I had an interesting discussion with one of my friends recently. The topic was discovering the right business for him. Ever since I have known 'Sean' he has always come with a different business idea about every 6-9 months. From real estate rehabs, to owning hotdog stands, to a cleaning business, to trading commodities, it has always been something very different from the previous suggestion. I used to be very humored by the randomness of the business opportunities, which were simply the beginning of a short-lived plan, but I've always respected his desire to be an entrepreneur.
I can't really make fun of him because I've had several very different business ideas myself and I've learned a lot from them so they are the basis for this article.
1. Reflect on Your Past Business Experiences to Know What You Like and Don't Like
My first business was with one of my other friends, Joaquin. It was a very simple enterprise - mowing for neighbors in summer, raking for neighbors in fall, and shoveling for neighbors in winter. I don't even think we had a name to our company. Despite the simplicity of my first business endeavor, I learned a lot. I learned that I do not like braving the elements and earning money based off of long hours of manual labor. I also learned that the bigger houses did not necessarily pay more for our services than the smaller houses, even though the bigger houses had more property. Soon enough, I learned how to set prices for our services that were justifiable (i.e. "A small lawn costs $10 and a large one is $15! Take it or leave it!"). Another important lesson I learned from my first business was that the amount of money I made was limited by the amount of lawns myself and Joaquin could mow ourselves. There had to be a better way.
2. Decide What Your Passion is and Commit to Building a Business Centered Around It
My second phase of business experience came from network marketing. I will never forget being approached by a random man (turned out to be a good guy) my freshman year in college and being lured by the infamous, yet irresistible hook "Are you interested in making extra income?" Working in the cafeteria 12 hours a week was not my passion and I was too naive to say "it depends". So, being the ambitious, eager kid that I was, I replied "Definitely! How?"
Later that day I found myself in a nice conference room with a pumped up speaker and many skeptical people around him. He spoke about many basic, yet profound money and business principles. Right before my eyes, he became a business guru destined for great wealth! He went over how a franchise works and how I, yes ME!, could be an arm of the franchise! The next thing was the income POTENTIAL I could earn. Once I saw the numbers I was in! All I had to do was convince 18 year-olds with no responsible care in the world and little money to invest about $125, buy the products regularly, and become disciplined "evangelists" of this amazing business opportunity!
I became that MLM evangelist and rounded up about 8 people for this presentation (my excitement was key!) Only 1 person ended up registering about a month after and I was only in for 4 months. I actually ended up making a small profit, but at what cost? TIME, a lot of time, trainings, calls, prospecting, trying to motivate people, trying to get people to listen to the CDs and read the literature, following-up, taking an out-of-state trip for "the big picture" convention, arguing with naysayers, defending the company name after someone googles it and see "SCAM" after it, and realizing that the promises to follow the system and the one-size-fits-all almost cult-like pressure "not to reinvent the wheel" did not work for everybody and was not the best fit for me.
I did not have a passion for the business or the products so it was no longer for me. Too much work. That whole experience taught me one of the most valuable business lessons I learned. Trying to build a successful business requires a lot of time, energy, sacrifice, and dedication, if you are not in love with the value of the products/services and do not have a passion for the industry then you will feel overworked and underpaid just like how you felt at the job you were trying to escape (Remember me, the cafeteria-worker-no-more! Yes more. I was back in that uniform the following semester, haha).
So, at this point I know that I do not like manual labor, my income being restricted solely by my efforts, and that I do not have a passion for becoming an evangelist of some shadowy company with over-priced health and beauty products.
3. You Can Lose a Lot of Money If Things Don't Work Out As Planned. Limit Your Financial Risk As Much As Reasonable (You have to take some level of risk, just make sure it is well-calculated after A LOT of research)
From An Infomercial To A Short-Lived Enterprise
I was on summer break from U of I before my senior year and I did not have an internship. Financial struggles and my eager pursuit to attain financial independence as an undergrad came at a cost. My grades were just "ok" after 3 years. B's were perfectly fine with me. I actually thought "Do I really need to get an A in this class, I mean, I'm gonna be a self-employed young billionaire anyway? I just need the right business." Needless to say, I did not join the ranks of Mark Zuckerburg or Bill Gates, despite actually getting an idea patented and an offer to produce it, for a fee that I did not invest after doing some research about the offering party (glad I didn't, the "Wisdom Guru", would have become obsolete very soon due to the explosion of smart phone applications right around the corner, this is another story).
So, I was not in a good position and decided to do something about it. I worked as a valet to earn the income I needed that summer, but I knew that I needed something better on my resume than that! One day I saw an infomercial about selling all different kinds of home decor and gift items and making money from the margin, you didn't have to hold the products nor ship them, you just had to own the website that people bought the items from. After seeing the potential and writing an informal business plan, I applied for a credit card and invested in the website and start-up materials. I used the knowledge and experience I gained from being "an evangelist" of that MLM to recruit other people as "affiliate marketers" and designed a whole business model to have these people sell these items for me, to earn a commission.
I still remember the headline I used in my ad on the online job boards "ArtisticHomeGifts.com pays people $400* a week as Affiliate Marketers". After about 3 weeks and conducting 20 phone interviews (great learning experience), I had 15 affiliate marketers. I had invested in business cards, catalogs, and made a simple webpage for each affiliate that served as a "gateway" page. So when their referrals went to their page and clicked through the link, the website registered a unique link and any purchase from there on out was recorded to the affiliate marketer who was registered to that link. I had everything planned out great, but only 4 people ever made sales and the financial crisis hit on September 2008 and (my site officially launched in early August 2008) killed the demand for random home gift items. After beating a dead horse for 3 more months, trying to motivate my affiliate marketers to sell to people who were scared they were going lose their jobs or had a spouse that lost theirs, I decided to fold the operation, focus on academics (I had just started my senior year) and officially closed ArtisticHomeGifts.com about $2,500 in the hole!
4. Networking Regularly is a Must-Do For Any Future Entrepreneur
So, where am I now? What did I make of this business experience? I have a solid 9-5 to build financial security and professional experience to fall back on, but I also actively work to build a business that is my passion (financial advising) and regularly network to learn about the opportunities out there and make connections with the right people.
Even if you are not an entrepreneur yet, it is extremely important to network and work toward building your future brand in order to give yourself the best chance as possible, for when you decide to go out on a limb. And you learn about many up and coming businesses and opportunities, as well as receive tips and inspiration from entrepreneurs at various stages. Focus on the relationship and getting to know who they are and what the passion is behind their business. You can really make some great connections and possibly meet a future business partner. Also, by networking effectively, you expand your future market (who you can sell to).
5. Stay Educated About Your Passion/Future Industry and Gradually Increase Your Steps Toward Being In Your Business Full-time. Only You Will Know When You're Ready!
A voracious reader of books and articles related to personal finance, investing, and business.