One of the biggest contributors to paying off our $100,000 in student loan debt was that Kevin and I run a few small businesses on the side of our already full-time jobs. I highly suggest that those who are trying to get out of debt look at alternative sources of income, rather than just trying to make more at your current job. Interesting Story-- before, when we were in so much debt, I would get so frustrated that so many of my lawyer friends were making tens of thousands more than me at their jobs, when we were all fresh out of law school and I felt like we were all starting on the same page. I felt bitter...and I wanted to pull out the "but it's not fair" phrase on a regular basis. In the last 3 months, nothing has changed in my work life. I do not make more money at work, but I am much happier. Now that we don't have the burden of debt, I'm very comfortable where I am at, my work environment is more pleasant, and I have a feeling that the only thing that changed...was me. I had no idea that getting out from under our student loans would change my perspective so much.
Back to my post, so are you wanting to find a way to make some more money? Maybe you're saving for your retirement, trying to pay down your mortgage, or simply stuck under student loan debt like we were. Here are a few suggestions I have for you when you're looking at running a side business to help with obtaining some extra cash.
1. Find Something You Love. I love photography, and I've loved photography for years. I still remember when I first realized I liked photography. Our family was in Vegas on a vacation when I was in elementary school. My mom let me borrow our family camera to take a picture of the Coke Museum, and when we printed it out she was so impressed at how perfectly framed the photo was, that she went around telling our relatives it was good enough to be on a postcard. I had purchased my first digital camera by the time I was in middle school. It was a Canon Powershot...with a whopping 3.2 megapixels and 4 optical zoom...which I picked because it was one of the best optical zooms I could find. In total I think I've gone through 4 Powershots in my life (lost one, broke one, one was stolen when I was in China, and I currently have one) and Kevin has a super nice one too. In high school I started learning how to develop my own film and by Sophomore year of college I bought my first SLR. (we are now on my 4th SLR) Anyway, I love photography so it was natural for me to start a photography business.
Kevin is the same way, he loves design. Our Etsy originally started as a place for me to sell my crafts (which I also love) but I added Kevin on as a partner while we were dating as a way for him to try to sell his designs. Kevin has since taken over the Etsy shop almost entirely. Kevin's degree was in graphic design, and he gets so excited when he has a cool new design to show me....he loves design!
2. Find a way to make money, with very little startup cost. My photo sessions started at $20 a pop. I started small, with a very small following, advertising only on craigslist. I didn't go out and buy a whole new camera, I worked with what I had. The key to trying a small business, is not to go into debt starting out! I was using that same camera from my Sophomore year in college to run my photography business. Eventually I upgraded with a $100 50mm lens (which seemed like SUCH a huge purchase at the time) to help out once I was able to make more money on it, and could justify investing in more equipment. Throughout my last 4 years running a photography business, I've purchased about $9,000 in camera equipment.
Etsy was a good way for us to try things out too. There is zero cost for opening a shop, $.20 for listing an item, and you only get charged a fee after that if you actually sell your product. We are selling items that cost little to nothing in materials. Once we could justify upgrading our design programs, we purchased new adobe programs for a few hundred dollars but we started with the super old versions we already had first, until we could make enough money to justify the upgrade. (If you wanted to try etsy use this link to start an etsy and you'll get 20 free listings...making it entirely free unless you sell an item)
3. Make it Flexible. What allows us to manage our multiple jobs is that we have flexibility. We manage our own schedules. If we are going to be out of town, we shut down the shop and I don't schedule photo sessions. If I have more time on my hands, I may run a photography special to get more clients in the door. It isn't always easy, but we've found the best way to do a side business to find a way to make it work around your existing schedule. Maybe work only on nights/weekends if you have a M-F job already! If you're a stay at home mom, find a way to do your side business during nap time :)
4. Track What Comes In/What Goes Out. You need to make sure to track all cash flow. If you're making a product, you've got to make sure your materials/costs don't overpower your profit. (Think of the Big Bang Theory Episode with Penny and her Penny Blossoms). You shouldn't be spending 1 hour of your time for $1 in profit. You also need to track this for other reasons, like taxes! Yes, you will need to pay taxes on your small business. That makes it that much more important to track your cash flow. (In another post I'll talk about things you should be doing to lower your tax obligation)
5. Don't Make Yourself Crazy. There have been multiple times I've had to cut back on our side businesses. The first was when I stopped selling completed hangers on my etsy shop (if you don't know what I mean, look here) It was the only way I could cut back on sales. The next was when I stopped selling crafts all together on there. Finally, on photography most recently I had to decide to cut off booking anymore 2015 weddings, and only schedule 2 sessions per day on the weekends, and max of 2 weekday sessions. Business is booming, but if I took everything that came in the door...I'd get burnt out and quit...which means we are back to zero extra income from our small business.
6. Do Not Rely On The Extra Money. There were times when I started Etsy that I had $400 in orders in 1 week, and then I would have an entire month of zero sales. The same for photography! The goal is to never rely on the income from your side business. Look at it as a perk, put it away into savings or pay it towards your debt right away. I don't let a single dollar of photography touch my bank account, it goes straight into our savings. Prior to paying off our loans, every dollar of it went to our debt. If you start to rely on the extra money, or spend it...it defeats the purposes of having an alternative source of income to help accomplish your goals.
7. Don't Let People Take Advantage Of You. This one is tough...but your friends and family will understand. You're trying to run a business. I started out feeling guilty for charging someone $20 for a photo session when I was spending an hour of my time, plus multiple hours editing their photos. I did the same thing with crafts, feeling guilty if someone said they wanted one of my crafts, I would just give it to them for free. My mindset was that my time was not worth anything...which is entirely wrong! We have the same issue with Kevin and his designs, and we both still struggle with this on a regular basis. Whether you are providing a product, or a service, people will (or should) know that you are providing something to them that has value. Do not devalue yourself and your time. If they want your product or service, they are likely willing to pay for it. This is one of the toughest things about running a small business.
8. Don't Annoy Your Friends/Family. Just as you shouldn't let friends take advantage of you, I suggest not making it a goal to have your friends/family be your primary customers. I started photography by posting on Craiglist (Hey...it worked! And it is the only place I've ever advertised apart from a few local bloggers where I've given out free photo sessions) and I wouldn't even tell anyone I had an Etsy for a number of months...for fear they would rain on my parade. If you're starting a business, its always great to have them for support, but don't make it a point of making your profit from them. If they want to support you by buying a product/service, that is great! What I'm getting at is I'm not big on the classic "Tupperware Party" scheme were you guilt friends into coming to an event to purchase things from you. Building a business on guilt isn't a great business model. Your business will grow the most if you get customers outside of your normal circle of friends, so find a way to get started without burning any bridges!
Those are just a few of our tips if you're looking at starting a small business! It doesn't have to be a huge money making scheme...just a way for you to do something you already love, and make money doing it!
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