When you begin a business, you should be prepared for each eventuality.
All entrepreneurs need a parachute. Because, whether you’re selling something or something, starting a fresh business involves risk. I’ve been a business owner all my entire life, and, looking back, I’ve relied on safety nets at every stage in my own career. I think devoid of the right back-up is what stops lots of people from pursuing their entrepreneurial ambitions.
Before I list 13 safety nets you can depend on, I would like to illuminate how they have helped me launch, sustain and grow different businesses.
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When I was in my own early twenties, I began designing products. The first one was a novelty baseball cap that had foam fingers you could rearrange to send a note, just like the peace sign. I ran an ad in a magazine to check the marketplace for demand. This only required fabric, a sewing machine, and money for the ad. I didn’t need a back-up. I didn’t sell lots of.
My next endeavor was checking a store in Capitola, a quaint seaside tourist town in Northern California. This is in the 1970s. I made everything that I sold in the store — primarily soft sculptures crafted from nylon. My rent was about $150, and I had two partners who split expenses with me. I didn’t need to borrow funds, because I had saved about $10,000 before starting out. In cases like this, my savings were my back-up. For another four years, I supported myself as I enjoyed watching the waves pass.
A couple of years later, I caught a break selling my creations at a festival in Sausalito when a person connected me with somebody who could scale my business. Meeting Steve Askin, who was simply owning a company called What’s New, changed my entire life forever. Within thirty days, he was representing me and selling my products to stores in the united states. The orders were to arrive so quickly, I borrowed $5,000 from my dad so that I possibly could hire visitors to help me sew, and therefore deliver promptly.
It had been obvious I was in over my head, therefore i taught Askin’s factory workers learning to make my creations instead. These times, my back-up were my parents. This is also the 1st time I was subjected to the idea that another person will make, market, distribute and ultimately sell what I originally invented. That is called licensing, and it became my preferred business design.
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The answer how come simple: Despite the fact that I’m a business owner, I’m risk-averse, and with licensing there’s basically no risk involved. Your licensee has already been running a business and on the hook for the heavy lifting of product development, meaning manufacturing, marketing and fulfillment. Basically, they take on all of the risk.
It took me some time to get proficient at licensing my ideas for products. Until then, my partner Janice had a full-time job and supported me. I also took on a substantial amount of freelance and consulting work to supplement my income during this time period.
Later, I started a business selling uniquely-shaped guitar picks. We sold mostly to fans, not musicians. Four folks pitched in a small amount of money so most of us had equity. Quickly enough, our picks were for sale in a large number of stores including Walmart and 7-Eleven. We became a Disney and Taylor Swift licensee. Engaging in Walmart was both exciting and daunting. We’d to scale up, also to do this, we needed capital. The lender wouldn’t normally loan us, therefore i invested my very own capital (about $250,000) to satisfy the Walmart order. This is money I had saved along with inherited.
It doesn’t matter just how much you prepare; there will be unforeseen obstacles. That’s just the type to do something new, which is what entrepreneurship is focused on. It’s worthwhile.
Having said that, running out of money and time are two extremely common challenges for just about any new business. You will need a safety net to avoid you from an unnecessarily rough landing.
Personally, I love to keep it simple. To be certain, there are more difficult means of raising money, like dealing with angel investors as well as venture capitalists.
I recommend going for a part-time job to supplement your earnings when starting your business. Find one that’s flexible and doesn’t demand five days weekly for eight hours a day. When you can look for a part-time job in the market you’re interested in and may learn from, that’s better still.
I began freelancing for toy companies that I approached about licensing my ideas for products. Some eventually did license ideas from me, however the freelance work I was offered helped me settle payments as I was learning how study products. I also did freelance work for Mattel along with other toy companies, including traveling overseas for manufacturing and design.
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Yes, you intend to be self-employed. But there may be great value in gaining industry experience first. Personally, I encourage you to search out employment a startup. I consider the time I worked at the toy startup Worlds of Wonder as a side-hustle. It had been a full-time job, but I had been dreaming about running my very own business. I volunteered for each and every assignment that I possibly could, since it was all a learning opportunity. So no, I don’t think you will need to quit your entire day job immediately. Your mindset is what’s most significant.
If you’re passionate about becoming a business owner, you will require the support of your partner. WHEN I quit Worlds of Wonder, to be able to depend on my partner Janice was instrumental. I earned income as a freelancer and through temporary gigs, nonetheless it was really getting the freedom to fail that made an enormous difference.
Worlds of Wonder hired me to become a consultant when i left. The pay was great! I was also in a position to submit my suggestions to them and even though I didn’t license anything, I was once paid a big holding fee around $15,000.
Like I described above, I started a guitar pick company with three other friends by investing our very own money. I really believe two of us devote $10,000 and the other two devote about $2,500. We grew from there.
I’ve been running my coaching business inventRight with my business partner Andrew Krauss for twenty years. What’s truly amazing relating to this venture is that people didn’t devote one dollar. We produced seminars for the first couple years and started selling coaching online. We’d no overhead no costs. No risk, no back-up needed.
It’s possible to get grants from the federal government to start out your business. The procedure is not complicated, nonetheless it should be done correctly. Entrepreneur contributor Kedma Ough has written at length about how exactly to get this done, including here, here, and here.
Personally, I think it is very nerve-wracking dealing with friends and family, particularly when borrowing money is involved. I don’t recommend it.
I absolutely love this business design. Pre-selling a concept through crowdfunding lets you raise capital to start out your business with. The major issue is that folks think they have a money problem, but it’s a really knowledge problem. For this reason so many crowdfunded projects that raise oodles of funds still neglect to make it to advertise. Running a business isn’t easy, even though you have capital.
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I used my savings to start out three companies. That is a great back-up, nonetheless it requires discipline.
In the event that you focus on selling the advantage of your product idea first, you can spend hardly any of your money licensing. No back-up required.
You can stay lean by concentrating on a prototype and investing in ads. Is anyone interested? Today you are able to do this using social media platforms. Companies in the “As Seen On TV” space run ads for products that don’t actually exist yet. Through the years I tested my ideas at street fairs, festivals, in magazines, and convenience stores. Extremely low risk.
Before you begin taking out your hair rather than sleeping during the night, create a back-up.
Please realize, you will always doubt yourself just a little. And it’ll be rough, always. They are the only constants. With the proper safety nets, you may become a business owner without putting your own future and the