Building a business is exciting, complex, and demanding. However, it’s probably one of the greatest things you will ever accomplish in life. Although you have to say goodbye to free time, your social life and sleep, at the end of it all you’ll have the opportunity to see your dreams become reality and live life on your own terms.
In 2017 Town Squared reported that there were over 28 million small businesses in the United States. It’s no surprise that more and more people are ready to break the chains of their 9-5 and pursue their dreams.
The first step in the process of becoming a solopreneur or a startup is to decide what kind of business should you start? Will you start with a side-hustle, or jump in with both feet at once?
This decision will come down to several key factors that you will have to keep in mind. Everything from finances, resources, to risk tolerance will play a role in your decision. So how do you decide what kind of business to start?
I’ve got five tips, to help make the decision a little easier.
#1 Time Commitment
Your new endeavor is going to take up a massive amount of your time. There is no shortcut to building a business or brand the right way. You’re going to have to put in the work to get it off the ground. Take a step back and figure out how much time you can devote to your new business. Think about things like your family, work schedule, social commitment, time spent on hobbies.
Take these considerations and block them out on a calendar. Then, schedule your “work schedule” around those events. If the majority of your day is consumed by other obligations, then perhaps starting your business is as a side-hustle will make more sense.
Spend a few hours a night and weekends working on your new venture. If you have more free time, then jumping in full-time, might be the way to go. Whatever the decision, remember, this is now your job, so take is seriously.
It’s important to realize that as a solopreneur or startup your greatest asset is the gift of continual learning. You will be expected to step into multiple roles and wear different hats. You’ll be responsible for everything in your business. Website, social media accounts, acquiring customers, products, marketing, rules and regulations… everything.
If you don’t possess the skills, you’ll need to acquire them in order to ensure success. What resources do you have available? Do you have access to mentors, childcare, family support, finances? All of these will be a key factor that will allow you to spend more time learning about and growing your business. Get real with yourself and understand what’s available to you and what you will need to acquire in order to be successful.
If your resources are limited, that should not deter you from starting, just realize that you will have to learn as you go. Starting as a side hustle may take a little longer, but it allows you to adjust and learn on the fly.
Ask most startups and solopreneurs why they started their business and they will tell you it was because they were not happy at their 9-5 job. Some might say that they didn’t feel like they fit into the company's culture, or had issues with their co-workers, there are a million reasons. However, keep this in mind. Starting a business while you are still employed is a great way to finance your side -hustle.
You’ll have the security of a steady paycheck while you work your ass off to build up your side income to the amount you need to jump off. Most people follow the 80/20 or the Pareto Principle rule. This rule simply states that when 20% of your efforts start to generate 80% of your results, then it’s time to jump into your business full time.
The role of finances is the largest factor in deciding whether to start your business as a side-hustle or as your full time gig. Do you have savings? Are you willing to sacrifice those savings on your dreams? What kind of debt do you carry? Are you sinking from student-loans, mortgage, credit cards? While finances are a tough subject for many people, it is critical that you understand your financial situation before you decide to start a business.
If your new business idea doesn’t provide enough for you to cover your monthly living expenses, then you must concentrate on side-hustle mode. Working fulltime and running a side business can be extremely challenging, yes! But you will do yourself no favors if you can’t afford a roof over your head, the food on your table, or the internet access you need for your business.
Growing a business takes time, end of story. You need to financially and mentally prepare to sustain yourself until you have enough paying clients or customers that provide you with enough revenue to sustain your current quality of life.
Understand that the first two to three years of starting a business are the hardest. 80% of startups and solopreneurs fail in the first year. Most new businesses don’t see profits till their third year.
You’ll need to financially sustain yourself to weather the storm. Starting as a side hustle will allow you to test the waters, get acclimated, and see if owning your own business is right for you.
#5 Risk Tolerance
Everyone handles risk differently. Some people like to take big risks, while others like to feel secure in their decisions. What is your level of risk tolerance? You might feel really confident in your idea and product and feel like jumping in full time is the right decision to make. Others will feel like they want to test things out before making a major commitment.
There is no right or wrong answer, the key here is to simply be honest with yourself. How much are you willing to lose? That’s the basic question that you need to answer. When you do, you’ll have a clear picture of whether this will be a fulltime, life altering decision, or a side hustle that you’re willing to grow into overtime.
In closing here are a few things to keep in mind when deciding what kind of business, you should start.
If you’re planning on:
· Using your current income to fund your business
· Want to test the waters and see if you like being a solopreneur or small business owner
· Value your current job and see your business as an enhancement to that
Then you want to start off as a side-hustle and grow into your business over time.
If you’re planning on:
· Financially and mentally preparing yourself to self-sustain for a long period of time.
· Already have enough clients or customers to sustain your monthly lifestyle.
· Are truly committed to going “all in” and grow your business to a full-time venture.
Then coming out of the gate running and building a full time business is the right decision for you.
Whatever you decide, building a business is exciting. You’ll need to work harder than you ever have before. Understand though, that you’re building your dreams, and living life on your own terms. There is nothing more satisfying at the end of the day, then being able to reflect and know that everything you did, you did it for you.
Charles Watson, M.B.A., T.M.
Digital Content Strategist / Founder
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