How To Manage Your Small Business After Lockdown
July 31, 2021
November 18, 2021
As a married couple, one of the most rewarding accomplishments of starting our side hustles was the ability to eventually step away from our 9-to-5 jobs. Now we get focus on things that are important to us, such as spending time with our kids, traveling, and giving back.
Craig and I had several of our own side gigs prior to meeting each other. But we started our first business together in 2006, when we merged our two side hustles into one company, Tandem Consulting. Our clients range from large businesses like Home Depot and Under Armour to more niche retailers in the health and beauty space. Today, Tandem generates $3 million in annual revenue.
A lot of people, especially younger folks, often ask us about what to know before turning their side hustles into a full-time business. Here are five mistakes we learned the hard way:
1. Ineffective time and task management
In the early stages, we were woefully unprepared for the craziness that ensued when we really got into the thick of juggling our full-time jobs and fast-growing side gigs. And since we saw our side hustles as an extension of who we are, we struggled to manage our time effectively. But eventually, what we found most helpful in boosting productivity was automating certain tasks and hiring people who could duplicate our efforts.
You need to think about how you’ll find those clients. Will you have a website? If so, how much will it cost, and how will you maintain it? Will you have marketing, branding, travel, or other costs to account for? Will you get certified? Who will handle your accounting, bookkeeping, and legal contracts? What if a customer doesn’t pay you?
With every business we worked on, these were all things we had to plan for. The sales you make are not the same as your profits (and $80,000 is not what you end up taking home).
3. Reinvesting revenues to generate more sales
Once you create “enough” revenue, you don’t necessarily have to reinvest all your profits into generating more sales. Let’s say you start a side hustle in the landscaping industry. Eventually, you grow it to a full-fledged business that generates $600,000 in annual revenue, with $130,000 in net profit — assuming you don’t take a salary.
You could then take a year or two to sharpen your systems, secure your client base, get lean by paying off any debt, and transfer your skills and management to a few employees. You can later promote your key understudy to run your business at $60,000 per year, and keep $70,000 per year for yourself — all while doing minimal work.
If you have a humble personal budget and manage your finances well, you might be able to live off less than $70,000 per year. Over time, you can build up some savings and start or invest in another business.
Additionally, at some point, you could choose to cash out and sell the business or assets.
4. Overpricing initially and not raising prices once you’ve established your brand
Once your business is successful, customers will pay for perceived value. And oftentimes, if something has low costs, people may value it less. Don’t be afraid to revisit your pricing structure regularly. With basic inflation and an ever-changing and dynamic economy, you should be dynamic in your pricing as well.
5. Reverting back to the employee mindset Side hustlers often fall short in adopting a hardcore ownership mentality.
Since most of them began as employees, it’s common to default to employee scripting. Some of the biggest shifts a side hustler must work hard to make are:
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