Thoughts on Starting a Side Business in a Down Economy

Spend less than you earn doesn’t just mean cut back on your spending. It also means striving to earn more income when you can, because the real goal is to maximize the gap between your income and your spending and then use that for a greater purpose (saving for your goals).

When the economy is good, there are a lot of ways to increase your income: hunting for a new job, asking for a raise, switching careers, starting a side business, and so on. Unfortunately, when the economy is down, many of those options are much more dangerous than before – people are afraid to rock the boat at work because of fears of layoffs and the job market is pretty tight as well.

In a down economy, I believe the best way to set yourself up for more income over the long haul is to start a strong side business. A side business started today will be ready to really thrive as the economy begins to rebound and people begin to spend their money more freely. Better yet, many good side businesses don’t have a tremendous amount of startup cost, so you don’t have to put yourself at personal finance risk right now.

You can do this. Many, many people believe that they don’t have what it takes to make such a thing succeed, especially now in terrible economic times. That’s simply not true. There are many, many ways to make extra money no matter what your skills are.

Thoughts on Running a Successful Side Business

Think of a side business as a hobby with benefits at first

Don’t worry too much about choosing the activity that will earn you a lot of money.

Instead, start off by thinking about the things you enjoy doing. For example, my mother truly loves young children – babies and toddlers. Few things make her happier than rocking an infant to sleep. Thus, for a while, she’s considered opening up a very small in-home daycare, simply because she personally enjoys the experience so much.

The Simple Dollar started off as a side business in a sense. I never anticipated it would earn very much money, but I knew that I enjoyed writing and felt I was at least moderately skilled at it. It was a great way to funnel my energies into something that could help others and might potentially earn a few dollars.

Answer the question: What do you truly enjoy doing?

Don’t answer this immediately – it’s much more effective to start a list and keep it over a period of time. Write your ideas down now, then leave the list out somewhere where you’ll routinely bump into it.

Also, it doesn’t have to be something that others consider fun. It’s about what you enjoy doing. What things do you do that leave you feeling good after you do them?

After a week or so, take a look at all of the things you’ve written down. Somewhere on that list is the perfect side business for you. The trick is finding it.

Try brainstorming a few different ways to earn money for each of the items on the list.

Let’s say, for example, that you wrote down “prep sports” as an interest. Perhaps you could become a referee. Perhaps you could start a blog discussing prep sports in your state. Make a list of all of these ideas – two or three or four for each thing you enjoy.

What you’ll find is that some of the ideas sound unappealing and others sound merely okay. What you’re looking for, though, is the one or two items on the list that fill you with excitement. You’re getting close.

If you have a small handful of ideas, whittle them down by eliminating ones that would require a large initial investment and also eliminate the ones that seem like they might wear on you with a large investment of your time and energy.

What you’re left with is something with potential. It’s something that can fill your spare time with something you enjoy. It’s something that can earn you some extra money on a regular basis.

So now what?
You have your idea. Now get started. Let the idea fill up your spare time – devote at least an hour or two to it each evening. Don’t necessarily seek income right off the bat – instead, figure out what you’re actually doing by learning from others who are doing similar things (the internet is a fantastic resource for this).

Try, try, and try again.

Don’t just sit there attempting to formulate the perfect idea. Instead, give your pretty good idea a shot. If you fail, great – learn from it and try again. Try as often as you can.

I’m reminded of a great story I read a while back, originally told by Alison Woods:

The ceramics teacher announced on opening day that he was dividing the class into two groups. All those on the left side of the studio, he said, would be graded solely on the quantity of work they produced, all those on the right solely on its quality.

His procedure was simple: on the final day of class he would bring in his bathroom scales and weigh the work of the “quantity” group: fifty pound of pots rated an “A”, forty pounds a “B”, and so on. Those being graded on “quality”, however, needed to produce only one pot – albeit a perfect one – to get an “A”.

Well, came grading time and a curious fact emerged: the works of highest quality were all produced by the group being graded for quantity. It seems that while the “quantity” group was busily churning out piles of work – and learning from their mistakes – the “quality” group had sat theorizing about perfection, and in the end had little more to show for their efforts than grandiose theories and a pile of dead clay.

Go out there and try something.

You’ll probably fail, but learn something from it. Get back up and try again.

Don’t spend hours and hours sweating over making a blog post perfect.

Write something, edit it a bit so that the big ideas are clear, then share it.

Don’t worry about being the perfect referee.

Learn the rules and procedures of the game, then go out there and try it.

Don’t worry about knowing how to handle every computer repair task.

Master the basics and be able to back it up with good documentation, then get started.

Most important, don’t worry about maximizing your profit.

Instead, focus on enjoying what you’re doing and building a positive reputation as you learn and improve. Eventually, you’ll reach a point where you’re in demand because you’re both skilled and you have a positive reputation – and then you’ll be able to earn quite a lot.

Good luck.

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.