Starting a business?
When starting a business alongside your day job, there comes a point where you have to either go for it or accept that it’s just a hobby. How do you make that decision and why is it so hard?
The Tom Daley moment
I call this the Tom Daley moment. When you decide to step up to the 10 metre diving board and leap into the entrepreneurial pool. Anyone who has stood on the edge of the high diving board can tell you, it’s a lot scarier looking down from up there, than it is watching from below.Fear of the unknown, financial risk and self doubt hold us back from starting a business Click To Tweet
Even Tom didn’t start out on the highest board, he worked his way up gradually from the lower diving boards, until he developed his skills and his confidence. Starting a business is no different. In this post I want to share how I faced up to all three and what you can do to beat them. It’s about how you make that leap from the 5-9 world of business as a hobby, and become a fully committed business owner and entrepreneur.
Fear of the unknown
Starting a business can be overwhelming. There are so many things to consider that are a lot less interesting than what you’re passionate about – legal, financials, accounting, sales, marketing. You can Google all that stuff, but it’s still hard to know what you need to do, what’s most important and what works. When I started out I decided to take a course to speed up my learning and make it more sociable.
It helped me focus on all the practical questions I needed to answer when I was starting a business to be successful. Things like…
- How much profit could I make?
- How can I forecast my turnover?
- What are the important financials in my business model?
One lady on the course made Petits fours. After answering these questions she realised that if she carried on the way she was, she would have to spend 12 hours a day, 7 days a week making Petits fours, to have even a chance of matching her current salary.
Doing an exercise like that upfront can save you a lot of time and pain. You need to see if there is any money in your idea and what it will take to be profitable.
The Rule of Thirds
- 1/3 – what does it cost to turn the lights on? So for Petits Fours what are the costs of ingredients, packaging, electricity etc.
- 2/3 – what do you need to pay yourself? You need a minimum income to keep going. How much do you need each month
- 3/3 – what should you be saving or re-investing? You need to build up a slush fund. Money that can be used to grow the business, to capitalise on an opportunity when it comes about.
There is always some flexibility in each third. You have choices to make about costs. You could get a cheaper supplier, or you could go high end. You could (and hopefully will be able to) pay yourself more than the minimum once things get going.
Don’t be tempted to skimp on the final third though. That’s both your insurance for the bad times – to keep things going – and your ticket to growth, when you’re ready to scale up.
Take some time to pull those numbers together and see how you feel about the business then. Does it fill you with confidence, or feel like a mountain to climb?
Don’t worry that’s just the first step. That’s your first revenue target. To understand if it’s achievable, or worth the effort, you need to research your market. If you’re running a business alongside a day-job you should have some idea of the challenges in your chosen market. But have you taken the time to study the competition, understand the value of the potential market, or set achievable goals?
We cover this in detail on The Guide to Starting a Business.
You don’t have to take a big risk to start most businesses. Sure, if you’re launching a product based business, there will be some initial investment up front to develop, or manufacture it. But you don’t have to re-mortgage your house to get started. You can often use your savings, or borrow from supportive family and friends to get off the ground.
Many businesses start with next to nothing. I started my first business, Sales Coaching Solutions, with a few business cards, a website and a good idea. After that is was about understanding my target market and developing my unique selling point.
I’ll bet there are one or two thoughts that keep on going round your head. Niggling doubts that focus on your weaknesses. The things you’re worried will show you up as a fraud, as someone who is just playing at being an entrepreneur. Some of that’s down to Impostor Syndrome, but some it is about taking practical steps to conquer those doubts.
When I started Sales Coaching Solutions I was working part time, 2 days a week. My children were 8 and 9, so I was dropping off and picking up from school. That meant I was working with my early clients during school hours on my days off. That gave me space, but it was horribly lonely until I found a coach.
I met her by chance at the school gates (our kids went to the same school). She was a business consultant, but she helped me for free because she believed in me. At times she believed in me more than I did. It’s so important to have people like that in your corner to lift you up and keep you going when it gets rough. Because it does get rough.
She was a huge help when I was making that decision to go all in and quit my job. My husband thought I was probably just playing at it and to be fair he was probably right. I listened to my friends too. Some were positive, others thought I was wasting my time. I had a decent job. Why was I risking that to start a business? But my gut feeling was that I could make it work.
Build a team
When I did commit everything to my business, I hired people, more people. Even when I was working the 5-9, I still employed a part time virtual assistant to do all the things I’m not so good at.
If the source of your self-doubts are a lack of skill, knowledge or experience around a certain aspect of business, you have two choices.
- Develop yourself – take a course, get a coach, read some books or articles.
- Hire people to do those tasks.
I know what I’m good at and I hire other people to do everything else. In order to grow you can’t do it all yourself, but it’s important to hire the right people. They need to be your no.1 fan, but they also need to challenge you every day.
Avoiding the saturation point
There’s a limit to what you can do in the 5-9 world. There will come a point – a saturation point – where you have to either throw everything you’ve got into the business, or just accept it’s a hobby that earns you a few extra pennies.
If you work full time, or even part time, there are limits. You only have a few hours after work in the evening, and at the weekend, to develop your business. You’ve got to make time to have a life as well. Time to spend with your family and friends, time to chill out and look after yourself. Many people don’t realise this until it’s too late.
Before you start to see the signs of saturation – extreme tiredness, irritability, maybe even depression – it’s time to make the call. You have to look at how much time you are putting in to the business and be honest about whether you’re making any money.
Have you got a predictable pipeline? Or are you just randomly, picking up clients here and there?
However, you also need to reflect on whether it’s your day job that’s holding back your business.If you had more time to spend on marketing and sales, could you make a go of it? Click To Tweet
- am I working smart here?
- have I done enough research to understand the market and my place in it?
- what is the potential of this market and what would I need to do to realise it?
- have I got the right people around me and the right skills and motivation to make this work?
Then and only then can you make an informed decision about making the leap.