True Story:
One of the first startups I ever joined had a consulting business. I was employee number 12. 4 of the employees were bringing in enough revenue to fund the whole company while we developed the main product.
We started talking to investors, and the first thing they said was "We won't consider you if you keep the consulting business, shut it down."
So the company shut down the consulting business. This meant that we were now on the clock.
The investors then waited until we were just about to go under and offered us a bridge loan....on their terms. No negotiating power.
Then finally, they closed the first round of VC.
Needless to say the company capitulated on all the terms of the term sheet for that first round.
Later, it turned out that we were ahead of the market by about 5 years.
So, the company failed because they listened to investors who gave them bad advice. The advice was useful for getting better terms for the investors.
Now, what would have happened if they had not shut down the consultancy-- they could have negotiated good terms, and wouldn't have needed a bridge loan, and they could have hung on until the market took off. Might have been a delayed payoff for the investors, but 7-8 years is not that long to wait to get a home run, especially compared to the complete loss alternative.
IF the investors had invested what they did without the requirement to shut down the consultancy, then the company could have added the employees they wanted to, and had both the investment and the profits from the consultancy to invest in the primary product.
The end result would have been a better primary product and a better return for the investors.
Blanket advice is generally not good advice. Don't run a SEO consultancy when your primary product is videogames. But if you're primary product is videogames and you can fund much of your overhead with a few employees and a licensing deal for that engine, then it is a good thing. It is easy to tell if it makes sense if the income more than covers the cost of the employees dedicated to the "side" business. And reality is, this side business will often present opportunities or your main business and generally underwrite advancement of the main product on someone else's dime.
If you're a couple college kids and this is your first startup, then maybe you're not able to keep focus on the main business when you have customers for a consultancy.
But when they are aligned and the consultancy covers hiring extra manpower so that more total effort goes into the main business, then giving up the consultancy would be a bad advice.
So, if you can do a similar split with time-- where you spend 4 months consulting to cover expenses for 12 months, then you're in a position analogous to this company. In that case, it makes total sense and the advice to "never do consulting" is bad advice.
You'll be better off in your TC application or any other aspect of your business having those 8 months of free time to just work on the product... because you consulted for 4 months.
The alternative is likely keeping a day job the whole 12 months and not being able to focus on the startup.