MBA977 How to Build a Business On The Side P2 + Free Ride Friday!

Hey there. Today is Free Ride Friday so make sure you hang on to the end of the episode to hear who won this week's Free ride. Every week we give away a free ride to one of our courses, one of our programs. This week we're giving away Easy course. We'll be giving away Easy course all month long. This is a 30 day course on how to build your own online course. It retails for $500 over at EasyCourse Co, but we give away a membership every week to somebody who's left us an itunes rating and review. All you gotta do is leave us an itunes rating and review and you enter our weekly random draw. Alright, let's jump into today's episode. Hey O. Welcome to the $100 RBA show, the business podcast that's packed with business strategies and insights every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA over@100mba.net and today's lesson is part two of our two part lesson on how to build a business on the side while you're in a job. If you haven't listened to part one, make sure you listen to part one first. That was yesterday's lesson. That's really the foundation when you're just getting started. How to organize your time, your space, how to commit to the actual business idea, how to validate your business idea and come up with your minimal viable product. In part two, today's lesson we'll be talking about how to build the business. Now that you know you have a viable idea on your hands, you've struck gold. You know that you have a market for your product or your business. You've done all your homework. Now it's time to actually build out the business while you're in a job. Right? We'll be talking about how to fund your business, how to get to profitability asap, how to start your business website. Now this is regardless if you have an online business or an offline business, how to take your mvp, make it an actual business or product line and then iterate to based on customer feedback to improve your offerings to your customer or customers. You want to make sure that what you're offering them continues to improve so you keep winning their business. And then of course we'll talk about the exit strategy, how to transition out of doing this as a part time gig. You know your side hustle to your full time hustle. So we Got a lot to cover again. So let's get into it. Let's get down to business. Today's episode of the $100 NBA show is supported by the Run Remote Conference. When we started our business, we chose to make our team a remote team. We wanted access to the best talent around the world. So if you're thinking about building a team without borders, without walls, then you need to attend the Running Remote conference. You're going to hear from experts from big companies that run their teams remotely. And I'll be there to speak about how to motivate your remote team beyond compensation. Head on over to runningremote.com to buy a ticket today. It's going to be in beautiful Bali and you can save 15% off by using my coupon code 100 MBA15. Alright again, if you haven't listened to part one, make sure you listen to part one first. So all of this makes sense in part two. Alright? Now that you have your minimal viable product, you know that you have customers, you know that you have a market for your business, your product, your offerings. Now we got to start planning how to take this small idea, this small MVP and making it an actual business. The first thing you got to think about is funding. How are you going to fund your business? Now with any business you have a few options. And the basic options are one, you self fund your business with your own savings or your own money. Two, you get some sort of loan from the bank, whether that's a personal loan, a business loan or using a credit card. Or three, get investors and we'll talk about each one a little bit right now, number one, self funding. This is my personal recommendation when you're side hustling is to fund the business yourself. Now you can start a very small business for very little amount of money. If you have an online business, this is not going to cost you too much just to get the ball rolling to get started. Maybe a few thousand dollars, maybe a few hundred dollars depending on the business model. But even if your business is a physical business, a brick and mortar, you may not need that much money to get started. Maybe 20, $30,000. And you might have that in your savings account and be willing to use it for, for this venture. Now you have your mvp, but you still are not an actual business and you don't know if this is going to be successful. So remember, it's a lot easier to do this while you're working because there's a risk involved, this may fail. And you got to be willing to be parting with this money. This is why I think self funding is a great idea. Because if it's some money you have on the side, you will not die. If you lose all that money, you still have your income. You might have a little bit extra money of savings too on the side, maybe some investments and maybe, if not, maybe if you just have a few thousand dollars to invest into this business. If you lose it all and this business is a failure, which might happen again. My job is to be honest with you. I've had businesses that failed. You're not going to be living on the street, right? You still have your job, you still have your income and you probably can recoup that savings in a matter of a year or two, maybe even less, right? That's a better position than being in debt to the bank, paying interest and dinging your credit and really having that burden on top of your head of debt. Now when it comes to investors, you still have that burden obviously of they're investing in you. And if it fails, you're not really going to be able to tap into that well again, it's going to be hard for them to trust you again. But there are people that start small businesses on the side with small investment from friends and family. Now I've seen this done before, but I usually see it as a second or third business that has been built. A great example of something I just saw recently was a app called ropig r o-p I g.com this is started by Laura Roeder and her husband. Laura is also the founder of meetedgar, another app, very successful, self funded app. But Ropig raised $300,000 just from friends and family. And she details how she did this exactly. She knew nothing about investors or anything like that before she started this process. And she details it all in her blog. So if you go to ropeg.com and go to their blog, you'll see that blog post. They actually raised 300,000 in 30 days. So pretty remarkable. So if you want to go down that route, that's a good blog post to read. But my personal recommendation is to go self funded, get the ball rolling, get to profitability and then after that, if you want to expand, grow, you might want to look into, you know, getting a loan or getting investors. With every business I've started, it's been self funded. I've taken the profits of the wins, we got the sales, we got the revenue and reinvested in the business to expand. It's definitely doable. It just takes a bit of Patience and a bit of frugalness when it comes to your costs. Okay, now that you have your funded sorted, you need to get a profitability as soon as possible. Meaning that when you start building your business, you have to start planning and pricing your products and all that stuff based on your cost as well as how much you're going to price this stuff. You got to make sure that you actually make a profit at the end of the month. A lot of people put off profitability for some reason, but if you ever watch Shark Tank or any of these shows that are like it, the first thing they ask is, hey, are you profitable? How much revenue have you made? How much profitability have you made? They want to know if this business is solid before investing in it. If you're not profitable, they don't want to get near your business. So you got to get to profitability as fast as possible so you have a viable business. Whether you get investors later on, you get people to, you know, partner up with you or even sell the business. So again, that means a detailed summary of all the costs involved in your business. Start with the costs. If you have a physical business, how much is rent, how much is the equipment, how much is the furnishings, how much is it going to be to actually have the running costs, like your employees and your electricity, your supplies, all this stuff. Write every single cost involved, any kind of licenses you have to renew every year, all that stuff. Online business, same thing, server costs, designer cost. How much is it going to cost to run your email marketing? Every single cost. I have a spreadsheet in our accounting folder in our filing system on Google Docs and it's a running total that keeps getting added. There's costs that pop up all the time you have to add to it. And this is something simple you can do on a weekend, just writing down every single cost you can imagine that will incur. Always try to lean on the higher side. If you're not sure how much it's going to cost, you know, kind of be a little bit generous. So you make sure that you, you're covering that cost from that point. You gotta figure out how many sales you need to make every month, whether you're a physical or online business, to break even. So say for example, your cost for every month of business is $10,000 and your average sale is $100. That means you need at least 100 sales a month, right? That's just a break. Even. So to be profitable you gotta have more than 100 sales, right? This is just a Very simplified equation here, but you get the point. You need 120, 150, 200. Personally, in my first few months of business, I like to be at least 50% above breaking even. Meaning that if breaking even is 10,000, I need to make 15,000. So I'm making a profitability of 5,000. Why? Because I don't want my business to be stagnant. I need to grow. I might need to make some hires, I need to make some innovations, some renovations, whatever it is. You can't just have the status quo. You can't just do the same thing over and over and expect to grow or expect to thrive. People are competing with you. You have to reinvest in the business and don't forget in your costs. To pay for yourself, you need some sort of compensation, a salary. Why? Because at some point you're going to have to transition out of your job and do this job full time. And you can't just all of a sudden pay yourself a salary. Your costs are going to double all of a sudden, you know what I'm saying? All of a sudden your costs are not going to be factored in. So make sure your part time salary is factored in and then when you make that transition, that's going to be obviously a full time salary. Now if you have an online business, a lot of people just need themselves. They don't need to hire a whole team, a whole crew of employees. They can even get some freelancers to do some part time work. So this can cut your costs. If you have an online business, and obviously we know the costs are much, much less when it comes to having a business online. Now once you've kind of mapped out your profitability, you got to as soon as possible build a website. You need to have a web presence. Regardless if you have an online or a physical business, people are going to find you via a Google search, via a search on the web. If you have a physical business, they're going to find you on Yelp, they're going to find you on Google, you know, ratings and local search and all that stuff. So you got to have a website, you got to have a web presence. Why? Because the number one thing you can do to help your chances of being successful is building your audience. You have to have an audience of people that you can market to, people that would be interested in what you do. When I say build a website, that includes building some sort of content corner like a blog, like a podcast, like some infographics, like some videos. The point here is that you gotta attract people with your great content. We talk about content marketing all the time on this podcast, but this is when you gotta put the foundation in. Now, building a website doesn't have to be hard and you don't necessarily need to have a custom built website. That might be a cost that you can save. There's some really great tools out there to help you build a professional looking website. Full disclosure, one of our sponsors on the show is Weebly. Now I've used Weebly, I've tested it out. I'm building my own custom site with Weebly for my own brand, my own personal website. Omar zenum.com still working on it. But Weebly is an easy, easy solution. I recommend it because it's actually good and it actually does everything you need and it's not complicated. Now obviously you can go other routes. You can use WordPress, you can get a custom built with a WordPress template. But if you want to just get going, I recommend Weebly. Now we mentioned content on your website. You have to have a content schedule, meaning that you have to put yourself on a schedule to produce great content for your website. A website with no content is not going to get you any traffic. If you consistently write great blog articles, for example, those blog articles are going to get indexed on Google. So when people search for those keywords, they find you and your website and your business and your services. The top way people find out about our webinar software of our ninja is via Google search by our SEO or search engine optimization. That's because we make a lot of effort to build great content on our website. So you have to schedule this in when are you going to write your blog post? How often are you going to schedule your blog post? Once a week? Once every two weeks? What is it going to be? Are you going to shoot videos? How are you going to get people to your website via your content? Make time for it. Make it happen. Now I know that we're doing all of this while you're at a job and it can get overwhelming because you're building a business, you're getting excited. You may be making some hires too and you're starting to spend some money. Totally understand that things might feel like they're moving fast, but one of my favorite quotes by Robert Kiyosaki, the author of Rich Dad, Poor Dad, Big time investor, millionaire guy, right, is one of the biggest lessons he learned growing up and learning to be an entrepreneur is fail fast. Now, I'm not saying that you're going to fail in your business. But the point is that you got to learn and do things quickly so you can, you know, get to the bottom of what wins, what works. Taking things slow often is not a good strategy when you're trying to build something that's great. Too many people fail because of hesitation. Too many people fail because they don't just do, they overthink things, they have analysis paralysis. So just be busy with building, with going through these steps. I'm talking about keep working your job, keep being dedicated to that, that employer. But when it's that time where you allocated those two hours a day plus the weekend or whatever it is, you go to town, you build your business like this is all you do. Because maybe this will be the future very soon. Maybe in a few months you're going to have to leave your job because your business is growing now. In a moment, I'm going to talk about how to make these iterations to improve your product, improve your business. Then finally, when you get to this version, it's like, okay, this is what I can run with. This is the business product offering I can run with and really expand. And I'm getting to a point of profitability where I can leave my job. We'll talk about that in a second. We'll talk about how to make that transition. But before then, I got to give love to today's sponsor. As an entrepreneur, you're always putting 110%. From late nights to weekends, you're willing to work hard to bring your idea to life. No one understands this better than the experts at Indiegogo. What's Indiegogo? Pioneering the crowdfunding platform, Indiegogo has been helping entrepreneurs go from idea to market since 2008, offering exclusive partnerships with top manufacturing, shipping and retail companies as well as live 24. 7 support and innovative tools. They are with you at every step. Plus, with a global backer network that's millions strong and innovative pre and post campaign tools such as pre launch pages and in demand, you'll be empowered to launch big and keep the momentum going all the way to market. Ready to turn your product or idea into the next big thing. Whether you're in need of a prelaunch strategy or looking for manufacturing and shipping support, Indiegogo's Experts will be there 24. 7 Ready to guide you at every stage of your entrepreneurial journey. To get started, download Indiegogo's free crowdfunding field guide and at www.indiegogo.com 100mba. That's www.indiegogo.com100mba. All right, I just want to stop for a second and talk about where we're at. We have a minimal viable product. We are now building a business around that minimal viable product. We know that we can build a business now that it's viable. We know people want to buy it. But you really haven't made any sales yet, right? You're still building your website. You're still kind of making your offer. And once you start launching your website, start launching your business, whether it's the physical business, you're going to start to make money. Even as a side hustle, you still don't know if this thing is for real yet. Now you might be thinking, what about registering my business? What about, you know, having a business bank account? Totally something that you can do early on. You could do it before you actually launch, and you can go to like a service like legalzoom.com and they can hook you up with registering your company as an LLC or a corporation. And you could take that paperwork and open up a business account with it, like at the bank. Or you can wait. If you're making less than $20,000 a year in sales, you can be a sole proprietor. You can operate under your own name. If you're in the U.S. you got to check your own country for your laws. And then when you file for taxes, you can of course claim this extra revenue and just use your own Social Security number. But if you're finding yourself making more money in sales, the ball is rolling. Of course, you can register your business and open up business bank accounts that everything is separate. Some people feel or prefer to just do it before you open for business, and that's totally fine. But I'm letting you know that you do have a choice to be a sole proprietor. Personally, I like to register a business before I even open for business. I like to open up a bank account as well, just so it's separate. And my personal finances, even just for my own personal use, is separate from the business finance. I just wanted to set that up and let you know this is where we're at right now. We're not really open for business yet. We had our mvp, but we're setting up our business. We're setting up our shop, and we're launching soon, right? All right, now you're open for business. You're selling your products or service online, or you're selling them, you know, in a physical shop. You're not going to get it perfect out of the gate. It's very, very rare. You need to put your MVP out there, listen to the feedback you're getting from your customers, whether it's online, via email or via chat, or even just getting on the phone with them or in person if you have a physical store and iterate. So you have a cycle, put a product out there, get feedback. You iterate, meaning that you improve upon the product based on the feedback and then you put out version 2, version 3, version 4. This is why it's important when it comes to your offerings to keep things very simple. If you have a T shirt shop, again, like we mentioned in part one, keep it very simple. You may want to have just one T shirt, one model of different sizes, one color, and then you have a different model, one color again, but different sizes. Then you want to maybe offer different colors of another model. Slowly expand your product line or slowly expand your actual offering or services. You want to know what works for fine tune it, put it out there, then bring in a different offering. You might get feedback from customers. Again, you're going to iterate, you're going to get feedback from customers. I love this product, but I need something a little bit more beginner or something that's a little less loud or whatever the feedback you get, you can use and expand your offerings. Now remember, we are not dedicating all our time to this business. We said minimum 15 hours a week, but you may be putting in 15, 20, 25 hours a week on the side. In my personal belief, it's going to be very hard for you to replace your income depending obviously on how much you're making right now in your current job. But you know, you're building a business and you're putting part time work. You're just going to get part time results. Just the reality. But you got to have some sort of measure. So I say you use the hours you're using with the income you're making. So say for example, you're making $3,000 a month, you need $5,000. That's how much money you take home with your salary every month at your current job. But you're putting in only 20 hours a week. So if you put in 40 hours a week, can you hit 6,000? Maybe and maybe a little bit less. But at least, at the very least, you have some measure. That's a close estimate. This is kind of your mark or your indication of maybe it's time to transition into full time entrepreneurship. Now, before you actually put in your resignation, quit your job, I highly recommend you do what I call a cost reduction plan for Your personal finances. You have to reduce your own personal expenses as much as possible. If you needed 5,000 with your current salary to live, maybe you can reduce all your expenses to make your living expenses a little bit more affordable. And that means maybe downgrading your car, even downgrading where you live, moving a neighborhood down, maybe a smaller house. It's okay, it's temporary until you get on your feet and then you can have even bigger place and a nicer car once you actually flourish with your business. So I highly recommend lowering your personal expenses before you make that leap. No matter when you actually make the leap, whether you're making just as much money as you're making now or half as much money, it's always going to be risky. It's always going to be a little bit scary because you don't have that steady paycheck. But tell yourself now, what is it going to take for you to leave your job? How much money do you need to make with that? 20 hours of commitment. So you know what the prize is, you know what the goal is and work towards it. Alright guys, that is today's lesson. That is part two of our two part lesson on how to build a business on the side. I know we covered a whole lot. You may want to listen to part one part two again. But hey, this is something I know you guys are all thinking about wanting a plan of action and I try to give you a kind of concise and really just direct plan of action for you when it comes to building a business on the side. Now even though today's lesson is over, our episode is not. It's Free Ride Friday. I gotta give away a lifetime membership to one of our programs. This week I'm giving away Easy Course. It's a $500 course over at EasyCourse Co showing you how to build an online course and 30 days. Let's see who won this week's free ride. And the winner is Stefan Heiner. And Stefan says the hardest working people in podcasting seven says. I just want to take a moment to thank Omar Nicole for the hard work they put into giving us their hard earned experience and reflections. Whether it's bringing out old episodes that need re listening or the variety that they examine in business, this is a binge watch worthy podcast. Thank you guys and keep going. Well thank you Stefan for that awesome rating and Review over at iTunes and you are a Free Ride Friday winner. So email me at omar100mba net so I can hook you up with our lifetime membership to Easy course If you're listening now, you can win a free ride as well. Just leave us an itunes rating and a review and you enter our weekly random draw. Thank you so much for listening to the Hundred RBA show. Before I go, I want to leave you with this. Building a business on the side is no walk in the park. It's a lot of work and it's easy to kind of burn out sometimes. Make sure you take a break every two months or so. Maybe have a full weekend to kind of deal with the burnout. I know you have your full time job and you get your side hustle business and I did it for 10 years. I know it could be really overwhelming but just keep your eye on the prize. Remember, if you are passionate and you really want to work for yourself, you want to build your own thing and make it your thing. Make that your motivation to keep going. Alright, thank you so much for listening to the Hundred Dollar MBA show. Make sure you hit subscribe so you don't miss Monday's episode. A must read episode is where I review a book. I'll be reviewing a great book, exactly what to say by Phil M. Jones. A fantastic simple to read sales book. Tune in for that on Monday. Until then, take care.