, this is not good position, because from $600/mo to something considerable for family life in US, may be long path, and not cheap, and not predictable.

I don't think you consider moving away to some cheap place, so answer is simple - keep your day job.

America is country of freedom, so you could continue your side business, and continue grow slowly, but until it will grow much more (I think about 10x at least), it will not become attractive for much investments, and you should not consider it as your main priority - now your main priority family and day job.

BTW, $600/mo is considerable amount for 3rd world countries, and this could be real solution, but it could be not easy, to hire people abroad.

Sorry, life is hard. I believe, if you will see old good cinema, this could make things looking softer and warmer, to accept.

And tell me, if you want to talk more.

Thank you and good luck!

I kind of was in that situation once, I had a side hustle that was making about $1000-1500/month. It seems cool to be making "real" $$$, but if you're not properly accounting for labor, equipment, operating costs, taxes, etc. etc. it's relatively easy to be "making" a few hundred $$$/month, and might be harder to scale up than you think.

Questions I suggest you ask yourself:

What can you do to increase that $600 to $1200 with your available resources (including vacation time) while holding your nose and continuing the day job?

What is the minimum monthly nut to get your family on the ramen plan? Of course you all ain’t gonna eat ramen but get lean and mean.

How many of the aforementioned doublings of revenue do you need to execute before you’ve hit “ramen family” minimum amount? Don’t forget to pay your taxes too.

How much of that $1M/yr do you want to split with investor(s)? With $600/mo currently, the investor is taking all the risk, so how’d you like to give them $800-$900k per year?

I would grind it out until that's more like $10k/month. At that point, if you have good growth and retention, you could try to raise enough money to keep going full time for another year.

Can you do a friends/family round?

Unless this has a huge market upside you're not looking for an angel investor and no one will give you a loan at your current scale. My suggestion would be to find someone who complements your skillset, and have them work for equity so you both own a cashflowing asset over time.

Another comment mentions that this is a guitar learning app and there not being clear competitive differentiation. Assuming this is true, find someone who is an excellent 0-1 mobile app marketer, give them 40% of the company with a 4 year vest, and work on it as a team.

I would find a way to validate that there is a path to $1m/year. Perhaps talking to some of the folks to see if they would commit to paying if you're able to deliver what you're building.

If you can get some written commitments in place, it will be a lot easier to pitch to investors if you decide to go that route, and you'll get a better valuation.

It doesn't sound like you are able to bear a worst case scenario at the moment since you have dependents, so you want to be as sure as possible before you lose your income stream.

Try contract work. There's a lot of "downtime" where you're looking for contract work that you can work on side projects and as your project picks up you can adjust the amount of contracting to fill the gaps.

I'd recommend Founders University which will most likely back you with $25k angel funding for 2.5% and you also get to join a community of founders and maybe appear on Jason's This Week in Startups. It's probably not a lot of runway for someone in your position and you could shop around for a better option if you have the time for it.

I was in the same situation(wife, small children, no real savings) about three years ago. Long story short freelance for a high enough rate that you can pay subcontractors to do the work and free you up to work on the side project. Eventually, you can start paying the freelancers as subcontractors to work on your project as well and this is the hardest part and I don’t know any way around it. I happen to know people that were in sales and know the business side of the industry I target. Eventually, one of them said, I’m ready to be entrepreneur and I sold a piece of the pie in exchange for him and his clients. Within the first two months our profits soared. It’s a wild ride and we are just getting started. Build a solid product that customers love and lightning will eventually strike.

Truthfully, quiet quit, put more time into your project in Q1-Q2, and try to 10x your revenue.

Business Attorney Here.

I would speak to an attorney to see your next steps both in terms of setting up your business for success as well as making sure there are no issues with your current employment.

Depending on your salary and experience, hiring a contract developer/freelancer could be an option. Europe is quite a bit cheaper than the US salaries, has plenty of skilled people that have a good education and level of english. tech.london could be a start if you want to explore this.

The option I am considering is taking 1-2 months of unpaid leave. Obviously this requires some savings and cutting down expenses however you can make it fun for the family with a little thought and creativity.

[random advice from the internet]

Maybe a business loan (is that even a thing?).

It is a thing, but basically most intial business loans boil down to signature loans. You sign as an individual and you are on the hook personally.

Sure an established business might get a loan collateralized against business assets such as inventory, real property, recievables, etc. Or a line of credit for cashflow.

Anyway, the simplest thing that might work is charging more for the existing product so you can support existing customers.

In part because $1m/year is not enough to make sense to an established angel investor. But mostly because charging more money is a good way to make more money; a good test of viability; and the simplest thing that might work.

Finally, be clear on the competing ideas. One is getting a new job. The other is owning/building your own business. They are not mutually exclusive. You can get a new job and continue building your side project organically.

Indeed a plan to build your side project organically over a few years is not the only option. Another is to build a new project that is easier to turn into a business (maybe even one that resegments your existing product under a new brand).

Keeping in mind that getting other people's (friends, family & fools) money is a lot of work that doesn't bring in revenue.

Good luck.

Ask your boss for a leave of absence. You'll have the security of returning to your job, but will also have the time to dedicate to your new project. You say you can't support not having a job, but if push came to shove, could you not work for 3 months and support your family if you cut down on expenses? If you are a dev at a-list startups as you said, you could probably pick up a contract here or there.

>a real gap in the market

Is there a market in the gap though? Often the reason there is a gap is because it isn't a viable market, not because nobody thought of it.

https://successfulsoftware.net/2017/02/03/choosing-a-market-...

Why can't you grow progressively? You're talking about a million dollars a year like it's an easy thing, so a hundred thousand dollars a year should be ten times easier for you and you won't have to quit your job.

People love to dream big and bet all, but nobody wants to make calculated risks and slower progression.

I haven’t done it, but I have known some who are good at what they do to go contracting 3 days a week (or however many) making higher day rates and spend their spare days building their startup.. would that help you ramp up quicker without taking on debt?

Very similar position to you, apart from I'm in the UK and have a b2b app.

To start with, unless you already know people, raising money can be a full-time job in itself, everyone wants to offer advice and no one wants to cut a cheque.

I took a massively risk-averse approach instead of aiming for $1m ARR I started with building a self-sustaining app that pays the mortgage/rent, then all the bills, then matches your salary.

Smaller more achievable goals will stave off burnout because you won't feel like you're failing everyday you're not making $1m ARR.

My best advice is know thyself.

Most of the "successful" entrepreneurs I know are self motivated and share a burning desire to succeed beyond the confines of corporate slavery.

Some people find corporate life comfortable. They show up every day and wait for their marching orders --- no need to think or act independently. At the end of the day, they shutdown and go home

If you like the "comfort" of corporate life, you are probably not meant to be an entrepreneur.

Another idea: line up some dev consulting work that would enable you to spend more time per week (in aggregate) than the 2-3 hours per day you're spending now. Consulting offers higher hourly wages and more flexibility, generally speaking.

There are clear downsides too. You would need to source these contracts yourself and figure out health insurance for your family.

You're right to be conscious of and cautious about runway given you have a family to sustain.

If you're not a single parent, what does your partner think about the circumstances, and what would they be willing to do to help? Having the support of those closest to you will be a motivating factor (emotionally, aspirationally, possibly financially too).

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The question for me is, what are you going to use the capital for? Hire devs to accelerate progress? Marketing? If it’s strictly to pay yourself, I’d probably just keep plugging away or move over to contract work to supplement.

I was in your boat almost 4 years ago. My side-project was earning $0 at the time and now brings in $1M+ ARR. I'd be happy to chat with you about the journey some time.

Perhaps consider making a deal with a company willing to market your idea, paying you a share of total sales? Would be a good idea to ensure you have lawyer with suitable experience.

Few things:

1. Unless you have real traction (2-3x growth every year) or rich connections, your change of getting an investment on a $600/Mo product is almost nil.

2. Your chances of getting a business loan is almost zero as well because most business loans are given against real collateral (e.g. physical/real estate, machines/hardware etc) and most banks in US wont consider a $600/Month software revenue anything real worth a collateral. You are most likely better of getting a personal loan if you have good credit but regardless, you will have to guarantee it personally which means they come after everything you got if you fail to pay it back

3. Your best bet is to keep the job and keep grinding on the side. If you really believe that this can become big, it can become big without you going all in at least in the early days. Get creative. Find a co-founder if possible who is willing to work for sweat equity. If not, do it yourself until the revenue is close enough to your min. expenses. Then quit the job.

I don't mean to say this in a rude way but no one will give you money so that you can quit your job and work on a $600/Month product. You have to take that risk yourself. All the best.

Source: A bootstrapped founder who was privileged to buy an existing side project (doing $2500/Month at the time. used my own personal savings) and grew it to low 7 figures revenue. I have taken small loans (SBA/personal etc much later on) and funded all of it myself for the most part.

Can you change jobs? Maybe finding a less demanding one that frees some time

Get co founder? Lots of devs sitting around burning thru their savings.

Are you sure you haven't already saturated your tiny market?

600 a month is not a strong enough signal. Keep trying.