Over a year ago, I wrote about some of the benefits to having a side hustle. Making extra money outside of your primary job is attractive, and the side hustle builds your confidence, your feeling of autonomy, and your scrappy “fight or die” mentality.
But how do you know when it’s time to stop being a hustler and start being a businessman? How exactly does a side hustle differ from a business?
Years ago, tutoring was my side hustle. I made some extra money at it (a few hundred dollars each week), but it never turned into a viable business. A side hustle and a business are not the same thing. True, they are related to each other (just like being a guy and being a man are related to each other.) And it’s also true that a side hustle may have the potential to someday develop into a business (just as a guy has the potential to someday develop into a man.)
When it comes to building a business, there are a few mental steps you need to take before the practical steps. If you don’t get the mindset right, you could easily slip back into building a side hustle instead of a business.
The Mental Steps to Building a Business
- You should eventually transition from a scarcity mindset to an abundance mindset. A hustler’s thinking is dominated by scarcity, thinking that the solution to their lack of income is simply to make more money. A businessman’s thinking is dominated by abundance, knowing that financial security comes from helping solve the problems for an infinite number of other people. Two very different ways of thinking.
- Learn to embrace failure while minimizing risk. You really do have to fail your way to success. It’s the way human beings learn. Imagine a toddler learning how to tie his shoes. That toddler will not get it right on the first try. He will try to make the loops and wrap the shoestring around and then fail at pulling everything together. But the most resilient people keep trying. Develop resiliency. This does not mean you go out and rent a 1,000-square foot office space and buy $10,000 worth of equipment. You must plan completely and make very small moves with calculated risks. You don’t seek failure, but you do embrace failure when it comes. Don’t let failures weigh you down or convince you to abandon your goals.
- Transition from being a taker to being a giver. Hustlers take. Businessmen give. It really is that simple. Hustlers focus on making money. Businessmen focus on providing value. Hustlers have a “do-for-self” mentality, while businessmen have a “do-for-others” mentality. Hustlers focus on making money now. Businessmen focus on making money forever. Hustlers go after the next big payout. Businessmen go after the next big idea. Hustlers focus on what they can do to make as much money as possible. Businessmen focus on what they can do to offer as many solutions as possible. Hustlers try to change their cash flow. Businessmen try to change lives.
- Modify your personal relationship with money. This is not true for a lot of people, but there are a few of you who have tenuous or pessimistic views about money. I had this view when I was younger. Many years ago, I was taught that money can’t buy happiness, money is not what’s really important in life, and money is the root of all evil (the actual verse states that the love of money is the root of all evil.) These ideas of money were planted in my head decades ago, and unfortunately, those thoughts grew into an aversion to money. I started to distance myself from people with money and discussions about money. Sure, I became a wiser, more faith-driven person at an earlier age than most, but an aversion to money stopped me from thinking like a businessman. If a business makes no money, then by definition, it’s not a business. If you’re like me with this relationship to money, here’s my advice. You have to view money as a tool to accomplish something more important than money. A knife or pair of scissors can be dangerous, but in the right hands, these are tools that help you get things done. Money is just another tool. I don’t chase after money any more than I chase after knives or scissors. I simply use them to get more important things done. The key is to keep your focus on those important things in your life (serving other people, breaking a cycle of poverty in your family tree, taking care of loved ones). Chase after those things.
The Very First Practical Steps to Building a Business
- Find a mentor who has built a similar business. Finding a mentor is the best thing you can do when you’re first starting out. Years ago, successful businessmen from all types of industries were surveyed. The study asked for their number one piece of advice to give to young entrepreneurs, and overwhelmingly, the answer was simple: find someone who has done what you want to do and then spend as much time with him as possible.
- Write a business plan. Within that plan, you’ll identify your purpose and mission, your short-term and long-term goals, important dates and timelines, key people involved in the business, and other important factors. Do not assume that writing a business plan means grabbing a blank sheet of paper and brainstorming your way into a business. A true business plan is written and structured in a specific way. A quick internet search will result in hundreds of links to free business plan templates. Study other effective business plans so you know how to write your own.
- Decide on a legal structure. There are all types of businesses in the world. At one end of the spectrum is the structure called sole proprietorship. For almost all of you, this is the legal structure that you’re seeking as you first start your business. The sole proprietorship simply means that you own the business by yourself with no partners, so all the profits, expenses, and liabilities are on your shoulders. (This also applies to someone who wants to open a physical shop, a service-based business, or even an online business.) At the exact opposite end of the spectrum is a corporation. A corporation is not a person or even a group of people. A corporation is its own legal entity that is operated by shareholders. The corporation takes on the liabilities of the business. (Think of Nike, Apple, or Wal-Mart.) There are other types of business structures in between a corporation and a sole proprietorship (such as partnerships, S-corporations, and limited liability companies.) Take a look at the Small Business Administration’s website at http://sba.gov for a breakdown of each structure.
- Register your business name with the county. We know that you’re not going to name your business Microsoft or Wal-Mart because those names are obviously already taken. But how do you know whether or not the awesome business name you came up with last week is taken by someone else in your city or county? There are two things you can do. The first is to check the U.S. Patent and Trademark website to see if that particular name has been trademarked. The second thing to do is visit your county clerk’s office. Every county should have a county clerk’s office that takes care of business name registration. (If you live in a small rural county with no county clerk’s office, you can contact the clerk’s office in your state capital.) The point is that the clerk’s office will check to see if your business name is being used by someone else in the county. Fill out the form, pay the fee, and after a few weeks, your name is officially registered.
- Become a bootstrapper. Years ago, the marketing and business genius Seth Godin wrote a book called The Bootstrapper’s Bible that explained how to launch a business from scratch with no money. (For those who don’t know, Seth Godin is a friggin’ genius. At one point, he was so popular that simply typing Seth into Google would lead you right to him. Just one name–like Oprah or Kobe or Madonna.) Anyway, Seth Godin’s book was written in 1998, and back then, I wasn’t even thinking about businesses. However, about six or seven years later, Seth Godin decided to take the basics from his book, turn it into a 100-page e-book, and give it away for free. This will probably be the only time you hear me say this, but I HIGHLY advise you to stop reading right now. Go to the internet and simply search for “Seth Godin Bootstrapper” and you’ll find a PDF file of the e-book. Read it. Read it right now. I’ll still be here when you’re done.
The steps above on starting a business and the tips on the business mindset are all just the beginning of the process. Obviously, you have to actually sell something, so you’ll have to decide on a product or service, price points, location, marketing, etc, etc, etc. This post was simply about the very beginning stages of the process to help you distinguish a side hustle and a business. If you like what you read, share this with others and leave comments below.