Contract work can be a great way to bootstrap the business if you're careful about it. I chose projects that we're high paying and easy to walk away from (corporate training, wrote a second edition of a book, strange enterprise documentation gigs).

Once we had a product we could sell there was a temptation to push it on any person with money. The problem with taking those kinds of customers is that it ties down your product. Keeping an independent stream of income would have given us more flexibility after we'd launched the product.

Also, some people say that having side projects makes it hard to focus on your main project. I found the opposite, having a main project that I loved made it very hard to focus on the side projects.