There are numerous reasons why budding entrepreneurs venture into side businesses such as wanting extra money, seeking new challenges that their current employment does not offer, or testing out an idea they intend to pursue as a full-time occupation.
If you need assistance with paying bills or desire to explore new career prospects, several experienced entrepreneurs in this field provide guidance on initiating a side business.
What do you need to start a small business?
Starting a business takes time and effort to build a strong foundation, regardless of your ambition to launch a product quickly. By dedicating time now to establish a solid base, you can improve the prospects of your business’s long-term survival. Important essentials for commencing a small business may comprise:
- Idea backed by market research
- Business plan
- Funding and bank account
- Business structure (corporation, LLC, etc.)
- Doing business as (DBA) name
- Employer identification number (EIN)
- Business location
- Licenses and permits
- Insurance policies
What is a good business to start?
Typically, a favorable business to begin is the one that caters to an unfulfilled demand from consumers. Consider any common issue that hasn’t been resolved yet, or explore ways to enhance an existing solution by enhancing its speed, affordability, or user-friendliness. It is preferable if your concept aligns with your passion or existing skills to some extent.
The choice of entrepreneurship that is suitable for you is also influenced by your financial situation. Certain businesses, such as dog walking, entail minimal initial expenses, whereas others, such as a restaurant, may necessitate significant financial investment. Moreover, if you have hopes of quickly amassing wealth, you might be let down. Typically, most small businesses require a significant amount of time and effort before they begin generating profit.
Starting a business from home
Starting a small business is appealing to many entrepreneurs due to the flexibility of working from home and having control over their schedule. However, this choice comes with limitations, especially when it comes to certain businesses like manufacturing that may not be suitable for a residential setting. It is also important to take into account the zoning and legal regulations in your neighborhood and the impact your business may have on your neighbors and household members.
How to start your own small business
Typically, a series of carefully planned business decisions is required to take an idea to market or turn a dream into reality. Although not all businesses follow an identical path, most of them undertake a number of these steps.
Find the right fit
When considering ideas for a side business, think about your skills that people are willing to pay for.
Micah Redden, owner of Spire Property Solutions, prompts friends and family to generate side business ideas by asking them:
- What are you good at doing right now?
- What are the skills that someone you know needs right now?
- What skills are worth money to someone you know right now?
He says that it is crucial to identify the central overlap of those three elements.
Make sure you enjoy doing it
To avoid risking your current job, it is advisable to refrain from engaging in a side business during your regular working hours. Consequently, you will most likely need to dedicate a full day to your primary employment before allocating time for your entrepreneurial endeavors.
Since you spend a lot of time working, it is advisable for you to anticipate the second job.
Michelle Dees, who transformed her side business as a Guinea Pig Owner into a full-time job, suggests that in order to prevent burnout from the demanding work schedule, it is crucial to derive equal satisfaction from the effort invested in your side hustle as well as from the various sacrifices made to establish and develop it.
Create a business plan
If you require funding for start-up expenses, investors will likely request your business plan to evaluate your potential profitability; therefore, it is crucial to explain your goals and how you intend to achieve them in the plan. Additionally, business plans aid in attracting partners and employees.
You have the option to adopt either a traditional or lean approach when developing a business plan. Traditional plans are detailed and typically necessary to secure a business loan. Conversely, lean plans are shorter and may utilize more visual representation through charts instead of extensive written content. These types of plans are particularly suitable for uncomplicated business models aiming for a rapid startup.
No matter which plan you select for your new business, almost all of them include:
- A description of your product, it’s value proposition and how you plan to market it
- How much investment you require and the amount of revenue you expect to make
- Your target audience and the customer experience
Start small and validate
To prevent overspending or getting into debt in order to finance your side business, consider starting small and testing your concept with a limited group of people, such as friends and family.
R.J. Weiss, the founder of The Ways to Wealth side-hustle blog, emphasizes that receiving feedback sooner depends on how fast you transition from the initial concept to generating income.
He suggests that individuals contemplate the alternative that provides them with the highest likelihood of earning $100 within this month. Afterward, they should develop a minimal but impactful product or service that enables them to achieve that $100.
Finance your business
Even if you lack sufficient funds, there are various methods to finance your business, including startup costs, which can sometimes deter individuals from pursuing their dreams.
- Bootstrapping
Self-funding is advantageous because you maintain complete control of your business. On the downside, it sometimes comes with the highest personal financial risk. - Venture capital investments
Venture capitalists or “angel investors” may be willing to fund your business, but they usually expect membership on your board of directors or some stake in the company. You may need a detailed business plan to secure a capital investment. - Small business loans
If you don’t have enough money, but still want to keep full ownership of your business, a loan might be advantageous. Be prepared to show banks and credit unions a comprehensive business plan, as well as your estimated expenses and financial projections. - Crowdfunding
Some people invest in a business in exchange for perks, as opposed to a share of the profits or company ownership. Because these perks are usually merchandise or name recognition, your business may need to be in the general consumer product or creative industries to take advantage of crowdfunding.
Hire freelance help
If you’re hesitant to invest money into your side business until it becomes profitable, that shouldn’t discourage you from hiring freelancers for tasks that require expertise you don’t have. In the beginning, this might include tasks like creating a logo or writing website copy. To find the suitable talent, seek recommendations from friends or colleagues who work with freelancers, or explore platforms like Upwork or Fiverr that offer project-based work.
According to Shunk, it is important to identify the tasks in your job that are the most boring and time-consuming. Is it possible to delegate these tasks to someone else? Do all of them require your expertise for successful completion? In most cases, the answer is negative, regrets Shunk for not hiring a content writer sooner after two years.
