So many of you daydream of leaving behind your 9-to-5 to become self-employed. Maybe you dream of becoming your own boss and launching a unique product or startup into the world – but can't find the time or money to turn that dream into a reality.
Because every time you think you can make it work, reality smacks you in the face in the form of monthly bills, responsibilities, and the need to keep a roof over your head.
Transitioning your hobby from part-time to full-time and getting paid enough to live on is no easy feat. It requires months (often years) of planning, dedication, determination, and the right attitude. Successful people are not born that way - they earn it through hard work and effort. According to a Harvard Business School study, their data showed that about 18% of first-time entrepreneurs succeed in being their boss.
If you are thinking of leaping, here are eight things to consider before turning your hobby into your career:
Be Cautiously Courageous:
To turn your dream into a reality, you will need to become a master of the details. You don't need to have a good idea; you need to know and study business processes from beginning to end. If you can work with someone who has already been successful being an entrepreneur, this will help you much to create a business strategy and overall financial plan.
Once you have a vision and a thoughtful plan in place, next, how will you financially make it work without getting a paycheck for potentially up to two years? Can you do that based on your current financial situation?
Taking action to turn your dreams into a reality requires a huge dose of persistence, every single day. How little are you willing to sleep to pursue this dream? You will most likely do every task when you start a business, and that can create a lot of stress. Can you handle having pressure all the time? Look at your current life, is it that bad?
If you think you are going to thrive, know statistically that won't happen for a few years. Is it worth it? Your quality of life will suffer, but the process will make you stronger.
Your business is not going to be a venture that your friends will bail you out of, let alone view you as a charity; your business should not be a "Go Fund Me” campaign.
Be Prepared for Uncertainty:
When you decide to make the jump, are you willingly taking on a lifestyle of change and no paycheck, for however long it takes? You may face repeated rejection, endless sleepless nights, unsupportive peers and family members, and many other incredibly difficult obstacles along your path.
Your underlying passion for your business is essential, but you need to be very aware that by saying "yes" to certain things, you are saying "no" to other things. Don't take away from your quality time with your children and family.
Build Your Tribe:
Seek out and find your tribe – who do you know who can help you on your journey? What is more important is finding coaches you can learn from, that will be vital for your venture to have a fighting chance of someday be profitable?
Could you loop your current boss into your idea? There is always the chance that your boss could be the mentor you need, and maybe even an investor in your new project.
Be Your Own Bank:
Save ahead of time so that you can be your own bank when it comes to paying your expenses to avoid going into debt.
Prep beforehand by building out a realistic budget and being very aware of how you pay your bills.
Be mindful if you deplete your savings or take out a loan for your new adventure, it could cost you your other assets, your home, or even your retirement nest egg.
Can you work part-time, until your side hustle can replace your income?
When you are self-employed, there are required licenses and taxes that you must pay that you will learn about in short order. Remember that most self-employed people pay over half their income to fees before paying their bills (or themselves).
Being independent means, everyone else gets paid before you do. Keep in mind too your current employment situation: do you have a non-compete, confidentiality agreement with your current employer?
You may ask, "Can you use your current employer's time or resources to build a side business?" the answer is NO! A former employer can go after you for any damage you cause by doing this. Do not do it!
Balance Takes Time:
Remember that it takes time to be profitable, usually not in a few months, or even a few years. It will take time, but it can be an exhilarating journey.
Being patient and having the right attitude means that you'll be able to approach your challenges and successes with thoughtfulness and humility.
Be Your Boss:
Being your boss sounds great, but keep in mind that most bosses don't work 9-to-5, but 24/7. They have to work all the time initially to get their project launched. They do not have the option of turning it off, for they are responsible and carry all the risk.
Consider whether you want to go at it solo, or if your side hustle would be better with a partner.
Being an entrepreneur myself, I enjoy all aspects of it, but the road was long and arduous to get to this point in my career.
I did not start as a side hustle; I went all in and made it be part of the 18%.
If you are in a relationship, make sure you have a supportive partner.
Realize how good you have it. Maybe not doing it is the best solution. Perhaps staying at your current job and collecting a paycheck can help your hobby continue to bring yourself joy for many years.
Making the plunge to indulge in your side hustle means risk, so be sure to have a backup plan when it does not work out.
Realize the real benefit of any new business is the life lessons you will learn. It is how our capitalistic system works and why Americans have opportunities to provide benefits to our society. 18% of entrepreneurs who succeed are the backbone of our economy. They create value for everyone
For sure, whether you succeed in your new venture of not, you will get an education on the journey, which is truly priceless!
Harvard Business School Performance Persistence in Entrepreneurship 2008 by Paul A. Gompers, Anna Kovner, Josh Lerner, and David S. Scharfstein
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Sarah Carlson, CFP®, CLU®, ChFC®