How Can I Develop a Second Source of Income?
So, you’re interested in a second source of income- a “side hustle” to use the parlance of our times. Be careful, because you’re time is limited, and you don’t want to waste time and effort on a venture that won’t work.
Here’s my answer for developing a second source of income.
Start with a need- an urgent need
It’s obvious, but every successful product solves a problem or fills a need- if the problem must be solved quickly, even better. What’s an urgent need? How about a car repair when you’re stuck on the side of the road (‘had the transmission on my car give out on a highway exit ramp. I don’t recommend it). Another good example is heat or air conditioning repair at home.
You’re willing to pay to solve an urgent problem or need.
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Where the rubber meets the road
So, I’m sure you can jot down some realistic business ideas. Once you do, you need to take a hard look at three factors:
- How urgent is the problem or need?
- What’s the size of the market?
- Can I scale to meet the market’s size?
If you don’t have specific answers to these questions, you’ll struggle to get your business venture off the ground.
Spend enough money to validate your idea. If you don’t you’ll really be flying blind as you start your business.
Be an observer
I heard the founder of Wash. It. Later. on the How I Built This podcast. She created a water-tight bag for soaking soiled baby clothes before they stain. Her packaging is an attractive black and white stripped design- it looks like a shopping bag from a high-end store.
If you’re a parent of your kids, this product solve an urgent problem- almost as important as landing on the moon (seriously, it’s that important).
So, how did the inventor, Hannah England, come up with an idea? She observed what was going on around her, and noticed a problem that needed to be solved. That’s a great way to come up with ideas for a startup. Here are some other examples of founders using observation:
- Bliss Spa and Skincare Products: Maria Kilgore started her business career by learning the proper way to give people facials. She was inspired to start her business after a terrible experience getting a facial at an expensive spa in New York.
- LinkedIn: Reid Hoffman noticed that people segmented their online preferences between personal and professional. He started LinkedIn to fill the consumer’s desire for a professional online platform.
- Patagonia: Yvan Clouinard started Patagonia, because he couldn’t find camping gear that was durable enough to stand up to the intense hiking and climbing trips he was taking.
What is it in your own life that’s a problem you might solve?
If you’re recovering from a financial setback, this article may help.
Perform intensive research
Arthur Blank started Home Depot with a partner, but the pair did not open their first business until they performed research on the concept for several years. Blank and his partner had extensive experience managing a successful chain of big box hardware stores, but they did more research to increase their chances of success.
There’s an endless ocean of information on the web, and finding useful research may be difficult. However, it’s worth the time investment to find the right information source for your startup idea.
Find the thought leaders in your particular industry, and find how what they’re saying about the industry. Many thought leaders put out white papers, free webinars and other useful information to attract an audience- and potential future clients. The information must be useful, in order to keep the reader engaged, and it can be a great reference for you.
Here’s an example: I pay attention to content marketing, and I recently came across an infographic from LookBookHQ. I thought the infographic was useful, so I went to the website. I downloaded this 15-page content marketing research document, and now I feel far more educated on the subject.
Find thought leaders- and read, watch, listen to everything they put out. It’s a form of free education.
Spin off your current career/ industry
If you work in a certain field, you probably have your own ideas about how you can improve things. Here are some other business founders as examples:
- Chipotle: Steve Ells worked in a high-end restaurant in San Francisco, was a classically trained chef. He started Chipotle originally as a cash generator to fund a gourmet restaurant, and he wanted to use some unique cooking ideas. Chipotle took off, and he expanded into dozens of store locations.
- Kate Spade: Kate Spade worked in the fashion and design industry in New York for years, and decided that the handbag market was missing something. She started making simple, modern handbags to fill a customer need.
- Clif Bar: Gary Eriskson was a competitive bike rider who was tired of eating energy bars that tasted terrible. His mother helped him create a better tasting energy bar that was healthy- and now Clif Bar has a big share of the energy bar market.
If you come up with an idea in your own industry, you’ll have some natural advantages. You’ll already know about the industry, so the learning curve won’t be as steep. Second, you can leverage your existing contacts to get feedback on your business idea. You know what questions to ask.
Summary
Observe, perform research, and consider challenges in your own industry. Create the smallest test version of your product or service, and see how it’s received by customers. Price your product so you can earn a reasonable profit, and do your homework to find out if the market is large enough to justify starting a business.
Good luck!
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
Co-Founder: accountinged.com
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/
(you tube channel) kenboydstl
This post was originally posted on my Quora page. This post is for educational purposes only.
Image: Bullseye, Jeff Turner CC by 2.0