Business trials

The first thing you learn as your own boss is don't cut your own throat.

The level of commitment of time, patience, energy and money involved in operating your own business can be extreme. You don't want to do that for nothing, or just to have it blow up in your face.

VERY IMPORTANT:

  • Do not, under any circumstances, jump straight in to any business venture, however terrific it looks.
  • Do not lose an income without a way of replacing it.

There's a really hard way of finding out the reason for that, and we can guarantee you're definitely going to be much happier not learning those lessons the hard way.

You can't do business with your eyes shut. Keep them wide open, when you're even talking about business. Particularly when it's your money you're talking about.

You may feel the need to grow an extra pair of eyes in the back of your head.

Do it. It'll save time, later.

The story is you really do need to be sure that your business can operate profitably.

That means, makes money, can pay its bills, and isn't going to send you bankrupt instantly.

You also need to be able to get off a sinking ship, if necessary. Your personal liabilities have to be kept under strict control, in business. If the business sinks, it can take you with it.

So, you do some trials of your idea.

Business trials are a low-risk way of making sure you're playing with a full deck when you really start up your business. You can minimize your use of all that time and money, and at least some of the energy and patience.

You can learn a lot, make some money, and make some contacts while you're at it, too, so it's not going to be a waste of time.

There's a variety of ways of doing a business trial.

The simplest is to do it as a 'hobby business'. Sounds a bit simplistic, but it means that you are doing some sort of business, it's just not your primary source of income.

It also means you don't find yourself working 24 hours a day for low returns. You can pick and choose your sales options, which you can't always do in a single income source type of business. Sometimes you have to take on work, even low paying stuff you wouldn't touch if you didn't have to do it.

Business trials can teach you a lot. Nobody starts off with a 100% efficient, dynamic, business. Even experts had to learn somewhere.

This is a really simple model for a trial business, but it works:

Time factor: You try it out for say six months.
Money factor: You create a budget and stick to it.
Risk factor: You decide if you want to do it part time, keep the day job, etc. (This is often the safest way of doing a trial, think about it.)

Example:

Our friend with the local IT business did his homework first. He had a job as an IT security specialist, earning a wage. He wasn't too happy with it, and figured out he could earn more in his own business. He'd always wanted to be his own boss, too, so that was another good reason to try the idea out.

But- He had a family to support, bills to pay, a mortgage to pay, and he had to be absolutely sure he wasn't going to go broke in the process. He decided to do some moonlighting doing private jobs, which would at least make the bills a bit less gruesome, and the mortgage easier to live with.

He kept the day job going, and used up some of his spare time trying out his business idea. That took some organization, but it wasn't too hard.

So, he began by doing a job for a local factory. Nothing too demanding, pretty ordinary, really, by his standards. Only a simple system, hooked up to some very basic hardware, was required, which the factory paid for up front. The whole job only took about four hours of his time, including traveling.

He discovered that:

  • He could manage his times well
  • The cost of petrol was his only real overhead
  • He made more money in four hours that job than in a day's work.
  • He got return business from the factory and they recommended him to someone else.

Pretty good so far, but that isn't like a wage income. Jobs came and went. He needed to know he had a consistent demand for work.

He got himself better organized, learned how to go and find work for himself and his services. He improved his time management so he could do more, both on and off site.

Then the penny dropped.

He realized he'd actually been reducing the amount of business he could get because he was only doing security. He was working to only about 20% of the market for his services. He was nowhere near full efficiency, as a business.

Being his own boss meant he could do something about that.

He upgraded himself, and fast, as a business. He had more than enough experience to do fundamental business IT work, which generates a lot of regular business, because people are upgrading and updating their IT all the time.

That was where his business really took off.

The original idea was OK-ish, but he needed more experience and exposure to the market to find out where the real business was.

The minute he let his clients know he was in the market for other work, he was operating a full time IT services business. Being your own boss has a lot going for it. He had full control of how he got business, how he did business, and his commercial destiny.

That's what a business trial can do, whether you're an IT expert, a green grocer, or whatever.

The other kind of business trial is more like a full dress rehearsal. You do the business full time, but you commit to certain criteria.

Criteria like:

If the business isn't paying its own bills in six months, and making money, game over, do something else.

If the business hasn't got at least ,000 worth of contracts in six months, forget it, the day job makes more money with less suffering.

If the business goes over budget any time in the first year, bail out.

The time factor is important here, because time is the one thing which will operate in your favor, however tough it gets.

You can set a time limit on your risks.

The money factor is obvious, but you can see what unlimited risk could do to any business. When the ship's sinking, you don't hang around to find out what drowning feels like.

As boss, you need to be able to recognize:

What doesn't work.
Bad risks.
When to get out from under.

Business trials can be life savers. Most small businesses fail because they simply didn't know what they were letting themselves in for.

Extremely dangerous:

They thought they were buying a job by buying a business.

Businesses just don't work like that.

The business is a job. But you're the one paying the costs, and everything else as well.

The name of the game is profit.

Never mind the lullabies, this is business.

Even charities have to make money, to operate.

Be realistic, and stay that way.

If you really want to be your own boss, there's no real choice.