The Benefits of Starting a Side Business
Published on - August 8th, 2009 (Modified on - May 28th, 2010) (by J.D. Roth) 
This is a guest post from Neal Frankle, a Certified Financial Planner and the blogger at The Wealth Pilgrim. Neal is a potential Staff Writer for Get Rich Slowly. For background on Neal’s personal story, check out his recent article about how he went from homeless to homeowner.
You can start a business even if you don’t have any money. You should do it even if you don’t need to earn more money.
I was blog-surfing this morning and visited the forums at Get Rich Slowly. I saw one particular post that really intrigued me. It was one person’s journey about leaving the rat race and starting her own business.
What was particularly fascinating about her experience and every person who left a comment was that they didn’t do it for the money. They opened their business because they wanted freedom.
In truth, when I opened my business I wanted more freedom too. But like most other small-business owners, I found I had less freedom — at least when it came to my time.
I work more hours as a self-employed person than when I was an employee. My business (instead of my boss) dictate what I have to do everyday. I don’t get to decide if I want to go to the office or go bowling instead. If I want my business to survive, I have to respond to the needs of my business — and that means the needs of my clients.
No, self-employment is not about having more freedom — at least as far as I can see.
Why do I love being self-employed?
Because it allows me to express myself freely. At the end of the day, I believe this is the real pay-off for most small business owners who love what they do.
I left the corporate world in 1993 because I was tired of my boss making arbitrary decisions about what was good for my clients. I was tired of my life being subjected to the whims of some corporate executive who didn’t even know my name. As an employee, I couldn’t do what I really felt was right either for my clients or for myself — so I left.
Why am I sharing this with you? Because I believe a great way for you to express your true self is to open your own business too — even if it’s not full-time.
Again, even if you don’t need the money, you should consider doing this. Having your own business will give you a new vantage point from which to live.
Sure you’ll have less free time. But if my experience is typical — and I believe it is — you’ll still have a lot more life.
What steps should you take if you want to open a business?
Decide what business you want to start by finding your passion. To be frank, I started my career in 1984 for the money. But over time I grew to love it. I love getting to know people, hearing their stories and trying to help.
What is it that you love about what you do now? Can you express that in a side business? My advice is to start by looking in your heart. What are you passionate about? Do you love photography? Is it music? Art? Dance? Cooking? Helping kids with autism? Golfing? Blogging? What work would be the best expression of who you really are?
Get help. It might be that your passion provides clarity about what kind of business to open. In my example, I couldn’t keep my job at the bank and have a side consulting business at the same time so the decision was made for me. If you don’t have any legal or moral conflicts, you can open up a side business without burning any bridges.
If you are clear about what field you are passionate about but don’t know how to turn that into a business, I have two suggestions for you:
Connect with mentors. Identify people who are working in the field and ask them for help. Most people are only too happy to help — especially successful people. (That’s why they are successful by the way.) Don’t be deterred.
Let’s say you want to get involved in the dance field but don’t have the money to open your own studio. Who cares? Call up a successful studio owner. Tell them you are passionate about dance, you want to open a side business in the field and have no idea what to do. Just because you don’t have the resources they do doesn’t mean they can’t be helpful.
You may not be able to open a dance studio….but by meeting with these people, you might get fantastic ideas on what dance studios need. You might be able to open a business to service those studios.
Moonlight at a business that is in your “passion field”. The best way to learn is to do. Go to work a few hours each week and don’t worry about how much you get paid. You are there for the experience. You might learn that you don’t have the passion you thought you did for the business. On the other hand, you might uncover ways to get involved with the industry in ways you never thought of before.
Even if you don’t have any money, you can start a business.
You’ll have to invest time. Everything has a price. If you can’t devote time to this, don’t start. But personally, I hope you do it. It’s the best investment you’ll ever make because it’s an investment in yourself.
Have you ever opened your own business? Did you hesitate? What finally pushed you over the edge? What was your experience?
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To those telling Tyler to just skip this article:
GRS is one of the few blogs I read where I learn as much from the comments as I do from the article. For this reason it is one of the few I actually open from within my RSS reader to see the comments, as opposed to other blogs I enjoy, like ZenHabits, where there are 100 comments saying, “Nice article, Leo!”
So if someone has VERY valid questions and points out flaws in a line of argument, I find that very valuable, especially when its an article I wouldn’t have had time to study in-depth myself.
Concerning the article, Tyler has hit the nail on the head, pointing at a fundamental reasoning error. Here it is again in case you missed it:
- Follow your passions instead of money to start a side business, allowing you to express your true self. (please correct me if this is NOT what the article is saying)
I would agree this is flawed. In fact, I would say the exact opposite is true. I would say as soon as you make your passion a source of income, expect to compromise your true self.
Example: I play music on the side. I write songs, play at open mic nights, do it for the love. If I pursue this as a source of income, what options do I have? I could become a freelance studio musician, which means playing music written by other people the way they want it played. I could try to cut a record? Let’s say I get a record deal, I now have a record label vying for control over my album, telling me what is commercial, etc.
Very few people have become successful in their lifetime pursuing their passions without compromise. Read How to be Creative over at gapingvoid for a pretty good explanation.
You can do it if you find the extra income completely unnecessary, and never want it to be your main job, but this isn’t what the article says.
Having said all that, I enjoyed this guest post. Probably more so than the others, since this one is more open for a discussion. And I do see the author’s point, that it is very possible (and even likely) that your own business will allow you more creative control than working for “the man”. Getting to decide yourself how clients should be handled is a wonderful feeling, but the sacrifices involved (even the creative ones) shouldn’t be ignored.
Anyways, let’s try to encourage analysis of the posts instead of GRS turning into hundreds of “Me too”s, one step short of blogs where the first 5 comments all say, “FIRST!”
Sorry… forgot to say great post – can’t wait to read your next one!
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I have to agree with what David said here:
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“”"”"- Follow your passions instead of money to start a side business, allowing you to express your true self. (please correct me if this is NOT what the article is saying)
I would agree this is flawed. In fact, I would say the exact opposite is true. I would say as soon as you make your passion a source of income, expect to compromise your true self.
Example: I play music on the side. I write songs, play at open mic nights, do it for the love. If I pursue this as a source of income, what options do I have? I could become a freelance studio musician, which means playing music written by other people the way they want it played. I could try to cut a record? Let’s say I get a record deal, I now have a record label vying for control over my album, telling me what is commercial, etc.”"”"”
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I am a full time housewife and have been since I got married 21 years ago. However, we have done a few things from home to earn a little extra money, mostly to keep our children occupied and to teach them skills. The last business we owned was a store (with a restaurant and gas station). All of our children worked there with us. We lived there too. However, when we sold it after four years, I was so tired, I didn’t want to start anything new again. That was two years ago. If I get an idea for a home business, I give it to one of my children. They do it without me. I would rather not have the pressure and deadlines. I consider myself to be somewhat retired. I bake, cook, clean, take care of children and sew. I do all these things because I enjoy them. I could also do all these things to earn money but I find more peace doing it just for my family. (I do babysit on occasion, however, just to have the babies around). My point? Sometimes, when you are finished earning money for the day, you would rather pursue your passions just for your own enjoyment and not to be at the demands of customers or clients.
This is just another take on this topic. There is nothing wrong with earning money doing what you enjoy. It is wonderful. However, some of us want to do what we enjoy just for the recreation of it.
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- “Follow your passions instead of money to start a side business, allowing you to express your true self. (please correct me if this is NOT what the article is saying)”
Yes…it’s what I’m saying within the context of my story. It may not be everyone’s experience.
“I would agree this is flawed. In fact, I would say the exact opposite is true. I would say as soon as you make your passion a source of income, expect to compromise your true self.”
With all due respect, I think people who feel this way don’t own their own business. Most people I know who do own their own business (myself included) don’t agree. If you read the comments from those who have their own business, I think you’ll see my point.
“Very few people have become successful in their lifetime pursuing their passions without compromise. ”
Now, I think your comment is a bit off the mark. Sure…everyone compromises. I’d much prefer to be in that recording studio with you (I play drums as a hobby and I love it) but I haven’t compromised my true self by doing what I do.
My values are who I am and what I do is an extension of that. Is having your own business the only way to express your true values (true self)? Not at all. But it is a wonderful way to do it. At least in my experience and that of many people who took the time to comment here.
I would argue that nobody has ever been successful (employee or self-employed) unless their work expresses who they are at their core.
Someone living a lie could make a ton of money of course, but the odds are they will be miserable and therefore, not successful.
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“My point? Sometimes, when you are finished earning money for the day, you would rather pursue your passions just for your own enjoyment and not to be at the demands of customers or clients.”
I think you make an excellent point and I agree with you.
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You guys have brought up great points (including Tyler).
I thought the main opinion of the article was that having a small business was a good thing to do.
Neal’s idea for turning a hobby into a business was just one suggestion for determining what that business should be.
It’s certainly true that turning a hobby into a business can “ruin” that hobby for you. It’s also possible that you can turn a hobby into a business and just separate the business part from the hobby side.
For a example a photographer might do weddings every second weekend and then on other weekends they might also have their own photo sessions where they can take bird photos (or whatever they like).
They don’t have to turn the hobby completely into a business.
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Your point is excellent and like almost all of the comments made before, unique and adds a great deal to the conversation.
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Neal (53)–”My values are who I am and what I do is an extension of that. Is having your own business the only way to express your true values (true self)? Not at all. But it is a wonderful way to do it. At least in my experience and that of many people who took the time to comment here.”
I have to agree with this. A lof of people aren’t able to express themselves in their main occupation, working under the control of others. Having your own business is a way to do this, and I think it’s something most of us long to do, and as a matter of emotional health, probably need to do.
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A side business gives you freedom. Adding multiple streams of income to your life allows you not to be dependant on one, say your main line of work. Find something you like doing, give yourself some patience to let it develop and you will reap the rewards.
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Michael (58)–That’s another outstanding point. The time for multiple income streams has arrived.
Relying solely on a single employer or even a single business in this environment might prove to be a strategic mistake. My own site is focused on this principle.
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This is an idea I have played with over the years. My one fear: health care. I have heard such horror stories of being taken by health care insurance companies if you do not have the baking of a large client. Any thought?
Thanks
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Kristine, I’m self-employed, and our health insurance is BCBS, purchased through ehealthinsurance.
I had some health issues last year that resulted in several thousand dollars of medical expenses. The process went every bit as smoothly as it would have had I still been employed by a big company.
Not that I can promise that your experience will be the same, of course. But for my wife and I at least, the whole health insurance thing wasn’t nearly as big a change as I feared.
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Love this post, Neal! I think it is very sage advice to keep the day job while exploring side business options, and following your passions.
I telecommute, have fantastic job security, earn a decent wage that won’t ever make me rich, but it’s more than enough. I moved to a tiny home on 4 rural acres a year ago to follow my dream of hobby farming as a side business.
Recently my employer offered me more hours – 40 a week instead of my customary 32. What a tough decision! I could take the big increase in pay, the extra vacation & retirement dollars, but then I’d have less time for pursuing my side passion.
I declined the offer. It allows me to spend 1 day a week volunteering on a local organic farm with a man who has been in the local produce business for 25 years. He’s an amazing mentor, and I am gaining so much experience and knowledge that I will be able to fully utilize when I officially launch my own effort.
I took my next step yesterday – I spent some of designated farm savings and purchased some supplies and heirloom seeds. I believe I made the right decision, and I’m extremely excited about it!
Follow that dream, my friends – but do it with a plan.
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Hi Neal,
Thank you for your response.
I think we both agree that in my hypothetical example, for instance, making money as a musician is far better than working in IT or whatever my made-up person would be doing otherwise.
From this point of view, I probably don’t disagree with the article. I’m just trying to extend the discussion into the subtext not covered, that pursuing your passions for profit has its downsides, too. Or at the least that it can be a grey area.
I look forward to reading your next article.
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Kristine, Mike gave you a great lead. It becomes an issue of trade-offs. The pay you get at work includes the medical benefits so you’d have to make that much more before you could take the big leap and quit. That’s another reason why I recommend the “toe in the water” approach.
Deb, I just love success stories like yours. Bravo! Nicely done…..I hope to hear more about your success.
David, I really appreciate you bringing up the downsides of this idea. They certainly exist. It’s important to approach this in a sober way and you certainly helped do that. Thanks. (Maybe we can jam someday?)
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Don’t overlook the “right” network marketing opportunities either. If you do your research and are passionate, the cost-of-entry is much less.
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I completely agree that EVERYONE should have their own side business. Mine is working freelance writing web content for blogs and web sites. I learned a long time ago that one should never totally depend on their employer as their sole means of earning money. What if you lose your job? What if your boss makes bad decisions and the company goes out of business? Always have a Plan B.
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@SavvyFrugality
I couldn’t have said it better myself . . . .
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@Savvy Frugality #66: I 3rd that motion…
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I’ve considered starting my own business, but sometimes at the end of the day it’s nice to just leave it all at work and go home to see my wife and play with my son and not worry about the “business side” of it all. (I’m a CPA – networking and finding new clients is a real struggle for me.)
So either I’m not expressing my true-self or my employer is allowing me to do so.
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Great article! I just have to pop in and say thank you for finally making the statement “you won’t have more freedom when you’re self-employed” I, personally, think this is the biggest myth that people believe when they go into business for themselves. And no one ever admits that it’s not true! It doesn’t mean that working for yourself isn’t more rewarding in so many ways. But if you are the only person working for your company, it’s a whole heck of a lot more difficult to take a 3 week trip overseas, yet nearly everyone I talk thinks that they will have so much more free time once they work for themselves! Drives me nuts!
Rachel
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I think this article really helps to show I could start a company. I like the idea of Moonlighting to really figure out if I like what I am doing. I think it is a great idea to dip your toe into the market to see what it will be like before you start and take the leap. I would like to hear more about how he made the leap and made it successfully.
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Would love to see more articles in GRS or elsewhere with specific pointers on how to start a business. Even if it’s a different business than the one I have in mind! I guess what I’d like to learn more about is what do I have to keep in mind when starting a business. (“Need to know what I would need to know”, so to speak.) For example I am sure there are books out there on how to start a restaurant, etc. But which ones are really good? Any great internet resources? Things that would point me in the direction of what kind of insurance one needs, how to get a storefront and how to shop for a deal on that, etc. Thanks for the article.
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There is no time like today to start a business. As Napoleon Hill said:
Most of us go through life as failures, because we are waiting for the “time to be right” to start doing something worthwhile. Do not wait. The time will never be “just right.” Start where you stand, and work with whatever tools you may have at your command, and better tools will be found as you go along.
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I have given a great deal of thought to your suggestion. On the one hand, such an article would have to be generic in nature but certainly, there are basic steps that most everyone must take to set up their business. Great suggestion. If I get the gig, I’ll do it!!!
(vote for Neal)
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This year I started to sell my artwork at various boutiques, galleries, and markets. The good news is that I sell multiple pieces at every venue, a feat in this economy. The bad news is that I haven’t made enough to cover my initial investment (when you count gas, rent, supplies, display equipment).
Although I haven’t made an actual profit yet, I have re-introduced myself to my sewing machine and improving my sewing skills. I’ve applied this to my wardrobe and saved money by making repairs and changes myself instead of going out to buy new clothes. And as I improve, I hope to break out the old patterns and construct a lot of my own clothes, too. A small side business can be a good idea to hone skills long lost. Big money can be saved by doing your own home repairs with the supplies from your side carpentry gig.
If you feel compelled to do something, it’s worth a try. Also, I’m confident I’ll make more than my investment for the holiday and when I rent tables at conventions. I’ll keep at it! Luckily for me, this is only my side gig!
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Van (75)–You may not be making a profit, figuring in your start up costs, but isn’t it gratifying that a few somebodies are willing to pay for your artwork???
That’s the highest form of acclaim!
You’ve proven to yourself that there’s a market for what you’re producing. You need to take that in and savor it…
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I disagree that everyone should have a side business. Some people simply don’t want to deal with it. They would rather take a chance that their boss at work is going to take care of thigns. I wrote about the different mindsets here.
http://www.askthewealthsquad.com/blog/is-self-employed-all-its-cracked-up-to-be/
I do think that everyone should understand the benefits of being self employed or starting a small business. It can be set up so that it doesn’t consume your life though. I think the biggest issue we face when we become self employed or a small business owner is we take the habits we aquire as employees over to our self employment or business.
Being successful means we have to have certain people in our business even if we wear that hat for many years. I wrote about the 7 Key people in this blog post.
http://www.askthewealthsquad.com/blog/do-you-have-a-wealth-squad-in-your-small-business/
If anyone has specific questions about starting or growing a business, I would be happy to answer them. Just hit me up on my contact form or sign up for my newsletter.
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Good article and great comments – I think many have made great points. It seems as though the viewpoints are from a younger generation – I’m going to give a perspective from someone a bit older:
I have a profession (actually 2) which I have spent 20+ years cultivating. Due to our family decisions regarding following certain employment opportunities, I resigned from a well-paid, ‘safe’ employment and decided to start my own business (consulting). I have now been doing this for less than a year and it has been quite an eye-opener. However, there are a few things I did first to determine if this was for me:
1) I interviewed three other consultants, two in a similar field and one in a disparate field. I asked them how they got started, what types of customers they had, what they charged, how they invoiced, how they set up their business, how they handled the finances, how they handled difficult customers, how they marketed themselves, etc. I also read extensively about how to market, how to handle business transactions, how to write a proposal, and invoice, how to collect, etc. I bought or checked out books (NoLo had a great one) on how to handle business finances, taxes, etc. Every one of the people I interviewed told me I was way ahead by asking them those questions and doing the research.
2) As a minimum, I set up a web presence and email presence for my business. I also purchased business cards and set up a separate business banking account and credit card.
3) I tweaked my professional network letting them know I was available for consulting jobs. You might find that the business will not come from where you thought it would, but tangentially at first.
4) I am in the black, but I keep my expenses low – I think of it like I do my own money – be frugal. Just because you can expense it doesn’t mean you should spend at your whim. You still have to pay for it or generate revenue to pay for that expense. You will have more marketing expenses early on – I speak at conferences right now for expenses or free. This is to get me known as a consultant and not an employee of my previous employer.
5) I was told it would take a year or so to get established – that is true – just now I am seeing a tick up in the volume of different jobs.
6) This is one stream of income for me now. As I am starting later in my career-life, I can afford to earn less now – additionally, I am leveraging my experience and expertise over the years in my chosen profession.
7) The comment on turning your passion into a business is correct – many people find that their passion then becomes work and they lose their desire to practice it. Not everyone is able to separate the business and fun aspect. And not all passions are considered uber-valuable in our society today – example, a lot of people love sports or music, but very few can make it a career. However, they might be able to make it one stream of income for themselves (coaching kids’ sports, teaching piano are specific examples).
Thanks for the discussion-provoking post.
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@Felipe Lopes
I too am 21 and am starting a business, but for the first time. I seriously weighed the risks and benefits and realized that the risks of having your own business only increase with age. Now is definitely our time to go for it!
I am launching my own business for about the amount of money my friends spend on going out in half year!
Best of luck to you!
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With business loans so tough to get, many new businesses need to start part time. It is an effective way to overcome many of the hardships of launching a business in a recession.
RonD
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Good advice. I definitely agree with “testing” out your passion job first…don’t just quit your source of income right off before you are sure it is something you will love doing.
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I contribution is that time will pass regardless of what you do, so why not start a business on the side, it does not hurt and if it works then you can take it to the next level. Don’t over analyze it, just do it.
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