If you’re like many hustlers, you probably have a million ideas in your head for what you might want to start on the side. Whether it’s a food truck or a eCommerce site or a kiosk in the mall, your head is full of ideas to the point that it might actually be paralyzing you.
The key to wrangling your thoughts is to start plucking these ideas out of your head and putting them on paper. Then you need to analyze each one and decide whether it’s something you want to pursue or if it’s something you believe will not work.
The goal of this exercise is to go through your list of ideas and settle on one that you think gives you the best chance for success. Then execute it, as cheaply and quickly as possible, to find out if it will work. If it does, fantastic! If it doesn’t, move onto the next one best opportunity.
So how do you analyze these opportunities?
Understand what you want out of it. Do you want to build a business on the side that you can pursue full-time at some point? Or do you want to find a fun hobby that can earn a little extra income? It’s important you understand what you want out of a hustle because it can determine whether or not you achieve success.
If you want a full fledgling business, the requirements are far stricter than if you only want a little hobby income. A hobby can make a hundred bucks a month and still be fun. A business can’t survive on that little and neither can you.
Make a sale. I have a friend who wanted to start a cookie business. She had grand plans to rent commercial kitchen space, set up a full fledged ecommerce website that let people order cookies, and pay for a beautifully designed website. How did she get this idea? She loved baking cookies and her friends and family loved the cookies, but would they pay for them? She didn’t know. So rather than spend thousands up front, she baked some cookies and began selling them.
People bought them and wanted more. Before her first sale, she didn’t know if people were willing to pay for her cookies. She used the funds to make more cookies and sold those. Eventually she got enough cash to pay for the website and the rents on commercial kitchen space to increase her baking capacity. Instead of going into debt, she’s self-funded through cash. It’s not a full-time business (that’s not her goal) but it’s a nice side hustle that scratches the baking itch.
Does the business scale? My sister started a jewelry business in which she would manufacture bracelets, necklaces, and earrings using Swarovski crystals. They were beautiful, all hand made, and people loved them. She would go to various events, set up her table, and sell hundreds of dollars of jewelry. She’d sell her unique creations on Etsy. It provided a nice side income and it was a creative outlet.
The problem was that it was a difficult business to scale. She had to make all the jewelry herself and it wasn’t something she felt comfortable hiring someone else to do. It’s certainly an option but not something that lends itself to scaling easily.
Will you pursue it when it’s “work.” The dream is to find a cash cow and you could argue selling jewelry is a cash cow – the margins are great. But there are aspects of every business that aren’t fun and so you need to consider what those are before you jump in. Will you be able to persevere when the passion becomes work?
My sister loved making jewelry, but she had to go to the jewelry events and sit at a table for hours. Sometimes the venues were hot. She had to look out for thieves. She had to pack and unpack her stuff, drive long distances, and inventory everything afterwards. She had to organize her paperwork for taxes. The ratio of “fun” to “boring” wasn’t there for her – is it there for your hustle?
What is your exit strategy? Every business will eventually have an exit. For some, that exit is the sale of the business. For others, it’s shutting down. When thinking about which business to start, we have to assume you’ll eventually sell it, even if it’s a lifestyle business you run for decades. Consider who might be potential buyers and what they value in a business like yours.
Starting a business is exciting. Thinking about businesses is equally exciting but not acting on it, and living within the dream, is a dangerous habit. Break that habit by trying to execute on a few ideas until you hit on one you know will work.
About the Author: Jim Wang was the founder of personal finance blog Bargaineering and currently shares his thoughts about how to make money blogging at Microblogger.com.