Benefits of a Side Business
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So you’re thinking about starting your own business. Not an easy decision, is it? This article will give you some ideas about the benefits of a side business.
On the one hand, you know your boss is a %^&* and you’re doing all the work anyway. So why should he get all the upside, while you mold a butt imprint into your chair?
On the other you’ve heard good things about food and shelter, right?
Yeah starting your own business is terrifying and not for everyone. But sometimes forging your own path is sometimes the best answer to life’s problems.
The trick is to do it right! If you look at the statistics around company closures then you know the odds of success aren’t in your favor. That’s why you have to make smart choices, especially at the beginning. Your early decisions can affect the direction of your life for years to come.
Dip A Toe
At the end of the day you need to eat dinner. Breakfast, lunch and snacks would be good, too. It’s easy to talk about starting your own company. But what about practical considerations?
The problem with starting a new business is that you don’t know what you don’t know. In theory making a product or service and then selling it is easy. The reality is much tougher. And how will you find time to do everything all at once – the customer work, the marketing, and the sales?
Getting it to all come together takes time, which is one thing new solopreneurs don’t have. Their personal bills (food, rent) are coming in no matter what. And the power company doesn’t care if your client Greg is late on his payment.
The easiest way to get around this problem is to ‘dip a toe’ in the solopreneur waters, while still keeping your day job. This means starting a business while you are still employed elsewhere. It sounds tough, and it is. But it makes a lot of sense. Best of all you’ll avoid taking on crushing business debt for no reason.
Starting your own company while working at another firm is somewhat similar to a “side hustle”.
Most people think of a side hustle as work you do in addition to your main job. But what if it didn’t have to be that way? Your side hustle doesn’t have to be some freelance writing on the side. Instead, think of your side work is as a business that will one day replace your main job. It’s a longer, tougher road than picking up some work as a freelancer, but the benefits of a side business are bigger and better. When your venture is eventually successful then the security it brings will be worth the extra effort.
The best thing about going this route is that you get TRIPLE paid.
Your existing company will continue to pay your bills.
Your new solo company will (hopefully!) generate some cash for you.
And best of all, your main company – the one that pays your bills will pay you AGAIN in the form of hard earned experience.
Think about it this way – your company is able to hire and pay you because they’ve achieved a degree of success. They might not be perfect but they are doing some thing right. As you start out on your own you’ll come across problems you’ve never faced before. And just by going to work you’ll be around a whole group of professionals. Together they know everything about sales, marketing, accounting, admin, and more.
At work you’ll begin to absorb the best (and worst) practices for your industry. You’ll learn first hand what your company is doing right. And you’ll think of ways your new company could be even better.
Masters in Getting S&^t Done
The even better part about starting a company on the side is how much you’ll learn. Regardless of whether you hit a home run or fall flat on your flat on your face, you’re guaranteed to learn a ton. The experience you gain as a company owner is priceless. As CEO you’ll have no choice but to try new things and take responsibility for every area of your business. Never made a website before? Tough – it needs to be done. Not sure how to get qualified sales leads? You’ll learn quick enough.
MBA programs dedicate entire courses to high-level marketing principles. But almost none of them teach how to get a new client to sign on the dotted line. In contrast, your small business will teach you 1000’s of lessons that aren’t taught in school. When it comes to learning as much as possible in a short period, there is no substitute for experience
One of the benefits of a side business is when you start a business you start thinking like a business owner. When this happens your work in your ‘real’ job will transform almost overnight. You’ll stop looking at the world from the point of view of an employee and start seeing things as a stakeholder. You’ll see how marketing, sales and production are all interconnected. And you’ll pick up tiny skills that in aggregate add immense value to your employer. Eventually your contributions will be recognized and your career could explode. Your acquired skills as a business owner will make you the best employee your company has ever had.
Just make sure you give fair attention to your work with the people who are paying you!
I recently heard about a fellow who was earning a great salary at one of the larger banks. His salary had gone up every single year, and the future looked good. Then, with no warning the bank announced a round of layoffs. He was caught in a ‘re-org’ and the bank didn’t need him any more. He had no income, but his mortgage lender didn’t care. They get paid, or they get his house.
Nothing lasts forever. When your boss decides it’s time to close the doors, or sell the company, or lay off some staff, or fire you – there’s nothing you can do. You can only try to put yourself in a position where your salary is welcome, but not essential.
If you’ve got a business that solves real problems and makes a profit, then you’ve got income security. Or at the very least you’ve got a job that’s more stable than the one most people have.
The World Is Changing
If the reasons above are enough to consider the benefits of a side business. But if you need more then look at some of the ways the world is changing.
These days it isn’t easy for young people to get a good job. There are lot of social changes that make it hard to start a thriving career. These changes, including “at will employment,”don’t support the amazing career that young business people envision for themselves.
Connectivity – The Double Edged Sword
Millennials entered into the workforce during a period of unprecedented global connectivity. From the point of view of operating a business, it makes the world really small. You can hire a programmer in India, hop on a conference call in Tokyo, and partner with a company in New York. And, depending on your solution, you can get clients from all over the world from your kitchen table.
But it cuts both ways.
Your employer can make a free Skype call to Tokyo to discuss hiring an outsourced coding team in Delhi, from offices in Toronto.
As a result, once valued local talent is now competing against people in other continents. Some skill sets are no longer hard to find; and as we all know when supply increases prices fall. In this case prices = wages.
Unless the job need is local (like a burst pipe), then many business requirements can be solved overseas. This trend may intensify in the years ahead as businesses get more used to working with providers all over the world.
The effect of all this connectivity is better prices for employers. And it can make it hard for employees to get competitive compensation. Businesses may also find their customers are willing to pay less due to overseas competition. If this happens then they in turn won’t be able to pay employees as well as they deserve.
I am afraid I can’t do that Dave
Beyond online communications, other technologies have exploded the past few decades. These improvements enable companies to use a combination of technology and ‘on demand’ services to hire fewer people than in the past. Newly established firms are now hiring an astounding 40% fewer people than they did in 1995.
Many jobs, especially those in manufacturing have decreased in number. Some decline is due to offshore production. But the real killer has been from automation, which has the power to killed off entire labor sectors. This trend is set to intensify more than 70 million jobs on the line over the next 15 years.
And with AI becoming more advanced, even jobs that require a degree may be under threat.
Job seekers know that organized labour has declined in numbers and social influence. This is important because unionized positions typically have better pay and better benefits. And by offering a decent compensation package, union jobs set a floor for the value of work.
As unions fall out of favor the cost of unskilled labour generally decreases. This in turn sets a lower benchmark for the value of skilled labour. So even if graduates aren’t seeking unionized positions, the decline of unions can still harm their long term compensation.
Educated millennials have an insane amount of education debt. Every year the hallowed halls of higher education spit out a new crop of graduates who HAVE to get a job to pay down their student loans. In the US graduates come out of school with an average debt of almost $30,000. And for some people those numbers are much higher.
What does this mean? Mostly just happy employers. There is always someone willing to work for ‘experience’ and an unlivable wage. The competition for jobs is intense. There is no shortage of recent graduates who have no choice but to accept work that is outside their field of study, or doesn’t require a degree.
Boomers Keep Booming
Baby boomers are hitting retirement age, but many aren’t yet ready for retirement. Participation in the workforce of those over age 65 has increased steadily, and this looks set to continue. Seventy is the new 65!
Reasons for delayed retirement vary but typically fall into two categories. Many boomers are healthier than previous generations and want to stay active and engaged at work. The idea of staying at home and not contributing to the world doesn’t sound like fun to them at all.
Others aren’t financially stable enough to retire yet, so they stick around. About 26% of boomers plan to retire at 70, or later. That of course assumes their health allows them to contribute at work. With savings rates well below what people need to retire comfortably, many boomers may be working for as long as they possibly can.
The result is downward pressure on mobility for workers at the bottom of the employment pyramid. Millennials can’t get promoted when openings aren’t available, and that only happens if baby boomers leave as they did in the past.
Starting your own business is always tough. But it can be one of the best experiences in your life. If you maintain a full time job and work on building a company on the side then some of the benefits of a side business include:
- Increased income (hopefully!)
- Job security when your business eventually achieves stability. Your boss can fire you, but no one can take away what you built for yourself.
- Improved career prospects as your understanding of company issues improves
- Marketable skills that will help you at your own company, or accelerate your career
But in addition to personal reasons, the number of well paid opportunities may be in decline in the future. This is due to several factors including:
- Boomers not retiring to make senior positions available
- Globalization and easy access to high level skill sets from foreign labour
- Technologies like AI and robotics increasingly replacing humans
- Education debt forces young people to work immediately after graduation
- Decreased influence of organized labour
No one knows what the future will bring, but if you put yourself in a position to grow and expand your opportunities you’ll do well. Starting your own business is a great way to make that happen.