Mike Michalowicz advises starting a part-time service business while keeping your job to minimize risk. He stresses that startups should turn profitable within 30 days, and recommends splitting revenue across separate accounts for owner pay, profit, taxes, and operating costs rather than mixing everything together.
Starting a business has always been a part of the American dream, and many Americans still would like to fulfill their dream and become their own boss, but it can be intimidating. Here with some tips to help us wade through some of the confusion about starting a business is author and small business expert Mike Michalowicz. Many of us, Mike, have full-time jobs, and we can't really give those up to start our own business. Are there still business opportunities for folks like us?
Yeah, there absolutely is, and yeah, it's terrifying to leave a full-time business to try what if my business will succeed. So what I suggest in those circumstances is start part-time, and the best way to start part-time is in a service-based business. Because when it's a service-based business, you don't need to make big capital investments. You can just use yourself. You are the capital. And that way you can get started quickly, you can use the hours that you have available, You won't take a big risk financially and see if it works for you.
Let's say I want to start my own business. Who do I go to? Who can help me out? I would have no idea even where to start.
Well, the question is, what do you like to consume? So you want to find areas of interest. So you look at the things that you already enjoy and like to do and then contact those businesses. You'd be surprised how many people respond to a simple question saying, I would like to get your advice. Would you be willing to help me? Most business entrepreneurs will reach back out to you and say absolutely and help you get started.
Ah, that's good to know. So what are some maybe bad habits that new small business owners typically find themselves in? Walk us through the key financial habits that everyone needs to kind of follow.
Sure, sure. One of the fundamental flaws that almost every business does is when we collect money from sales, we're getting started, We put it all into one single checking account. That's what we're told to do. The problem is all that money accumulates in one spot, and then it's our natural tendency to say, "Oh, that's what I have available to grow my business." So we spend it all, as opposed to pre-allocating that money to different purposes. You know, we started a business to support ourselves, so we need to allocate a portion for owner's pay. We need to allocate a portion for profit. So pre-allocate money as opposed to just depositing in one checking account. Have multiple.
Is it okay to not make money at first? And if so, I mean, how long do you wait before you say maybe this isn't working?
Yeah, so I believe it's not okay not to make money at first because I've seen that extended for months, months turned into years, and years turned into a lifetime. Businesses run check by check. I suggest this: you have to be profitable within 30 days. I know it sounds like an absurd question, but if you put that challenge out to yourself, you'll find a way to become profitable very quickly.
What if you already, though, have your own debt? How do you become profitable knowing that you're already kind of starting behind?
Yeah, so you got to analyze what you have. And if you have debt, you have to become profitable. So you got to use tools that can assess what's going on. Use tools like Xero. It's a very popular accounting software. Use other packages like spreadsheets to see where you stand, and then you can determine your timeline for getting out of debt and moving forward.
Well, we are out of time, but quickly tell our viewers where they can go to to find more information on how to create some good financial habits.
Yeah, a great spot to start is actually Xero, which is X-E-R-O.com. There's lots of resources there, plus some free tools.
Alright, Mike, we appreciate your advice this morning. Thanks so much for joining us!
