In the US, approximately 543,000 new people start a business each month. However, even more shut down. That’s an incredibly insightful statistic, revealing much about the way our culture has evolved in thinking of entrepreneurship and what it really takes to start a business.
As of 2011, there were over 28 million small businesses in the US, with more than 22 million of those self-employed with no additional payroll or employees. That’s a whole lot of solopreneurs striking out to start a business and make their dreams come true.
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The sad thing is, the majority of entrepreneurs attempting to start a business are destined for failure. Even some of the world’s top entrepreneurs failed miserably when setting out to start a business for the first time.
It’s not because they aren’t smart, hard-working, or well-connected. It’s because they make just one (or more) very bad decisions right at the beginning when they’re getting started. If you haven’t taken the time to discover your strengths, or you haven’t gone down the path of entrepreneurship before, it’s honestly hard not to make these mistakes.
If you’re looking for inspiration on which type of side business you should start, check out my picks for the 101 Best Side Businesses You Can Start While Working Full-Time.
This infographic and post explores those bad decisions (I’ve made most of them myself), provides you with detailed insights on how you can avoid all of them, and gives you the tools to start your business and successfully grow it before you quit your 9-5 job.
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I've started 4 businesses, all of which began while I was either a full-time student or had a full-time job after college, working 50+ hours/wk. With one of them, I quit my day job a little too early and I learned a lot from that experience.
That single choice created a longer term effect on how quickly we were able to scale the business due to cash flow constraints. It ended with me having to move back in with my parents. I'll come back to this later.
For now, let's start with this. Don't quit your job before you start a business.
Let me elaborate, don't quit the job that serves as your primary source of income (i.e. how you can afford to live, eat, and have fun) without already having steady revenue and traction with your new project. Even if you have a nice cushion of savings set aside and plan on outsourcing most of your work or using sophisticated online business tools, that's just too much pressure for most people. The kind of pressure you don't want when you need to be mentally at your best.
If you want even more resources to help get your business off the ground quickly without wasting time and money, check out my recommendations for the 76 Best Business Books for Entrepreneurs.
Now, to help better illustrate these steps to starting a business while working a full-time job, I teamed up with Brian Downard at BD Ventures to bring you this awesome infographic.
Want to share this infographic on your blog? Email me at firstname.lastname@example.org and I'll get you set up.
10 Steps on How to Start a Business While Working a Full-Time Job.
1. Make the Commitment.
First and foremost, you need to ask yourself how bad you want this.
This will get difficult, it will strain your relationships, and you'll continually be forced to make tough decisions. In fact, if starting a business while working a full-time job is ever easy, you're probably not doing everything you should be doing or you're not trying hard enough. Growing a side business will be an incredibly challenging experience. It should be.
You need a set of ground rules in order to get started. Nothing worth achieving in life comes easy. Truly accept that and you are well on your way to becoming a successful entrepreneur. Are you ready to make meaningful sacrifices in order to turn your dream into a profitable business?
If so, then put your money where your mouth is. Write down a list of all the activities and commitments you have in your life with the amounts of time you devote to each during your week. Take note of the ones you can afford to lessen your involvement with, and let them know you are stepping back a bit to focus on a new project that means a lot to you. The more time you can free up, the quicker you'll be able to start seeing results.
Cut down on the easiest areas that have the least amount of friction first. This will vary for everyone, but it's probably time spent watching TV, playing video games, or surfing Facebook and Instagram.
The number of hours you sleep each night is often the first thing to get chopped down a bit. That's ok (and encouraged) as long as you're getting enough sleep to be on your A-game for everything that's important in your life. I call this opportunity management.
Here's an awesome article from LifeHacker on how to optimize your sleep schedule and get less of it. Mine is about 6.5 to 7.5 hrs/night, but I have friends that function well with less than 5 hrs/night. That figure is different for everyone, so test into finding your lowest sustainable number and be disciplined about sticking to it.
Know which time of day you're mentally at your best and make that the time you spend on starting your business. For me, both my critical thinking ability and creativity become pretty worthless after 10:00pm, so I prefer to get up at 4:15am and start early on my side business before heading off to work.
Be selfish and give your passion project the best part of your day.
2. Inventory Your Strengths and Interests.
Which skill sets are required to start your business?
Secondly, are you genuinely interested in this business concept or are you simply pursuing a money-making opportunity that doesn't have a deeper meaning?
I spent months putting together and rigorously testing my Skill Assessment Guide that I'm giving away to everyone who reads this post. You'll list out every asset & skill your business idea requires and map those needs to what you can or cannot do for yourself right now. It'll guide you toward discovering your entrepreneurial strengths and point you in the right direction moving forward.
[Free Skill Assessment Guide Download: Get it here]
You likely possess at least some of the necessary skills to make your side business happen, but if you don't, you're now faced with a tough decision. Spend time learning a new skill or outsource to someone else who can help. There's no right or wrong answer, it depends solely upon your spending threshold, urgency, and desire (or lack thereof) to learn new skills and abilities.
Be honest with yourself. What are you good at? What are you great at? Where is there room for improvement? If you want to be successful in starting your business quickly, you need to maximize the time you spend on doing what you're great at, and work to outsource your weaknesses.
For me, I know that I can tell a good story through a blog post, email, or on social media and drive in web traffic. That's my basis for connecting with people here, so I focus on that ability. That's largely why I chose to start a freelance business as a freelance content marketer on the side of my day job--I already had the skills locked down.
I also know that I couldn't code a full website on my own to save my life. That's why I use WordPress with my simple projects and freelance out help from more talented experts for the things that require attention to detail & in-depth customization.
Here's a look at the first website I made back in 2009 as a Sophomore in college, try not to laugh too hard.
For the sake of keeping startup costs as low as possible, you're realistically going to need to learn some specific skills in order to pull off starting your own business. You should, however be constantly looking for and evaluating opportunities to outsource your weaknesses, if possible (more on that in #7).
3. Validate Your Business Idea Before Building Something Nobody Wants.
In a recent intensive study of 101 failed startups, published via Fortune Magazine on why startups fail according to their founders, the #1 reason most businesses fail is a lack of market need for their product (cited by over 42% of the failed companies). This really highlights the need to fully validate your idea and get honest feedback from potential customers before you start building, creating, and spending money.
In my detailed breakdown of why my first business failed, I chronicle exactly How to Create a Product Nobody Wants and Lose $6,537 in the process.
It's human nature to think that we're right and that our ideas are always amazing, hence the number of people who start a business each year. As entrepreneurs, we have a lot of pride when it comes to our work. Unfortunately, our business concepts and product ideas are often not fully thought out, useful, or even properly researched.
Take the example of Coors Rocky Mountain Spring Water. This product line made sense from a manufacturer's point of view because they could utilize existing production capabilities, distribution networks, and strategic competencies.
However, this project from Coors flopped big time because they had already established their brand as an alcoholic beverage company for decades. The product was packaged similarly to their beer, and instead it just caused more consumer confusion than anything. They quickly pulled it from the shelves. If they would've fully vetted this idea and spent the time to get a lot of outside feedback, the results would have pointed toward this being a loser.
There's an art and a science to objectively validating your business idea. It's easy to take off with an exciting new project in mind and work inside of your little bubble without ever involving anyone else for feedback during the process. When you emerge on the other side, you would be lucky to have created something that is received well in the marketplace (or even has a market).
Keep that excitement you have. Channel it into a positive, calculated direction, and intelligently test your way into assumptions about your potential new business before jumping aboard and setting sail.
Nobody likes to fail, but the fear of failure is what's keeping you from achieving your goals.
I've failed plenty of times. Did I enjoy any of it? Of course not. But I learned a ton from every one of those experiences. They've been arguably better lessons than I've learned from my successes. What's important is that I'm no longer afraid to land flat on my face with a new project, when it's in the testing phase.
My first product, the iStash is a classic example of not truly validating a product idea before spending a ton of time and money on bringing it to life. Here's a picture, and you can read more about this colossal f* up here: How to Create a Product Nobody Wants and Lose $6,537.
Now, I test the hell out of my business ideas before jumping in fully.
When I give a new business idea a few thorough tests, gather a statistically significant amount of objective feedback, and the results strongly point toward "Holy shit, don't do this one!" I by no means feel like a failure. I just learned early on that I need to either seriously alter my approach, or at the very worst, I just saved myself a ton of time, effort, and money. Don't be afraid to move onto the next one.
One of my favorite articles on this topic is titled "Why Quitting is for Winners." It explores an an in-depth, systematic approach by Productivity Expert, Bassam Tarazi, in which he advocates actively abandoning what doesn't work, and only focusing on the projects that map to positive results.
In my upcoming Online Course, How to Start a Business While Working a Full-Time Job, I take a deep dive into how to easily validate your business idea before spending a ton of time working on it. You can join my Waiting List today.
4. Create Your Competitive Advantage (and What Makes Your Business Unique).
A competitive advantage is defined as your unique advantage that allows you as a business to generate greater sales or margins, and/or acquire & retain more customers than competitors. It's what makes your business, your business.
This can be in the form of your cost structure, product offering, distribution network, customer support, or elsewhere in the business. If you're going to start a business, it needs to be unique in some (ideally, several) ways.
An example of a very powerful competitive advantage would be owning the exclusive rights to a brand new microprocessing chip that Apple is 100% going to need to include in every iPhone they build moving forward. Now, something like this is very rare. Apple hires some of the best & brightest in the world to cut down on the possibility of things like this happening, and they work with outside suppliers who can guarantee these things as well.
Your strongest competitive advantage may be your own personal skill set (your unique experience, storytelling ability, or industry knowledge), strategic relationships (you're best friends with the CEO of a potential first client who loves the first proof-of-concept for your product), or your personal brand that you've built. The strength of your competitive advantage will greatly affect your early results in learning to sell your product or service.
I challenge you to write down what it is that'll be your competitive advantage.
If you don't know yet, that's ok. This activity is meant to kickstart your entrepreneurial thinking and get you headed down the right path. Defining and continually building the strength of your competitive advantage(s) is an essential step in the process of starting, growing, and staying in business.
Most importantly, your advantage(s) will be built into everything you do. Your product, service, and outward messaging will all tell the world why they need your product or service. Developing your messaging strategy deserves its own post (coming soon).
5. Set Detailed, Measurable, and Realistic Goals.
Now that you're developing a better understanding of your future business and what makes it unique, it's time to start making the real work happen.
Without setting attainable goals and realistic deadlines for yourself, you're going to spend a lot of time spinning your wheels. It's hard to get anywhere if you don't know exactly where you're going. In my experience, it works best to set daily, weekly, and monthly goals for myself. It helps me to stick with both the short term and long term objectives.
In the beginning, your daily goals are most likely small wins or to-do list type of items. I use the iPhone & Mac App, ToDo to handle run my daily schedule and track the small wins for my day. It allows you to physically check things off your list, which I really like - that has a strong psychological affect for me. Below is a screenshot.
Weekly goals are the more significant wins that likely can't be completed in just one morning or evening's worth of work. An example of a weekly goal would be finishing 2 solid blog posts designed to drive in traffic to check out your brand new product. Since there are a lot of different pieces that can go into the creation of a great blog post (images, links, statistics, free content downloads), this is a realistic weekly goal.
Monthly goals start to become big picture-focused. If you're trying to build pre-launch buzz for your product or service, a month 1 goal could be getting your first 100 email subscribers that are interested in learning more once you launch. Month 2 could then be to double or triple that list size, or to get your first working prototypes ready for user testing. This will vary greatly depending upon the type of business you're in.
The further out you start planning your goals and deadlines, the more difficult it will become to make them realistic. You start to depend on assumptions of progress in certain areas, or of things outside your control coming together by specific dates. It requires some flexibility (don't allow yourself to get overly stressed). Nevertheless, having these defined goals and dates set is what's going to keep you on track and moving forward.
6. Build a Road Map to Launch Date and Beyond.
How are you going to reach your goals? It's great to have a ton of awesome sounding milestones, but if you have no real plan on how you're going to hit those targets (and when), then you're really just hoping and wishing rather than putting in the hard work that's needed to create a business.
It's one thing to set your goals, and yet an entirely different activity to map out exactly how you're going to get to point B, C, D, and beyond. If you find yourself questioning how to make it to your milestones (this is natural - everyone experiences this feeling at some point), take the initiative to seek outside advice from friends, family, or personal mentors.
Be proactive. Nobody can do this for you, but you won't be able to do it all on your own, either. Your ability to problem-solve and navigate around your obstacles will determine the level of success with your business.
Here's an example of mapping the route to achieving one my goals from #5 above. My daily goal on Monday is to finish all of the copy content for a blog post I'm planning on launching. The weekly goal that this maps to is pulling together the entire blog post, including all of the other assets like a free downloadable resource for anyone reading, beautifully designed images, links, and a well thought out keyword strategy that will make this post truly awesome.
Moving up to the monthly level, launching that blog post and seeding it out to friends, family, mentors, and the rest of my network is designed to get 100 initial supporters committed to buying my product once it has been fully produced. This is a proof-of-concept and tells me that there's a desire for that product in the marketplace. It's all very calculated and aligned.
Plan as best as you can for the potential of press spikes, going viral, and needing to dedicate all of your free time to meeting demand if your product takes off all of a sudden.. it can happen!
7. Outsource Your Weaknesses.
This one is all about focus. Look for opportunities to outsource every possible part of your business creation that you can. Obviously, you don't want someone else planning your goals, roadmap, or telling you 100% what your product or service should look like.
The point here is that you need to be doing what you do best. While it would be great if you could code your own website to test out your digital service idea, if you don't already command a knowledge of developing, you're looking at a few months of dedicated learning time just to get to the point where you'll be able to understand the basics.
I'm a huge advocate of utilizing skilled freelancers to help speed up and streamline my business processes. Websites like oDesk, Elance, PeoplePerHour, and Fiverr have become integral (and affordable) resources for me. If you want to learn more about leveraging these sites and which tasks you can (and should) be outsourcing today, check out my free Skill Assessment Guide.
An alternative to freelancers would be bringing in a partner, full-time employee, or part-time contractor who can complement your skills and abilities. When I got started with my last business, Case Escape, my partner Matt was an awesome complement to my abilities. He possessed a much stronger ability for personal selling than myself. Given the nature of that product, it took a lot of time on the phone and in-person meeting with potential clients. Because he was talented at this aspect of the business, it freed me up to work on scaling our digital content and bringing in targeted sales leads.
8. Actively Seek Objective Feedback.
Your goal is to build a product or service that provides value to people. It does no good to build something that nobody wants. One of the biggest luxuries you're afforded by deciding to start a business and test the viability of your new company before leaving your day job, is that you can take the time you need to get ample feedback.
This is a crucial step in evaluating any side business, because you have such a limited amount of free time to work with, that you don't want to waste it on something without a serious growth potential.
It's important that you seek unbiased, outside feedback to make sure you're building something that's actually marketable. Do this from day one and never stop. Your mom and close friends likely do not constitute 'unbiased' feedback.
To find your early feedback group, you want to target people that you know will give you only an honest opinion. Reach out to them personally. My go-to group consists of a handful of close entrepreneurial friends and a few mentors I regularly keep in touch with. From here, you can start to widen your scope for feedback and begin incorporating Facebook, LinkedIn Groups, Reddit, ProductHunt, GrowthHackers, and your local Starbucks.
My favorite tool to gather feedback (other than in-person conversations) is Survey Monkey, plus it's free.
Be careful to only share what you're ready to show the world, and always have a strategy when you post somewhere or reach out to someone. You may just wake up one morning and see your product on the homepage of your favorite website (that was a hell of a surprise).
I've found the most effective way to frame asking for feedback is to simply ask for help. People love helping others out, and if your request is kind & genuine, most people are willing to give a surprising amount of their time to help you in pursuing something you're clearly passionate about. Make their opinion feel extremely valued, and really reinforce just how much a few minutes of their time would mean to you.
9. Don't Blur the Line Between Work & Your Business.
It may seem tempting to create a "better version of Your Company ," but unless your employer missed some major lessons along the way, your contract probably clearly stipulates that you've agreed not to do, just that. Plus, that's just bad practice and it can (will) destroy a lot of relationships that could instead be very helpful for you one day.
I go into way more detail in my post about how to avoid getting fired (and sued) while starting a side business.
Know and fully understand the agreements you signed when you started your job. If you're under any non-compete clauses, assignment of invention clauses, or non-disclosure agreements, then it's best to consult your attorney for personalized advice on this matter. I recommend doing this no matter what.
Print out every contract you've signed and take it in to have it reviewed, it's definitely worth your time and resources. Fully disclose your proposed business idea, and your attorney will give you their opinion on if you're violating any of your agreements. Ask for guidance on how to stay safe moving forward.
It may seem obvious, but don't work on your project during company time. You'll also need to refrain from using company resources on your personal project, no matter how tempting that may be. This includes not using your work computer, any online tools, software, subscriptions, notebooks, or seeking the assistance of other employees.
If a link is ever traced connecting your personal project to anything directly related to your job, you expose yourself to potential legal action. Just don't do it, and you'll have nothing to worry about.
You're also probably very friendly with some of your co-workers and one of them may even be your business partner in this new venture. It may seem natural to want to ask your co-workers or your boss what they think of this new project that you're working on, but I recommend treading very lightly on this subject.
10. Reach Critical Mass Before Quitting Your Job.
I can't emphasize this one enough. Don't quit your job right away.
"But I could get so much more done and get this launched next week if I could just dedicate all of my time to it, right?!" Not quite. Even if you could, you really don't want to. Here's why.
Don't get me wrong, I'm an advocate of only doing things that I'm passionate about, and doing those things with 100% of my energy. That being said, I'm willing to take my time in fully vetting an idea, discovering my target market, and testing that idea with them, before making the solo decision that "this must be great!"
Having the time to continue thinking things through and seeking the advice of others will greatly benefit your new business, rather than hurrying through everything with tunnel vision like you're in the middle of a giant adrenaline rush.. as fun as that sounds.
Even more importantly, unless you're working on a high-growth startup and can secure investor funding (or you're able to self-fund), you're realistically going to need some form of sustainable income before your new project is able to be that sole source of sustenance for you. This is where your job comes in for now—just check out how David and John, The Debt Free Guys prepped before launching into their own business full-time.
The last thing you need is the stress and strain of worrying about your cashflow early on while you're still trying to figure out how to hit the accelerator on your business. I've made that exact mistake, and in turn had to make some difficult sacrifices to keep the business alive and growing.
A few months into the start of my last company, Case Escape, my business partner Matt & I both quit our jobs to pursue growing our business full-time. While it was definitely liberating to quit our jobs, and exhilarating working for ourselves at 23, we were nowhere near reaching the point where our business could sustain the lifestyles we wanted to live. Oh, to be young and naive.
Our product was awesome, and Matt's still doing really well with the business on his own, but it took us much longer to find our core business model after a couple of pivots, and gain traction with the new direction. To make a long story short, we both moved from picturesque Newport Beach back to our respective hometowns (on complete opposite sides of the country) to cut down on expenses and grow the business remotely. I talk more about that experience in my interview with entrepreneur John Mattone right here.
I started doing freelance digital marketing & consulting to help supplement my income, and Matt did the same with his former career. As you can see, this move definitely slowed our progress, and as a consequence took us longer to scale the business. By no means do I regret the decision since I learned a lot from it, but you can see why I'm so adamant about gaining traction before quitting your 9-5.
Starting your business while working a full-time job will undoubtedly be difficult, but it's doable. There are as many paths to becoming a successful entrepreneur as there are businessmen in this world. Take these steps into account and you'll be well on your way to being your own boss. Imagine that awesome feeling.
Are you thinking of starting a side business? Join my course, The Launch Formula to get the tools, tips, and strategies that'll help you skip a lot of these hard lessons on your own - and guide you through my process of starting a business without wasting a ton of time & resources.