A study conducted by the folks at Under30CEO revealed that when it comes to the financial upstart of many small businesses, the majority of young entrepreneurs are self-funding their startups. 61% are jumping on the bootstrapping wagon, while less than 15% cited major outside funding sources like venture capitalists, angel investors or winnings from small business pitch competitions. What does this mean? We’re a generation of resourceful thinkers and financially-savvy change makers, finding ways to make our entrepreneurial dreams happen, and on our own terms and budgets.
Sounds so romantic, doesn’t it? While being an entrepreneur can be exhilarating and exciting, don’t be fooled by the glamorous overtone. It’s a true test of your creative, intellectual and personal limits. Yet there are more and more young professionals leaving the ranks of the 9-to-5 to start a small business. And one thing that many of them have in common? For many it begins as a part-time side venture that we continue to nurture, build and refine while we pull in our full time salaries for months or even years, so that one day when we’re ready to take the leap, we can do so with complete confidence and a solid foundation for success.
THE REALITY OF THE WEEKEND ENTREPRENEUR
Just how does one balance building a business with working your typical 40 to 60 hour workweek? I like to think it’s driven largely by passion, motivation, and perhaps an absolute refusal to settle for less than what we feel we’re capable of achieving on a personal and professional level. Welcome to the phenomena that plagues most of Gen Y, the consistent need to ask ourselves, “What else can I be doing instead?” We’re an incredibly ambitious and driven generation, boasting multiple members who by age 30 have changed the face of technology and culture as we know it. And for the rest of us who are satisfied creating something that simply allows us to make a fulfilling living doing the work we love, the real reward is in bringing that vision to fruition, whether we do it in 6 months or 6 years.
The first phase of starting my own business was saving up enough money to move onto phase 2, which was trading in my full time job in IT for a part-time administrative job at a small design agency in NYC. Certainly not my dream job to sift through resumes and balance the bookkeeping, but it was just enough supplementary income to cover the bills without depleting my savings, and it freed up a good 3 days per week to focus solely on building my business. But it was incredibly important that I looked at having that part-time job not as a diversion from my goal, but as a stepping stone bringing me closer toward it.
Even the business moguls of the world like Donald Trump and Robert Kiyosaki talk about the importance of keeping a part-time job, or some other supplemental income source during the startup process (I’ll let you read “Midas Touch” on your own). Smart entrepreneurs understand that starting and building a business is a process that can take several years to truly prosper into a profitable and sustainable venture. If you’re not willing or able to ride out the 12-36 month startup phase without a salary, it’s best to keep your income options open and diversified. What does that mean exactly?
DIVERSIFYING YOUR INCOME STREAMS IS THE WAY TO GO
Careers no longer have to be limited to one’s primary money-making occupation. We can use our talents to cater to different audiences and provide a variety of services and products to make a living. We can expand into new side opportunities to not only maximize our earning potential and build a career safety net, but continue to build new skills that may open up additional doors for future opportunities.
This is certainly a great strategy for jobseekers, and an even better strategy for budding entrepreneurs. Whether you take on a part-time job while working on your business, or you stay in your full time career for awhile, you’re essentially creating multiple income streams that can help support you through the startup phase. This not only serves as a great professional network-builder, a way to start tapping into your target market, but it also lessens the financial risk and stress of trying to attain immediate profitability so you can survive. Believe you me, there is enough stress involved with running a business, and the more you do to lessen the financial burden, the more you will be able to focus on actually growing your business to a sustainable point.
STARTING UP TAKES A WHILE. AND THAT’S OKAY.
During my first year in business, I was lucky in that I had a consistently profitable first 9 months. But eventually my monthly revenues became erratic as I hit various seasonal points like summer vacations and the holidays. Those who had been in business for themselves much longer than I had, and who had more of a basis for comparison, reassured me that this was simply the way of most small business, and that you just have to ride it out. In many cases, no particular month is consistent year-over-year; there are no peak or off-peak seasons in my consulting industry, and as an entrepreneur you simply have to prepare yourself for a continual revenue roller coaster.
The good thing about taking time to establish your business on a part-time basis and not having to worry about your profits while doing so is that you can start to recognize trends in terms of what works, what doesn’t work, what seems to resonate best with your customers (they really love that holiday 40% off promotion!), and get a sense of what your annual salary could potentially look like once you make the full time leap. And having those projections handy as you continue to grow and evolve will make plotting out your marketing, financial and growth strategies much easier year-over-year.
I understand from experience the urge to make that full time leap, to feel like you’re finally reinventing yourself and escaping the restrictive chains of the cubicle world. But the smarter you are about starting your business in the beginning, the better the chance that it will be successful and sustainable in the long-run. Much like a building, it’s a gradual construction process, with one of the most critical parts being the solid foundation that holds it up. Whatever brand-building timeline equates to a solid financial and strategic foundation for your business is the right strategy for you, and that may be a slow and steady part-time start.
It’s far too easy to start looking around and comparing yourself to your entrepreneurial peers, trying to decipher their secret success recipe. But always remember that your business is unique, with its own unique challenges, characteristics, brand personality and potential. And while it takes time to build a well-rounded brand that uniquely positions your business within your target market, that’s what will ultimately make your business (an you) a thriving success!