On average, 4.4 million businesses are launched each year in the United States. I started my first business seven years ago, and spent a lot more money than was necessary to launch because I was impatient to build it fast, rather than well.
Now, there are so many businesses you can build for $1,000 or less, but many people never begin because they think they need a lot of capital. Or when they do start, they spend on unnecessary expenses.
As a financial and business coach, I teach new entrepreneurs how to avoid these common pitfalls and get on a faster path to profitability. Here are three costly mistakes you can avoid when building your next side hustle.
Stop Prioritizing A Pretty And Perfect Website
This mistake personally cost me $10,000 when I started my first business, a fashion rental company, I hired a developer to help me build a website that I ultimately had to scrap. Why? It turned out the business model I started out with didn’t actually work well in real life.
If you’re like many other new side hustlers, and particularly women entrepreneurs, imposter syndrome can prevent you from asking people to pay you. I instead see many new side hustlers agonizing over building a pretty website because they think that’s what will lead new customers to them, versus having to talk to real people.
In hindsight, I could have gotten the same level of online traffic just by having a simple landing page or even a business page on a website like Yelp, just to generate the first customer leads into my business without a costly website. It turned out I was able to use an out-of-box solution for $99 per month, and I didn’t need a custom website at all.
Sell To Five Real Customers On Your Own Before You Buy A Lead List Or Sales Service
You don’t need a business plan to start a business, but you do need real, paying customers who aren’t just buying from you as your friend or family.
When I decided to become a professional speaker, I paid thousands of dollars for a company to provide me with 400 “qualified” leads for speaking engagements that only yielded two paying gigs. This happened partially because more than half the list was no longer updated, and partially because I was a terrible salesperson to start.
Sales can be incredibly intimidating so start small, rather than not at all. I began speaking for free of charge, and I gave myself permission to do so to attract people outside my social network in exchange for gathering data around my business process. I also tested out what would be the most effective way to promote my business and produce better content for future engagements.
After my first five speaking gigs, I bumped the fee up to $99 and that eventually led to customers paying $1,000 for a speaking fee. If you choose a platform that charges a processing fee, don’t forget to include that in your pricing considerations.
A lead list or a sales service is useless if you’re not clear on what you’re selling and how to make it a no-brainer for your customers. In that pilot process, I also added new speaking topics, and recorded content and bonus materials that helped me up my price. Now, I’ve earned thousands of dollars for speaking gigs and my rate continues to grow.
Get Addicted To Execution Instead Of Inspiration
I painfully made this mistake early in my current business when I paid $6,000 for a sales coach who didn’t really deliver what I had hoped for, but it also failed because I didn’t have a clear model myself.
If you think of simple things — a lemonade stand as a kid or holding a garage sale to get rid of your old junk — starting a side hustle isn’t that complicated. But the self-help and coaching industry has grown exponentially, making new entrants think that it is. According to the International Coaching Federation, the total industry revenue in 2019 was $2.849 billion, increasing 21% since 2015.
I recently taught a cohort of financial education students about saving money and budgeting. One aspiring entrepreneur asked, “Is it okay for me to buy this course from this marketing guru? I think it will really help my business.”
I asked her, “How many courses have you bought, and how many of them did you complete and implemented everything you learned?” When she sheepishly said none of them, I offered the advice to not buy any new courses until she completes the ones she’s already bought. I refer to these students as having “inspiration addiction.”
I warn new entrepreneurs to carefully vet whom you seek education and advice from when you start a business. Sometimes, it’s because the actual content isn’t valuable. And sometimes, it’s because aspiring entrepreneurs buy into the dream of owning a business but lack the skills to implement the actions to become profitable.
I do think it’s helpful to invest in business education when you start a new side hustle. In particular sales, marketing or personal finance training can help you scale faster. If you do decide to invest in education, personally commit to finishing what you started when you bought into it.