Ask Felicia Joy: How to Build a Low Risk Business by Starting Part-Time
It is a commonly accepted premise that entrepreneurship is risky. This idea is based on an old approach to entrepreneurship. The kind where people risked their savings, health insurance and nearly everything they had to become a successful business owner, and for most people it simply didn’t work out.
Things have changed.
We know a lot more about what can make a business successful and what can make it fail. Plus, the rise of the Internet has made it possible for people to become hybrid entrepreneurs, who work a full-time job, earning a steady paycheck, and build their business part-time — often handling business matters before work, on lunch break, and after work on a laptop or smart phone. Hybrid entrepreneurship is the smartest way for most people to get started in business today.
The three biggest mistakes people make — and risks they take — in business are spending too much money; starting a business that doesn’t take off because it doesn’t connect with a market of people who will consistently buy; and, not creating a predictable “paycheck” for their business through a focused sales and marketing strategy (I’ll explain how to do that in my next column).
Each of these issues is easily addressed with the right insight and by starting as a hybrid entrepreneur:
Eliminate or reduce every expense
The goal of business is to make money, not spend it, but it is tempting to spend too much in the beginning on things you think you need because emotionally it feels like that makes your business better. You may believe you need a fancy website, the best business card and business equipment that is bright, shiny and new.
More than anything you need paying customers so spend only what you absolutely must spend to present yourself and your business in a professional manner to potential customers so you can start generating business income.
You can buy a website domain for $10 or less and have it forward to a free blog. You can order business cards for free or up to $25 online and they will be decent enough to do business. (By the way, don’t explain to people when handing out your card that it’s a starter card — it shows a lack of confidence). And you can set up a phone number (even a vanity number) for free and have it forward to your cell phone to establish a business phone number.
If you’re starting a product business negotiate the cost of design, manufacturing or acquiring the product and ask for payment terms that give you time to sell the product before you have to pay. If you’re opening a storefront buy your fixtures and equipment used. And reinvest and save all the revenue you make for the first six to 12 months by working for your business for free. As a hybrid entrepreneur you can do that because you’re getting a check from your day job.
Look forward to PMS — the good kind
The most important mission at the start of your business is to prove your business model by achieving what I call PMS: product market sync. This is when your product (whatever goods or services you sell) syncs, or connects, with the right customers; the people who will buy from you consistently. You need to start the business with a target market. But sometimes your target market may not be who you thought it was and you need to figure this out right away.
For example, I have a friend who created a line of knee-high, Hot socks for women. Naturally she thought women were her target market. But she actually found that men are her target market because they buy the socks like crazy for their girlfriends or wives birthdays and holiday gifts. It’s an easy gift, very affordable and they can be guaranteed that the product will fit.
As a hybrid entrepreneur, you’re not betting your whole life on an unproven business that hasn’t achieved PMS. You have time to tweak the variables that are going to make your business work — and you don’t have to risk your livelihood to do so. My friend who sells the Hot socks is successful now but if she had been depending on her business in the early days before she learned precisely who would respond to her product then she would have probably gone out of business or experienced severe financial stress.
Build predictable profits
Once you’re really clear about your target market then it’s time to create a focused strategy that will bring you regular and repeat sales. You achieve this by creating a well-oiled sales, marketing and customer service machine.
As a hybrid entrepreneur, you can allow yourself the time and space to put systems in place that will enable your business to thrive and expand to the size you want it versus being on a constant money chase and not paying attention to the patterns in your business that you could use to master marketing.
Best of both worlds
Entrepreneurship does not have to be high-risk. Hybrid entrepreneurship allows you to take a thoughtful, strategic approach to business success without risking your livelihood. I started a business part-time in 2007, transitioned from corporate America in 2008 and have been growing my business ever since. And there are many examples of other successful hybrid entrepreneurs. Lisa Price, founder of Carol’s Daughter, was a hybrid entrepreneur for six years before transitioning into full-time entrepreneurship.
Whether a part-time or full-time entrepreneur, you have to be focused and you must be committed, but you don’t have to bet the farm.
Teleseminar starts July 25, 2011: Learn more about Felicia’s upcoming 6-week teleseminar on how to become a hybrid entrepreneur. Take the guesswork out of it. Learn her proven strategies and approach for how to start your own business on a part-time basis (20 hours per week) and build it to profits with little capital and low risk while you keep your full-time job and paycheck. Or, if you’ve started your business part-time and are pouring money into it, learn how to reverse that pattern and start making money from it.
Felicia Joy is a nationally recognized entrepreneur who created $50 million in value for the various organizations and companies she served in corporate America before launching her business enterprise. She is the author of Hybrid Entrepreneurship: How the Middle Class Can Beat the Slow Economy, Earn Extra Income and Reclaim the American Dream and is often called on to discuss the ins and outs of entrepreneurial success. She has appeared on CNN, FOX and in other national press. Felicia operates Ms. CEO Inc., a company that produces media and events to help women entrepreneurs achieve more success, faster — as well as Joy Group International, LLC, a business development and consulting firm. Follow her at www.twitter.com/feliciajoy.
Note: All advice offered in this column is for general information only. Felicia Joy and The Atlanta Post are indemnified against any and all related claims. Always seek the advice of licensed professionals before making business decisions.