As recession fears loom, many professionals are looking for additional sources of income, both to diversify their earnings and safeguard themselves from record-setting inflation. Stories that make entrepreneurship sound easy are all around us, but many of these pursuits require developing additional skills, having a substantial online audience, securing outside funding, or all of the above.
If you’re entrepreneurship-curious, one coach suggests a simpler approach.
“Definitely do not quit your day job,” says Sigrun Gudjonsdottir, a business mentor of 10 years originally from Reykjavik, Iceland. “So many people start with a side hustle to feel things out and see if they like it, and that’s fine. The real failure is never getting started.” Gudjonsdottir says that a service-based business — one in which you trade your time and/or expertise for money — has one of the lowest barriers to entry, and is great for beginners and 9-to-5ers who are still working things out and want to test-drive different ideas.
Using your work skills to make money on the side is often referred to as moonlighting, and many employers have clauses or limitations on what employees can and cannot do. For example, if your side hustle targets the same clientele that your company is trying to reach, it’s probably a no-go. Be sure to check with a manager or HR on what your options are before you proceed.
That being said, consulting, coaching, or freelancing can be great ways to make extra cash. If you aren’t sure how to get things off the ground, here are Gudjonsdottir’s tips on what to prioritize first.
Her Business Leverages Skills Used Throughout Her Career
Gudjonsdottir’s parents were both entrepreneurs, which influenced her from an early age. She studied architecture, and imagined having her own firm one day, but became fascinated by the internet and tech startup culture in the 1990s. She pivoted into working for a software company. Then the dot-com bust arrived.
“They let me go,” she says. “A lot of software companies were over invested, and then [when the bust arrived] they were burning money versus making money.” At the time Gudjonsdottir was laid off, she says the University of Reykjavik was promoting a continuing education program in partnership with Deloitte for female professionals interested in business. The program’s deliverables included creating a mock business plan. She enrolled. At the end of the three-month program, she says she still had cold feet about launching, but found the business education to be helpful in her corporate pitching efforts.
“After the 2000 crash, a lot of companies in the IT industry weren’t hiring,” she says. “It was not enough to apply for a job. You had to convince people to hire you.” Gudjonsdottir pitched a founder, adapted her business plan to the needs of the existing company, and brought her ideas to the meeting. Her preparation paid off, landing her a project management position. She discovered she had a knack for accelerating business performance, eventually ascended to the position of CEO with that company herself, and went on to hold executive positions with other tech companies over the next ten years.
Startup life was taking its toll in the form of migraines. Eventually, Gudjonsdottir chose to step down for health reasons, triggering an inflection point that forced the entrepreneur to embrace self-employment and work on her own terms. She wanted to remain in the realm of business strategy, but was tired of negotiations and funding conversations, so she leveraged the skills she had developed over the years in areas like rapid product testing to launch a personal brand for professionals looking to bootstrap their business idea.
Editor’s Note: Closing the Gender Gap in Funding
Women-owned businesses produce $1.9 trillion in annual sales, but a woman’s ability to operate autonomously both in terms of personal finances and entrepreneurial funding is still recent.
The Equal Credit Opportunity Act of 1974 gave women the ability to open their own credit card and loan accounts. However, women were still not allowed to receive business funding because of the perception that they were “less reliable” borrowers. A woman had to have a man to co-sign their business loan up until 1988, when HR 5050, the Women’s Business Ownership Act, was signed into law. Since the 1970s, the number of women-owned businesses has grown by over 3,100%, but 88% of these businesses make less than $100,000 in revenue a year.
There are funding resources specifically for women entrepreneurs available at the US Small Business Administration and your local Community Development Financial Institution (CDFI). A searchable database of CDFIs is here.
The Most Important Step for Getting Started with Your Idea
Gudjonsdottir notes that, for most people whose business idea involves offering a service, your best bet is to leverage skills you already have and use regularly.
“You don’t need to have run a business before, but it’s easier if [your service] is related to what you already do,” she says. Instead of agonizing over logos, websites, or impostor syndrome, the business coach instead recommends focusing on identifying your ideal client, and notes that many newbies fail because they don’t get specific enough with proving their initial value proposition.
The three questions Gudjonsdottir suggests you ask yourself are:
- What is the problem you solve?
- Who do you want to work with?
- Is your client able and willing to pay — and are they motivated to do so?
“If someone wants to coach people on having, say, a healthy lifestyle, I tell them that’s too broad,” she says. “Right? What does that even mean? [Healthy lifestyle] means one thing to you and another thing to me. If we say losing weight, that’s more specific; maybe I’m interested now, whereas you’re not interested. The idea is more specific, it attracts some people and repels others, and you want that.” She recommends people take a big problem, dial it down to something small, and then go and get feedback as quickly as possible to validate and prove the idea.
Great brands repel just as much as they attract. If you try to be everything for everyone, you’ll quickly lose your footing. Focus on your ideal client, and focus on getting to know them as deeply as possible.
The Difference Between Consulting and Coaching
Consulting, coaching, and freelancing are often used interchangeably, but they have nuanced differences. Consultants are generally defined as experts who come in, provide insight and analysis, and then leave. In contrast, coaches are more hands-on in the implementation process, providing support and encouragement along the way. Freelancing is skill-specific, and usually involves you doing the job on behalf of your client for a set rate.
“I used to have this course on how to find the right business idea, and people told me they loved it,” she says. “I don’t sell it anymore, because a lot of the people who go through a course like this say “Oh, this is my business idea.” And then what happens? Nothing. I was frustrated.” Gudjonsdottir’s speed bump echoes one of the primary criticisms of online course culture, which is that completion and implementation rates are low. She shifted toward coaching when she realized how much people struggled with taking action, and modeled her mentorship approach off of Scrum, a management methodology that builds feedback loops into the iteration process to help teams build products. “You have to get going, quickly create something, put it out there, and get feedback.”
When it comes to dipping your toes in entrepreneurship and making money on the side, the business coach encourages you to take action before you feel 100% ready.
“You just have to decide to start,” she says. “You will never have a ready concept. “Ready” doesn’t exist.”