think a lot of people have trouble actually getting started on the road to entrepreneurship because it can seem so daunting to go from nothing to fully supporting yourself and your family. People think that you have to make the leap in one go and the fear of trying that paralyzes them.
So I have put together a list of steps that breaks the process down into something more manageable to (hopefully) help you on the path to work freedom.
1a. Have a job that covers expenses while still not requiring more than 40-50 hours per week
While this may seem counter-intuitive, it is crucial that you can keep the lights on without having to find a secondary source of income and that you have enough time left over to put towards a small venture.
1b. Save up enough money to at least cover two months of expenses
It is important that you are not desperate for sales or strapped for immediate cash. Desperate breeds stupid.
Summary: have a job, pay bills, save money
2. Do a self-check/self-discovery to quantify your passions and skills
This is not referring to some mystical crap, it is simply identifying what you enjoy, what you are knowledgeable about, where you have a network, what you have skills in, what you hate, what you absolutely could not see yourself doing etc. This will help guide you towards an industry or venture that you already have a leg up in simply based on your experience. It will also help steer you away from terrible ideas that seem good. Simple example, if you are a terrible writer and hate being on a computer, you probably should not be a free-lance writer. Even though the gig sounds good, it does not fit your passion and skill set.
Summary: find out what you like and what you are good at
3. Identify a cheap way to easily start generating a small amount of cash-flow in your excess time, without working for someone else
The key words here are “cheap”, “small”, “excess time” and “without working for someone else”. Whatever you decide to do in this step will probably not end up being your full-time venture, it is simply a means to get your feet wet being your own boss as well as create a “Future Business Fund.” Some potential ideas are: mowing lawns, cleaning gutters, flipping furniture, tutoring, doing DIY and re-selling, making cheap websites for local business, doing business photography etc. **What** it is does not really matter but it needs to start generating income on day one and it should probably be something that has the potential to generate more than $1000 extra a month (not that much money folks). If you were mowing lawns at $50 a lawn, you would only need ten bi-weekly customers to make this. Note that you may need to buy some initial equipment to do your job more effectively. I would advise that you do not spend more than about $3,000 on initial equipment and that you do not take a out a loan. Instead borrow from yourself with a plan to pay yourself back from half of your profits each month.
Summary: come up with a day one income-generating business idea
4a. Slowly grow, expand and iterate on the idea(s) from step 3 until you have $10,000-$15,000 in your Future Business Fund and an efficient process.
The timeframe on this depends on how much time you invest in step 3 business and how successful it is. Ideally you would be able to generate $10k-$15k in 6-9 months give or take. Patience is key here, you are learning to manage your time effectively and you have the opportunity to learn how to do basic accounting (keep your books or pay someone to help you like a friend or SO), keep a basic customer database, do effective customer service etc. All of these will be immensely beneficial in whatever venture you decide to do full-time and it will help you stay organized.
4b. Be thinking about an exit or expansion strategy for your idea from step 3
It very well may be that you find your idea to be lucrative and something you enjoy and want to expand it, if not you need to be thinking about an exit strategy. Either option is fine but you should be forming a plan for the next step. If the idea is expansion, it may be a good idea to go ahead and incorporate your business and look to hire a helper part-time (two people mow more lawns than one). If your plan is to exit or pivot, begin looking for a way to sell your small business. This is where good book-keeping and a customer list really pays dividends. Work out your your projected 12-month revenue and then multiply that number by 0.75 to get a ball-park sell price. For example if you forecast that you would generate $20,000 in sales over the next 12 months your target sell price would be somewhere in the $15,000 zone. Remember that the goal here isn’t to get the best price for you created business, it is simply to off-load it and make something additional for your efforts. Think of it like a severance pay-check. Another option is to work to automate your idea from step 3 for a reduction in profits but freeing up your time.
Summary: grow your business to $10k-$15k and decide whether to expand or sell
5. Begin using your Future Business Fund to either expand your business or start your new venture
If you opted to expand, you should now have the capital to add something small (an additional mower and a part-time worker for example). If you opted for starting something new, you should have enough capital for the pilot round of whatever you decide to do. If it is a subscription product service you should have enough to buy your first round of inventory, set up a decent looking website, do some paid promotion etc. Regardless, of what you decide to do as your new venture, remember to start small and work to deliver something quality over rushing to get the job done, it will pay incredible dividends in the long run. Note that your expansion or new venture should be able to generate enough income for you to eventually make the switch to working in your venture full time.
Summary: expand or grow your old/new business
6. Using your business to become the man/woman
The next goal is freeing yourself from your regular job to focus on your business as your full-time gig. The easiest way to figure this out is to have a monthly budget (good practice anyway) to determine exactly how much you need to make per month in order to sustain yourself while still being able to re-invest in your business growth. Regardless of what idea you end up pursuing you should be able to reasonably reach this point within 6-12 months or so give or take.
Summary: quit 9-5 and be your own boss
7. and beyond.
Continue to scale until you are Uber successful (pun intended) and rule the world
Summary: you’re just lazy and should not be an entrepreneur
– You have started your potentially two business
– You did not have to go into debt to do it
– You have quit your job and are working for yourself
– It did not take you that long. 1-2.5 years may seem like a lifetime but in the scheme of things it is nothing. If you started today and are 27 (or 17) you could reasonably expect to be running your own full-time gig before you are 30 (or 20)
Remember that there is no replacement for hard work, sweat, and blood. You do have to put in the hours, you do have to sacrifice, you do have to be willing to put yourself out there, but it’s worth it.
Go out and win bootstrappers.