How to Save Money to Start Your Own Business

When saving up to make the self-employment switch, don't sell yourself short.

Starting a business almost always takes money. When saving up to make the self-employment switch, financial expert Edward Kohlhepp, CFP from Doylestown, Pennsylvania, recommends that you don’t sell yourself short.

“Don’t stop when you have enough to just buy the business,” he says. “You’ll need money for operating expenses such as taxes, rent and payroll, plus you should have six-to-12 months of personal living expenses saved to tide you over until the business begins generating reliable income.”

Here is a four-step plan to help you start cutting costs and save money so you can get your business up and running as soon as possible.

1. Start Budgeting

Budgeting is an important part of any business, so if you haven’t started a budget yet, this is the time. There are several ways you can do this, from an old-school pen and paper system to using budgeting software that lets you manage your household costs in addition to your business finances, so you can keep tabs on your various sources of income all in one place. (Disclosure: I write for Quicken, who produces these types of products.) You can also use a combination of the two or other methods that work for you, so long as you start a budget and stick with it. Remember: Budgets can be fluid, so feel free to adjust as you go.

2. Focus on the Essentials

As you create a personal budget, keep a record of your daily expenses. If an expense isn’t essential, cut it. For example, it may be part of your morning routine to grab a coffee for the commute. But bringing your own java in a travel mug compared to buying a latte every day will save you serious cash after several work weeks. Review your monthly expenses and eliminate those you don’t really need. Some other considerations:

  • Will a Netflix or Hulu subscription allow you to cancel your premium cable service?
  • Do you use your gym membership often enough to justify the cost?
  • How much can you save by buying staple items in bulk?
  • Would using public transportation, cabs or services like Uber be cheaper than owning two cars?

If you find that your excess expenses most often happen while you’re on the road, take your budget with you. Budgeting apps can help you track personal and business expenses on the go from wherever you are.

3. Negotiate for Savings

Only half of all consumers bargain over prices when making a purchase. Yet 89% of those who did were able to get a deal at least once in the past year, according to the Consumer Reports National Research Center.

Even if you find a great price online, services like Amazon and eBay often allow you to negotiate on the price with some sellers.
When shopping for items in person, always keep an eye out for a way to get a deal. Negotiating often works best when you can see the person face-to-face. Here are some strategies:

  • Ask if there is a discount when you pay with cash.
  • Point out a flaw or defect in an item you want, like a loose button on a jacket, then ask if there could be a discount because of it.
  • Ask for a discount when buying in bulk.

4. Eliminate High-Interest Debt

Carrying high-interest debt is an extra financial burden you don’t need when you’re ready to start your business. Calculate how much loan interest is costing you each year and compare that to the interest you’re earning on any investments you may have. If the difference is substantial, it may be wise to pay off those debts immediately. High-interest debt can also impact your credit. You can see how by viewing two of your credit scores for free on Credit.com.

When saving for your business, always consider what your needs may be in the future. For example, if you don’t cancel your credit cards after paying them off, you will have available credit to fall back on should your business suffer a setback.

Image: JohnnyGreig

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Confessions of a Side Hustler: How Full-Time Workers Keep Their Side Gigs a Secret

Many Americans are juggling extra gigs on top of their regular nine-to-five. According the Bureau of Labor Statistics, about 7.5 million Americans held more than one job in 2016. The figure rose by more than 300,0000 workers from the previous year, due in part to years of stagnant wages, a competitive labor market and the growth of the gig-economy. Of the multiple job holders, more than half, or 4.1 million, split their time between a full-time and part-time gig.

Having a side gig waiting tables after work is one thing. It’s when workers decide to turn their side hustle into a full-time business that things can get complicated.

For budding entrepreneurs, it can make sense to continue working full time until their new venture business is up and running. A full-time job provides a certain level of stability — like a consistent salary, health care, and other benefits.

Knowing when and if to disclose your new business with your employer is the hard part. For that reason, some entrepreneurs choose to keep their secret side hustle just that — a secret.

Some experts say an employer should know if you have any business interests outside of your daily work responsibilities. Others argue what you do on your free time is none of your employer’s business so long as you aren’t using company time or resources.

“Some employers really encourage their employees to work on side businesses because it stimulates creativity,” says Jill Jacinto, a millennial career expert at Manhattan-based career consultancy firm WORKS. On the other hand, she adds, some employers “might feel you are neglecting your current job or getting ready to make a move elsewhere.”

Beyond feeling ostracized by fellow workers or their employers, there are also potential legal conflicts or consequences to worry about, says Bruce Eckfeldt, founder of Eckfeldt & Associates, a business coaching and management training firm based in New York City and a master coach for career-assistance company, The Muse.

“Before you invest a bunch of time in your startup, make sure that your current employment agreement isn’t going to be a problem,” he says. If you happen to be launching a business in the same field as your current employer, there may be restrictions outlined in your contract that could come back to bite you.

In addition, you should do your very best to separate your new business from your day job as best you can. Separating your time and focus is a little more obvious — don’t work on your startup at your job — but you may also need to create some physical boundaries too.

“Build a solid wall between the work you do for you employer and for your startup. Separate email address, file repositories, maybe even computers and profiles if you’re really careful,” says Eckfeldt. He says this adds a physical level of separation between your day job and your startup. It also protects you against any claims you have used work time or resources on your startup. Doing so is common for many starting out, but generally considered unprofessional, and could breach the terms of your employment contract.

We interviewed several full-time workers who are secretly juggling side businesses along with their 9-to-5. We asked about their motivations, how they keep their other job under wraps, and the toll it has taken on their professional lives. To protect their identities (and their livelihoods), we have changed several of their names.

Here’s what it’s really like to live a double work life.

“I sell live crickets on the side.”

By day, Jason*, 32, is a project manager for a paint and flooring company in York, Pa.

After work, he puts on a much different hat as a pet food distributor. But he doesn’t sell Kibble ‘n Bits. His website, The Critter Depot, sells live crickets, which pet owners purchase in bulk to feed pets like snakes and large reptiles. Jason also operates a couponing blog under a pseudonym “Jason” and picks up Craigslist gigs in his free time.

“I like to get income from many sources, so I side-hustle,” Jason tells MagnifyMoney.

The husband and soon-to-be father of three says his ultimate goal is to retire as soon as possible. He plans to keep taking on extra work as long as he can manage it. He calls his full-time job “the bedrock” of his retirement plan.

“The full-time job, that’s the bedrock. That’s the foundation. If I had to sacrifice the other three [businesses], I would make sure I kept my full-time job,” says Jason. “Even if my side hustles got to the point where they were pulling in six figures alone, I wouldn’t get rid of my full-time job.”

On why he doesn’t tell his employer about his other income streams, Jason says he doesn’t want to blur the lines between his different businesses.

He’s careful to focus only on office work during office hours, and on his businesses when he’s at home. He doesn’t want to risk losing any trust at work.

“I don’t want [my boss] to think maybe I’m too zoned in on my side projects and not zoned in enough on my at-office projects,” he says.

For him, keeping his job in addition to the side income streams is all about keeping his family afloat.

“If I were a bachelor, I’d say you’ve got to put every ounce of your time into it. But the father in me says you’ve got to be level-headed because it’s not just you that’s relying on [your income], your whole family is relying on it.”

“I’m a travel agent when I’m not working on Wall Street.”

While Fred*, 45, was working at an investment firm in New York City, he developed an idea for a travel business. In 2009, he launched YLime, a concierge service that helps organize group trips for Americans looking to book travel to various countries for annual Carnival celebrations. Recently, he expanded his offerings to include travel packages to some African countries and wine tours on Long Island, N.Y.

His reasons for keeping his side business under wraps are simple: his workplace frowns upon employees having outside income.

“I’ve been on Wall Street for about 20 years now, and there is a certain culture in here. If they see you doing something else, it limits your growth,” he says. “They are not going to consider you for those positions because they assume you’ve already checked out to a certain extent.”

Although he says his company isn’t a conflict of interest for his position, he would be concerned if his higher-ups knew about YLime.

“Depending on your relationship with some people in the firm, some people may try to use that information against you,” Fred says.

“My bosses found out about my secret trucking business from a local news reporter.”

After a management shake-up at the Las Vegas gaming company where she had worked for a decade, 41-year-old project manager Marcella Williams thought her days were numbered.

Fearing she might lose her job, she decided to use her project management skills to open her own business on the side as a backup.

She launched CDL Focus, a truck rental and shipping company, in mid-2015. She rents two semi-trucks, primarily to people looking to obtain a commercial driver’s license. They can use her trucks to practice driving or to take the licensing test without going through an employer to gain access to a truck. Williams employs a driver for the other part of her business, which focuses on shipping.

She spent nearly $130,000 of her own savings and salary to bootstrap the business. In its early days, she admits it was hard to focus 100% on her day job while trying to get CDL Focus off the ground.

“The truth is, I probably spent a lot more time especially in the beginning working on the business than on my job,” says Williams. She gave her full-time job assignments priority and would shift her focus once her regular duties were completed, she says.

Williams recalls a time a potential truck client called her in the middle of a meeting with her supervisor.

“I’ve been in a meeting with my boss and my phone is ringing off the hook and he’s like, ‘do you need to get that?’” she says. In those cases, Williams says she tries to take the call after hours or send an prewritten reply so that she can respond later.

“You want to run your business and stay on top of it, but when you have a one- to two-hour conference call or meeting, you have to decide: are you going to screw over the person who is paying you?” she says.

After almost two years in operation, Williams caught the attention of a local reporter who wrote about her new venture. It wasn’t long before her employers found out.

The same day, her supervisor asked her into his office to be sure she wasn’t going to quit.

Now, she says, “[my co-workers] ask me ‘how is your trucking company going?’ in the middle of cubicle land.”

“I flip houses and sell bounce castles, and my employers have no idea.”

Austin, Texas-based Dennis* says he hasn’t quite mastered the ability to focus on his full-time job and ignore his side business until after work hours. The 31-year-old works as a logistics manager for a large technology company. About a year and a half ago, he and his wife took their savings and launched a real estate investing business.

Dennis and his wife buy, renovate, and resell homes. They learned the basics of house-flipping from a well-known investor in Austin. “Our first year we did 13 transactions,” says Dennis.

Excluding education and other startup costs, Dennis and his wife got into the market with $1,000 in direct mail advertising and about $15,000 spent fixing up their first property. They now earn between $20,000 and $50,000 on each home they flip. The couple says they brought in about $65,000 in 2016.

In 2016, Dennis also launched a pair of e-commerce stores, which sell bounce houses for children and clothing and accessories.

“I work on all three [projects] while I’m at my day job so it is hard, especially trying to keep everything a secret and not having co-workers see what I am truly working on,” Dennis says. “I know that I am not fulfilling my primary duties at my full-time job to the fullest extent of my abilities.”

To make things easier, the couple has hired a call center to take and record all calls from the real estate business, which are then addressed after Dennis comes home from work. He says he will do the same for the e-commerce stores as business grows.

His ultimate goal is to build up enough passive income to replace his corporate income. For now, he keeps his job for financial security, while he grows his e-commerce portfolio and his and his wife’s real estate business.

“The salary and stock incentives that we have right now are kind of hard to walk away from unless I had sufficient passive income that would replace what I have now,” he reasons. He has given himself two years to grow his businesses into self-sustaining operations. At that point, his stock in the company will be fully vested, and he can consider leaving for good.

“I’ve been blessed. I have a good education, and I’ve always had a good job, but ultimately my main goal in life is to be independent and not have to do the corporate grind,” he says.

The post Confessions of a Side Hustler: How Full-Time Workers Keep Their Side Gigs a Secret appeared first on MagnifyMoney.

How to Pitch Your Business Like the Pros on Shark Tank

Here's how to pitch your business idea like the pros do on Shark Tank.

For the last few years, Shark Tank has been a hit among the nation’s TV viewers, and it’s easy to see why. Every week, hardworking entrepreneurs go before a panel of business moguls in the hopes of taking their venture to the next level. Each success story leaves the audience with that “anything is possible” sentiment that drives so many inventors to take their idea from concept to consumer. The million-dollar question, quite literally, is “What does it take to make the perfect pitch?”

Of course, this question isn’t exclusive to the televised success of Shark Tank participants. If you own a business, knowing how to successfully pitch it could mean the difference between absolute success and failure. Ultimately, most advisers will tell you that you simply need to be “prepared,” and they’re right.

However, how you prepare and what guides those decisions is what really matters. Consider the following tips to create a strong pitch for your business.

1. Develop a Solid Business Plan

A solid business plan made the top of this list for a reason: It’s that important. In one episode of Shark Tank, Mark Cuban — successful businessman, investor and Shark Tank staple — scolds two contestants for coming in with the “worst presentation ever.” Why? Their pitch didn’t include even a hint of a well-thought-out business plan.

A business plan proves that you’ve done market research and answered the who, what, when, where, why and how of your business. When you pitch your business, you’ll need to be prepared to answer in-depth questions about everything from marketing initiatives to production and delivery plans. If your answers are vague, the chance of success will be low.

2. Address the Need

The pitches that show products or services as meeting a perceived need, as opposed to only a want, are consistently the most successful, according to Bill Murphy, a contributing author for Inc. Magazine, an entrepreneur and self-proclaimed Shark Tank addict who analyzed 377 pitches that appeared on the show.

This is particularly true if you pitch your business as one that addresses a mass-market need such as food or clothing. When it comes to these items, the market is often oversaturated, and you’ll need to distinguish your product or service from the rest. The unique need your idea meets is where you will find your success.

3. Have a Story

If you’ve tuned in to Shark Tank at any point during its eight-season run, it’s likely that you’ve been moved, or at least reacted, to a product pitch or two. That’s not because the entrepreneur hopefuls are limiting their pitches to just the facts. Successful product pitches include the story behind the product, and in doing so, they are in a sense bringing their products to life.

Stories show development, success, determination, market research, credibility, etc., and when accompanying your well-crafted idea, they can add a human appeal that’s needed when you pitch your business.

4. Practice Your Pitch

Never go in without practicing. Ever. Practice in front of a mirror, convince friends and family to lend you their ears (and eyes), recite your pitch in your car on your commute … It doesn’t matter how you practice, just that you practice. You may be the most self-assured, confident, well-researched entrepreneur with a solid business plan and a great story, but if you don’t practice before you pitch your business, you’re doing a major disservice to yourself.

Practicing will help you identify gaps in your pitch, efficiently incorporate any props you have and ultimately increase your confidence during delivery.

5. Be Confident

Whether consciously or subconsciously, people react to the level of confidence, or lack thereof, that someone exudes. When it comes to how you pitch your business, this is absolutely true. Investors at all levels of commerce, including Shark Tank, expend capital to products and services they feel confident about. If you don’t feel confident when giving your pitch, it’s highly unlikely they will either.

Stand up tall, use strong language and diction, keep your head up, smile, use your hands, and be proud. All of these, when paired with the tips above, may help increase the likelihood of success.

In the hunt for the perfect pitch, it’s likely that you’ll find multiple suggestions and tips on how to obtain the funding you need, but at the heart of each and every one of those, you’ll find that preparation is a key component. Though you might not be pitching in front of the Shark Tank audience, you should treat your pitch as if you are because your product’s future depends on it.

[Editor’s Note: Having good credit can be instrumental when it comes to financing your business, because many lines of credit, including business credit cards, require a personal guarantee. You can view two of your credit scores, updated every 14 days, for free on Credit.com.]

Image: Boogich

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