Hedge your cashflow with a side business – part 1 – What do we need to start one

By Sendy – 21 October 2008

So, you have a job, that gives you a income stream, and regardless of your satisfaction with the amount of the income (most probably you’re not satisfied), it’s important to recognize a more damning fact, that it’s just one source of income.

Now, this represents a risk, if you only have this one source of income, and that source income goes down the drain, you’re entire source of income also goes down the drain. Leaving you with no option but to tap into your savings to maintain your lifestyle while you look for a new job. Baadddddd. This is a double whammy, not only your income move from positive to nil, your asset also move from dismal to even less.


How do we hedge this? well, at this time, most people would probably understand the 4 quadrant of income: wages, professional, business, and investment (it would be interesting if there’s another self-standing source of income, need to think about this).

A working man like us don’t have time to be a professional at night (and vice versa), since if we are, that means we’re not doing the best in our respective line of work, and that’s simply stupid. If you want to have a career, then go madness at it as your day job, so you have a fair chance of getting a good salary from that career. if you want to decide to moonlight a bit in the night…well, there’s a good chance you won’t be able to compete with the Real professionals who not only moonlight at the stuff.

Ok, investing…hm…do you notice that investing gives menial rate of return? I mean, look, 10% of $ 1 million is nice, but if i have $ 1 million to invest with,  i won’t worry about cashflow in the first place. And those Hedge Funds and Berkshire Hathaway shares? heck, if i achieve the financial position to participate, i might write a blog about investing rather than about working proffesionals

So, what do we got left? Business…

Dreadfull isn’t it? Can’t you see i’m busy enough with my day job, how do you expect me to start my own business, and this blogger just wrote about being “madness at your day job” a few sentence before this stupid aha moment, and really, if i have the capital to start a business, why should i worry about cashflow.

Now, there’s a lot of misconception of what is really needed to start a business. Here’s what i think is the main ingredients to start a business (in order of importance):

1. A mind that actively search for business opportunities. You see those commercial vehicles day in-day out? bringing goods and service guys? What do they represent? Money. You see everyday objects, and you think, who made this stuffs? whose their supplier? Can i import same stuff from China? Can i export same stuff from Indonesia? You see people, businesses, their activities, and you wonder, what service would they like to have that makes their life easier? What service would they like to have that they don’t know yet that they would like to have such service available? Your brain is the easiest of capital, you have it right there, you don’t need to pay to use it, it’s available for you each moment your awake, use it, think, what business opportunities lies behind each product and human activity.

2. The balls to start a business. Not only u need the right mind, you also need to have the right mental attitude. If you think that a business is to scary, and you’re not willing to handle that fear, stop reading, you waste to much of your time already. Starting a business will be tough, running it even more so. You will find difficult suppliers, hordes of operational detail to solve, taking a leave (oh those precious leave days) to have a meeting with partners only to have your time wasted, clueless employees, a lot of problems awaits you, if you’re scared, stop now. But please, don’t use lack of money/capital as an excuse for fear, Money is the least important requirement to start a business.

3. An identified and accessible venue to start a business.  Ok, let’s get real, all those thinking won’t yield any cash if it’s not converted into real business. Now, use the afore mentioned capital again, discover a accessible venue to start a business. Example, exporting a small amount of craft from India to the United States (if you happen to live in India), or distributing bakery products to cafetarias. You know your own limitations, your knowledge, your time, your money, these are all limitations, but they’re not fatal limitations, you just need to find a business venue that falls within your limitations (fear not withstanding). Business is like clothes, there are clothes at any price range, from $ 1 to hundres of thousands dolars, same with business, there’s a business for every amount of capital available.

4. Time. Ok, you’re a working man, what does that mean to your time commitment to the office? varies a lot right? Some job can be done well enough if you do it exclusively from 8 to 5 mon-fri (think of a garderner that works for a landscape firm, his moves his career forward by being the best garderner during his work time). Some job need mon-fri to be successful ( a banker or financial analyst need to read the financial news, read finance book, study for certifications if he wants to be ahead of the pack). Some job need an entire week (e.g.: investment banker, a management consultant who works with Project Leader and Partner who don’t know how to push back). But even if you work for the extreme cases above, you still have your leave days, yes, your leave days, and if you’re really intent on starting a business, you will view that as a necessary sacrifice.

5. Money. So, off all five, money is the least important. Now, this doesn’t mean money is not important, money is important, but it’s the least important, so, imagine how important the other 4 things are. As I mentioned before, there are kinds of business for all sizes of money. And if you think you don’t have the money yourself, have a partner. Right now i’m starting a business where each partner put $150, told you, you don’t need thousands of dollars to start a business.

I will continue with the mechanics of starting the business on the next part

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