Monday, 12 August 2019 13:15

Creating Your Own Income By Running Your Own Business

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“What if I went out on my own and became my own boss?”

This is a question I have heard asked by many people who are frustrated in their jobs. They want more control. And, they are tired of having someone else set their agenda and determine their employment. They wonder whether they can earn more and enjoy life more if they set out on their own.

For many people starting a business means too much risk, too much stress, too much unknown.

Their priorities are not on the adventure of creating a new venture, but on taking care of their family, and on focusing on other aspects of their life beyond their income. For others, their compensation working for someone else is so high that it’s not worth passing up to start out on their own.

And yet for others, starting a business means creating new possibilities in their life, and moving in new directions that they’ve dreamed about for years.

If you’ve ever thought about going out on your own but wanted to better understand the risks and rewards, this short article can help.

Not Starting from Scratch
When people think about starting a business, they think they need to start at ground zero. And this concept scares them.

And in fact, starting from nothing is quite hard. You are far more likely to succeed if you start a bit further along.

But there's good news. Most businesses do not start from scratch.

There are three ways you can start a business without going back to square-one.

(1) The first is to build a business from your current professional expertise. If you are a working professional, simply take your current job and turning into a consulting firm where multiple companies hire you on a contract basis to provide this expertise. In particular, identify what skills you offer that have the highest perceived value and where there is a shortage of this skill available.

(2) The second approach is to slowly build a business on the side, while your income comes from somewhere else. For example, let’s say you love making jewelry and want to make this a full-time business. Instead of quitting your job, you might find some local street fairs or a farmers market where you might start selling your jewelry or a jewelry store who might sell or pieces on consignment. Or you might starting selling online through Etsy. Over time, you learn what people like and what they don’t. You slowly evolve your product line and your sales approach without the overhead of a store. So when you finally go full-time, you already know this business can create an income for you.

(3) The third approach is to start working with an experienced partner. This experienced partner can then teach you the business and make sure that you succeed. For example, your uncle John wants to retire in a few years and shows you the ropes. Or, your neighbor wants to open a second store.

If you don’t have an Uncle John or neighbor interested in partnering with you, you can become a franchisee.

Franchises are basically “businesses in a box”. You buy the box and get advice from headquarters about what to do. Franchises actually offer far more options today than just the classic McDonald’s or Comfort Inn or even Kumon education center. For basically any type of business you can get guidance and support by becoming part of a franchise.

 

“If you build it, they will come…” In the movie Field of Dreams, the lead character hears a voice in his head that tells him to build a baseball field in the middle of a corn farm, promising “if you build it, they will come…”

And yet, for people starting a business, there is no such promise. The biggest danger is that they won’t get enough customers to generate the income they need.

If you are building a business off of your pre-existing professional expertise, you can get your first few clients from your professional network. People who know you, already like you and trust you will be interested in your services. And if they can’t use them for themselves, they will refer your skills to others who can use them.

The key step in creating demand for this professional services business is to go out and have conversations with past employers and with other people in your professional world before you take the leap. You line up the customers that you need to make your business work.

If you are starting in a completely new business field, but you start your business slowly, on the side, then you may not have any customers to start out. But you give yourself the time to develop these customers over time. You can build your customer base one person at a time, until you have the numbers to make it work.

If you work with a partner, then your partner should help you identify customers. In fact, before you invest any money in starting this type of business, they should be able to teach you how to measure the potential demand for this business in your area. If they can’t provide you with this information, then I wouldn’t trust them as a partner that can guide you forward.

Before you start investing heavily in your business, you should have a clear answer on where your customers will come from if you build it. This takes away a significant amount of risk.

 

Doing the math -
“Will the business actually work for me financially?”

I know a lot of people dislike numbers. And the thought of sitting in front of a spreadsheet sounds like torture (as does anything related to accounting).

And yet, one essential component of starting a business is doing the math.

What are your costs of starting the business? These include any investment in buying materials or buying advertising. And it also includes how much money isn’t earned by having paying a job instead.

What are your likely earnings from this business? This comes back to the “will I get customers?” question asked earlier, and combines it with, “how much will they pay me?” and “for how long will they keep paying me? “

When I subtract my costs from what I get paid, what does my income look like? Is this income enough? How variable is this income from year to year?

These numbers will give you a much better picture of whether or not it makes sense for you to take the plunge.

When you look at these numbers and how much you have in savings, can you afford the financial risks of starting this business? If you need to invest a certain amount of cash up front and expect to be losing money over the next 12 months, followed by just breaking even for another year, before having a comfortable and sustainable financial outcome, will you be okay? Will your family be okay?

One important question that gets overlooked and underestimated is how long it takes before the numbers start working for you.

In my experience, it takes people about three years to get a business to a point of sustainability. Obviously this number varies. If you already have a waiting list for your professional services, this time might be shorter. If you are slowly starting your business on the side, this time might be longer, and if you are starting a franchise or a partner business, they should be able to give you even more specific numbers about how long it takes to ramp up the business to a level of sustainability.

If these numbers don’t make sense, but you still want to start your business, you may simply want to adjust your business model. Perhaps you start your business more slowly on the side, or perhaps you change your business so that you don’t need to invest as much money upfront to get the ball rolling.

With any luck, when you run the numbers, you’ll discover upside income potential in excess of your current job. This may not be something immediately within reach, but something that could happen in the future for you.

 

Making the lifestyle trade off
My grandfather, who ran his own company, had a favorite family quote. “The great thing about running your own business is that you can work an 80 hours per week you want…”

Not every business will require you to invest 80 hours per week, but when you are starting out on your own, you’ll need to be investing a lot of hours to getting the business off the ground.

You’ll be called upon to do whatever dirty job needs to get done, where you don’t already have a specialist. You may have to put in odd hours at least initially.

You’ll have to make getting this business going a central focus in your life. If you have a lot of other balls up in the air, then juggling a new business will not work in your favor.

The good news is that once you do have the ball rolling, you’ll get a bit more flexibility, and you’ll be able to make decisions about where you want to be and what you want to do that you didn’t have before.

 

Getting started

If you are still excited about the possibilities of launching a business, and how it can create new opportunities in your life, then I want to strongly encourage you to consider the avenues I’ve discussed here - launching a business from your professional expertise, slowly building your business on the side, or working with a partner like a franchise company to get a head start.

If you’re not sure where to find this type of partner, one resource you can look at is a website partner of ours called FranServe. They represent over 500 different franchises in 80 different industries and their service is free. You can learn more about FranServe here.

Read 219 times Last modified on Friday, 23 August 2019 05:08
Alan Carniol

Alan is the creator of Interview Success Formula, a training program that has helped more than 40,000 job seekers to ace their interviews and land the jobs they deserve. Interviewers love asking curveball questions to weed out job seekers. But the truth is, most of these questions are asking about a few key areas. Learn more about how to outsmart tough interviewers by watching this video.