How to know when its time to move from a side hustle to a business
Nearly 70% of people start a side hustle to make extra money. I remember my Mom who is a Marriage and Family Therapist making gourmet brownies while my sister and I were in private school to make some extra money for our summer vacations. Sure, she made a living wage as a therapist but the joy of making extra money outside of your salary seems to bring a extra level of joy. So, when do you move from a side hustle to a viable funded business model? When consulting, I always suggest stating with your business plan.
A business plan or bplan is an amazing internal measuring tool to work out all of the business ideas you have in your head and heart; but its also a necessary element in getting your start - up funded by investors and financial institutions.
Follow these short steps to writing a funded business plan for any type of business.
1. Executive Summary
Your executive summary should tell the whole story of the business in short and tightly packaged summary.
What industry are you in? Discuss the market and solution your company offers to an issue. This is one of the most important elements to consider when starting a new business. [Explore more on this topic HERE]
Who is your competition and why? Doing the market research is imperative to success. Offer something that is already an over saturated market and go unheard. Launch something your industry is not ready for and risk over pricing or over estimating the markets need. Research offers answers.
Provide financial highlands. What is the projected revenue of this product or service? How long is it going to take to realize profits? Even though none of us knows the future, investors and VC's want to see that you have done the work and can provide a strong financial argument.
Here is the time to tell the whole story. Your goal with the executive summary is to get in the door. This section the time to discuss the brand, history, market validation and forecast of the business.
The Brand - Describe the product and service you are going to offer. Although this is your baby and I am sure you have dreamed of the "birth" of this child for a long time, make sure you describe this product as if you are talking to your 5 year old. Using verbiage and vernacular that is industry specific is a major turn off to investors, especially if they feel like your trying to be a "smarty pants".
History - How did this product come to be? What happened or what dream did you have that made this product or service come to life? Be brief. We want to know the how and the why - spare us the long details.
Validation of Problem and Solution - My favorite example of validation of problem and solution is Ms. Mary Anderson, the creator of the windshield wiper. Every business owner thinks they can do it better - and you should, here is the time to prove it.
Business Forecast - Where is your business going to be in the next 1, 3, and 5 years? Why? How are you going to get there? A forecast is a scientific prediction of what your company is going to accomplish in the future. This is the time to allow your imagination sore. I do not believe in limiting success but make sure that your forecast is following the SMART goal setting you will be creating a road map to success.
3. Market Analysis
There is a time and place for everything and here is the time to flex your "I know what I'm talking about muscles." This and the next two sections of your business plans are very important for a few reasons - it will only be read by those who are interested in funding your project. Do I know that for sure? No, but the likely hood of an investor reading to this point is rare if you lost them at hello. Consider putting a lot of time and mental energy into the following areas:
4. Financial Plan
Last and most important is your financial planning. The thought of starting a business and following your dreams is so exciting. The planning, the focus groups, creative branding, and go-to market strategy are all hard work but are typically the more cerebral and creative part of launching a new business. The financial plans are just the opposite. The numbers don't lie. If you can not afford a financial adviser or a CPA to prepare these spreadsheets for you the following links below will offer plenty of direction.
Don't allow these steps to overwhelm you. Contact a consultant for direction.