Many, especially younger ones, wonder what they need to know before turning their side activities into a full-time business.
In a report published by CNBC, the couple Carrie Poleg and Craig Klickner give some advice in this regard, based on their successful experience in this field, as they have managed since 2006 to establish their first company, and they currently own 8 sources of income They generate more than $3 million in profits annually.
Inefficient task and time management
In the early stages, the couple say, we weren’t prepared enough for the crazy pace that followed our actual venture juggling our full-time jobs with fast-growing side activities. Since we considered these additional activities to be in fact a natural extension of who we are, we struggled to manage our time effectively, and what we found most beneficial for increasing productivity was hiring new people who could support our efforts.
To figure out whether you should do a task yourself, someone else, or no one at all, first ask yourself:
• Is this mission essential to you, your side business, or your values? And if not, could you simply not do it at all?
• If it needs to be done, can you delegate it?
• If not, how and when can you complete it in the most time-saving manner? What is the deadline for its completion?
• While you continue to perform this task, can you drop it or delegate it to others in the future?
Confusion between revenue and profit
We know many people who have tried to start online training in this field, and their mindset is this: We find 20 clients, we get $4,000 per client per year, and we make $80,000 profit. No problem, right? This is a mistake.
Should you think about how to find these clients and will you need a website? If so, what will it cost and how will you maintain it? Will you bear the costs of marketing, branding, travel, etc.? Will you get a quality certificate? Who will handle the accounting, bookkeeping and legal contracts? What if a customer doesn’t pay you?
With every project we worked on, those questions had to be studied and planned, and the sales you make aren’t the same as your profits (and $80,000 isn’t what you’ll end up with).
Reinvest revenue to generate more sales
Once you make “enough” profits, you don’t necessarily have to reinvest all your profits in order to generate more sales.
Suppose you started a side business in the landscaping industry, for example, and developed your project into an integrated company that generates $600,000 in revenue annually, and $130,000 in net profit, assuming that you do not get a salary.
You can then take a year or two to secure your customer base, connect with them well, pay off your debts, and transfer your skills and management to a few employees. You can later promote a senior manager to run your business for $60,000 a year, and keep $70,000 a year for yourself, all while doing the bare minimum.
Exaggerate the prices in the beginning and do not raise them once your brand is established
Once your business is successful, customers will pay for the value they get, and often if something has a lower price, people may appreciate it less. Don’t be afraid to review your pricing structure regularly, with core inflation and a dynamic and ever-changing economy your pricing should be dynamic too.
Back to the employee mentality
Side business often fail to adopt the entrepreneur mindset quickly, so the biggest transformations that side business owners have to work hard to make are:
• Stability and predictability versus change: When you work for two weeks and get paid for two weeks, things here are predictable because you have pay and benefits and you usually also have a set schedule, but as an entrepreneur you may work hard and have an unexpected schedule throughout years and your salary is less than necessary.
• Being Smarter vs. Finding Smarter People: Employees usually aspire to be the smartest person in the workplace or to see those who are smarter as their competitors. But when you start your own business, surrounding yourself with those who are smarter than you becomes an advantage.
Being nurturing versus taking care of yourself: Elon Musk once responded to a question about words of encouragement he could give an entrepreneur, saying, “If you need words of encouragement, don’t do it.” Transcend the need for a handhold, a curriculum, or someone to manage the small details of your life.