In an earlier post, I was thinking about a side gig to make a little extra money and get experience running my own very small business. After initial online research was discouraging, I decided to put this off and focus on school. Now I am more comfortable with school and am revisiting this idea. The numbers I laid out are still a motivator and potentially good goals. Being able to pull a profit, then 1000/mo, then 4500/mo out of a side hustle business would be great.
In Infinite and Elusive, I was struggling with picking a business to pursue. For the long term big picture I solved this with ETA. What this solved for me was that I could be an entrepreneur who is primarily interested in running and growing a business without caring what that business actually does (usually what people think is most important to an entrepreneur).
For the short term side hustle, I decided to speak with all my friends and acquaintances who I know have side hustles to get ideas and to hear how they got started and what their first steps were. This has been informative, motivating and has helped strengthen those relationships. The research I did on franchises I was able to share with a friend who is interested.
I started focusing on reselling type businesses. I think they appeal to me because they represent an opportunity to capture value that other people overlook. They also usually have a time and patience component which appeals to my personality.
went to an IT conference last week that was attended by mostly small business
who provide IT services to other small businesses. Because of that, over half
of the attendees were CEO’s or owners of their companies. In general, I found
it really exciting to be among these business people and to be a part of their
conversations. Specifically, I observed that most of their backgrounds were
technical, people who quit their IT jobs to do it themselves. There was a lack
of skills and experience with value selling, finance, operations, and
marketing. Some had an interest to develop these more but most knew they had to
but prefer to ignore it. This gave me encouragement that small business is an
area of interest and an area that I can bring value to.
general topic was that “money” has started to flow into this
industry, which I think means Private Equity and some Venture Capital.
general topic of interest was these service companies becoming more formal in
their finance and accounting. One concept that they are adopting is the role of
the Service Manager. This is a P&L manager for a line of business for the
company, generally defined as responsible for great customer experience,
employee experience and gross profit for the line of business. It seems to be a
more technical person in the role and more hands on.
is also a constant reminder to show business value to customers rather than
just being a technology provider. These are not business people and it is
helpful to see that and see what kind of value I could bring to a small
business in this space but also to small business in general.
I attended a webinar on franchising put on by school and delivered by John Armstrong from FranNet. I think there are some really interesting industries and businesses represented in franchising that opened my mind to more potential small business possibilities. There are two reasons I feel that this option is not as strong as searching. First, funding seems more difficult to obtain. There does not seem to be the benefit from having investors and advisors with you during the process and because this is a new business you are responsible for funding the net working capital and cash flows until you find customers. Second, franchises are fully focused on operations with limited potential for additional growth and development. I would like more creative control of the business strategy and marketing for my company than is possible with a franchise. The idea of turning my own small business into a franchise itself is appealing however.
I considered shutting down this blog but have more updates after a period of discouragement. After investigating many side hustle as business ideas, I felt discouraged. Instead I worked on implementing a couple of insights from Leadership and Organizational Change class from school. First has to do with expanding and strengthening my personal network and second is in strengthening a promotional mindset in myself.
I also took the opportunity to join a club called Entrepreneurship Through Acquisition. It’s goal is to promote this as a career path for MBA graduates. The idea is to run distressed or bankrupt companies that you either buy or are purchased by a small group of investors. This is appealing to me because it has some of the positive aspects of a franchise but with more freedom and variety of choices.
With the MBA degree and my network in place, taking control and turning around a business is an appealing idea post-graduation. It also gives me focus in my studies and networking.
The biggest excuse I hide behind is that I would start a business but I don’t have an idea for one. This seems like a good place to start. There seems to be infinite possibilities for businesses when you look, or pay attention to creative people with side-hustles. However, the idea seems elusive. There are parameters for a good idea, but I also need to be on guard for talking myself out of every idea.
There are many types of businesses to choose from and they don’t have to be an invention or backed by a new idea. There are franchises, services businesses and even taking an existing product or service and offering it in a new way or to a different customer. I understand deep down one is probably never “selling a product” and is probably selling change, or an experience, or education, or community, or customer service. These values should drive the business decisions and I want to discuss them later. Here I want to think about what it is that will be transacted.
One type of side hustle involves involves doing more of what you do. If you are an IT specialist at a company, maybe you take on some of your own IT clients outside of work. This has the benefit of multiple income streams and gives you leverage to negotiate with your employer for more flexible time. However, there is no large net positive in dollars you make for your time. You earn more money, because you are working more hours. Even if you can make better dollars per hour in your side gig, it won’t scale unless you start hiring to fulfill your service contracts. This is possible but also low margin.
The other type of side hustle involves upfront work and on going maintenance work, but can scale without employees. A way to think about it is, if you go on vacation, will your business still be making money while you are gone. This could be YouTube videos or selling products, versus coaching or tutoring or gig economy jobs (Dog/Baby Sitting, Task Rabbit, Driving, Delivery, etc).
Because of my current limitations on time being in school and working full time, the business approach makes the most sense for my situation. It will allow me to create in bursts and continue to grown in the meantime.
Business school tuition is a strong practical motivator to make first steps to starting a business. My program is extremely expensive and has caused concern for the amount of debt I would need to finance it. A better option would be to supplement the payment with additional income from a side business.
One way this could work is to earn and save the cost of tuition before payments are due on the loans. The total cost of the program is $200,000 and the first payment is due in 30 months. This would be closer to about $7,000 per month. Regular monthly payments on this loan would be approximately $2,500 per month which is what I can estimate to save from my primary income. This leaves average $4,500 per month. This seems like a lot but any portion of it would beneficial and acknowledging that the hardest part is going from zero to $10 rather than $10 to $1,000.
The values are less important than having numbers that provide short term useful purpose. It is a motivation that is more tangible and available than a ten year goal, but a mindset that will serve well after these immediate needs are met.
In my very first class session of business school, the very first activity the professor asked us to do was to write on an index card our one, five and ten year goals. The perspective he wanted us to take was of looking back from this time in the future and seeing all the steps we needed to take to get to that point. I am shocked that so far, this very first, seemingly obvious and predictable activity has had the most impact on me of anything else I have done recently.
What I was confronted with when filling out my card was that ten years from now I don’t want to be working for someone else’s company, far from it. I wanted to have made my friends rich.
This is an idea I ran across when talking with a colleague about the company Connectwise that, from my understanding, was founded, built and taken public in a thoughtful way that benefited customers, employees, and shareholders. The founder, Arnie Bellini, built a high quality business that is a net positive in the world and made his friends and early investors rich.
This struck me as the only point; why do anything else.
Starting and running my own business has been on my mind, but the activity in class put me in a perspective that to be there in ten years, it isn’t going to happen on its own. If I am serious about this I need to start taking steps or facing my life towards that goal.
This has caused me a great deal of cognitive dissonance. My excuse thus far has been that while I know a lot about how my company will run (what kind of culture we will have, some people who will work there), I don’t have an idea for what we will be doing or selling.
It seems that most people start with an idea, and I am starting with an index card of pretty general goals. The leap is that with these directions, the rest will follow.