My 5 Year Plan: The Test-Drive Approach To Starting A Business
By: Matt R. on August 13th, 2008
Categories: Finance Stuff, Phase 1:The Implementation, Starting a Business
“With time and patience the mulberry leaf becomes a silk gown.” -Chinese Proverb
I’ve recently decided that I am going to take my time with this whole starting-a-business thing. My overall timeline is going to be simple. The initial goal for my business is to be a part-time extra-income generator for me starting sometime before the end of this year. This blog, and the filing of my DBA paperwork, have already set the gears in motion for that. Then, in about 5 years, I’ll decide if I will make the leap to running this thing full-time. This is slightly contrary to the more aggressive timeline I originally had, and I’ve changed my “About” page to reflect this accordingly.
Five years is a long time. Why am I setting this goal so far ahead?
- I need money. I make enough money now to where I can live a comfortable, middle-class existence. The small business websites I’ve been reading claim that as a wanna-be small business owner, I need to be prepared to lower my quality of living for some time because it will take a while before my business starts generating steady income (if it ever does). I want to avoid this. I want to see if I can continue with my current standard of living, if not improve it, throughout the course of my start-up process. In order to do so, I’ll need a cushion of money that I can use to buffer the loss in income I’m sure to experience when I finally make the leap from my current job to working for myself. Starting next month, I am putting together a comprehensive budget with the goal of eliminating my current credit card debt in one year and building a reserve of 6 months worth of my income in my savings account in 5 years. That way at the 5 year mark I’ll have no debt and enough of a financial pillow to basically take a 5 or 6 month hiatus from work and give this full-time business ownership a good, solid, worry-free try. I think this is perfectly acheivable. Over these 5 years I’ll also be saving every penny of money I make from the part-time business to put back into business expenses. If I want to do something for my business, but I don’t have enough money saved for it, then I wont do it. It may seem counter-productive…how can I build my business if I don’t put money into it?…but I think over the course of 5 years, I’ll be able to find ways to grow my business smartly, without the need to throw money at it.
- I need experience. Even with nearly 8 years of computer troubleshooting experience, I know there are many things about fixing and maintaining personal computers that I have yet to learn. I feel it will be a good idea for me to spend some time going out to people’s homes on a part time basis and trying to find problems that will stump me. Then, I can slowly build a database of tried and true fixes so that I will have a solid arsenal of skills and expertise when I start my business full-time. On top of that, I have NO experience with business operations, business finances, business law, business taxes, invoicing, etc. I will spend these 5 years reading books, attending seminars, trying, failing, and trying again. Hopefully, I will learn enough business savy to feel confident when take the plunge half a decade from now. And you all get to join me for the ride!
- I need assurance. Do I really want to commit to a lifetime of fixing other people’s computer problems? Right now I think so, but what about after two years of doing it? I don’t want to quit my job and after a couple of years realize that this whole computer repair thing was just a silly phase. I doubt this, as I’ve had this idea brewing in me since I was in high school, but it’d be nice to know that, after doing this a for a few years, I truly do enjoy it.
Most decisions I make in life are deliberate. I’m not someone who reacts quickly and goes with my “gut”. My gut has let me down in the past and I refuse to use it to make life decisions. So far, I think this philosophy has served me well in life: I’ve travelled the world, made wonderful friends, I’m pursuing my passions, and I can’t think of any major decision that I regret.
I feel like too many start-ups fail because they invest money into an idea before they know it works, or before they are sure that they can handle it. It seems like entrepreneurs feel they need to jump head first into any venture or it’s not worth doing. This maverick philosophy is indeed exciting and romantic. But, as I’ve read about from many disenfranchised would-be business owners, this often leads to disaster. Don’t get me wrong, some people excel at this type of business acumen, but many do not, and I certainly wont.
Slow growth is fine with me as long as there is growth. What’s the rush?
“Time flies like an arrow, fruit flies like a banana.” -Groucho Marx
August 13th, 2008 at 10:27 pm
I quit my first job which was working for a moving company because I thought I could just make some business cards and hand them out and all of a sudden I would have my own handyman business. Things never really picked up and I soon learned that if I wasn’t licensed and bonded and insured that nobody would take me seriously. I didn’t have a company vehicle, I didn’t have enough tools, I didn’t know how to give estimates. I realized my mother was my only reference.
You are right. Just because you are good at something and you enjoy doing it doesn’t mean you are meant for a career in it, let alone start your own business doing it. I think it is good that you are taking your time. Rome wasn’t built in a day.
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August 13th, 2008 at 11:21 pm
Exactly. I’ve noticed that there are types of people that excel at business ownership, and those people can pretty much open a business in anything and be successful. Then there are the folks that are really good at something, but they don’t have the know-how or dedsire to turn it into a business. I think I’m somewhere in between. So, we’ll see how it goes.
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August 14th, 2008 at 2:05 pm
Wow! What a mature attitude. In this day and age it is refreshing to find someone who doesn’t expect immediate gratification. I know someone who tried to start a business growing mushrooms. He was a really good farmer, but didn’t know how to get his idea into markets. He hadn’t planned that part out. He just assumed that once he was growing mushrooms, people would want to buy them. He didn’t do any research to see if there was a demand for the kind of mushrooms he wanted to grow. Ultimatley, he could not sell the mushrooms and his enterprise went belly up. The fact that you are doing all of this research and planning will really pay off for you if you decide to make this a career. Good luck and my hat’s off to you.
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August 14th, 2008 at 4:26 pm
I should be ok as long as computers don’t all of a sudden become irrelevant in the next 5 years =-)
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August 15th, 2008 at 2:42 am
There is no doubt of your success. You already set up all principles of your business, have strong will and wonderful philosophies.
I want to invest in your business…
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August 15th, 2008 at 4:20 pm
@ Matt, You are thinking about your business in an analytical way. Nice to know that. It’s a good way to approach a new business.
While I support the approach, I would suggest you rethink timelines. In five years, many industries dramatically change. Some even die. Many more will come up.
Specially for you, who seems to thinking of a service business and not a product. If you have a service, the investment you need to get started is very little. (Please correct me if I am wrong). And so, it may not need 5 years to get started. There’s no harm in trying out options - while you are still working somewhere else - start your business do it part time - see how it goes and if your revenue catches up with your expectations, you could leave your job. However, the reduction in your standard of living is not just in terms of income but also your social life and free time.
One ‘out of box’ suggestion I can give to entrepreneurs is that you could go out and live in another country that has lower costs - (like India) so you can spend the time of your ‘low income period’ at a lower cost as well as build your product at a lower cost. This applies more if you have a product with long gestation period.
I wish you all the very best. If there’s anything I can do for you, let me know.
Cheers,
Chaitanya
http://www.p2w2.com/blog
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August 15th, 2008 at 5:13 pm
Hi Chaitanya,
Thank you for your wonderful comment and advice. Hopefully as my blog continues, more folks like you will be willing to offer suggestions that not only pertain to my situation, but that can help others as well.
You’re right, 5 years seems like a long time to spend starting a business. In fact, I don’t intend to spend the entire time “starting” my business. During this time I will be running my business part time, learning from my mistakes, and experimenting with different approaches. Although many industries change and die over time, and technology is probably more prone to this than any other industry, I feel computer support in general is here to stay. I’ve been doing computer support in some form for over 8 years now and although the technology changes very rapidly, the underlying pricipals and techniques stay mostly the same. The 5 year milestone is basically the time I feel it will take me to save up enough personal money to be comfortable with making a decision on if I want to do this full time, stay part-time, or abandon it altogether. Keep in mind this is only a plan, and it may change (in fact the plan has already changed since I launched the blog last month!).
You present a really interesting suggestion. I’m a big fan of experiencing other cultures and countries and I think it would be a great idea for someone who has a product they’d like to try selling at less of an initial financial burden. However, I’m not confident I would be able to provide my services in a country where English is not the native language, or where technology trends may be different than here in the US. Plus, I feel like it’s in my best interest to cultivate local customers and build a good reputaiton in my community before I branch out to other areas. But who knows, maybe I’ll find value in delivering my services overseas…I’m definitely open to that possibility.
Thanks again for stopping by!
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August 16th, 2008 at 6:03 am
Wonderful. I wish you a good time with your entrepreneurial journey. I am glad you liked my blog!
Chaitanya
http://www.p2w2.com/blog
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