608: Want to Start a Business? 5 Essential Questions No One Asks (Especially if you have a family)

Scott Anthony Barlow 00:00

I've started five businesses. Two of them dismal failures, and three of them profitable and successful. Consequently, every single day I get questions about starting businesses from clients, from people at the coffee shop. Questions like, "How long does it take? When should I take the leap to full-time? What's a good amount to have in savings?" And I answer these, but honestly, most of the questions that I get asked are the wrong questions. In this episode, I give you better questions to ask when you're interested in starting a business on the side and potentially taking it full-time. And more importantly, what most people never think to ask.

Introduction 00:43

This is the Happen To Your Career podcast with Scott Anthony Barlow. We hope you stop doing work that doesn't fit you, figure out what does, and make it happen. We help you define the work that is unapologetically you, and then go get it. If you feel like you were meant for more, and you're ready to make a change, keep listening. Here's Scott. Here's Scott. Here's Scott.

Samantha Martin 01:08

Our intro just said, "Here's Scott", but obviously this is not Scott. This is Samantha, the content manager here at Happen To Your Career, but luckily, I have Scott here with me today to answer some of those questions you heard in the intro and the much better questions you didn't hear in the intro. So Scott, let's jump in.

Scott Anthony Barlow 01:30

Let's do it.

Samantha Martin 01:31

So the idea for this episode came from you talking to all the people that you mentioned– clients, people at the coffee shop, people on the street, family, friends.

Scott Anthony Barlow 01:41

Podcast listeners.

Samantha Martin 01:44

They come to you because, like you said, you've started five businesses. I think a good place to start would be, how you started Happen To Your Career because you did start it on the side of your real-time job.

Scott Anthony Barlow 01:58

You're 100% right. It was started on the side, and it was with the intent to go full-time. However, that's not where it began. But first I should probably back up and say that my wife and I, Alyssa and I, who you've heard, probably heard Alyssa on the podcast before. However, we had run more than one business together. And also I had left a job in the past where I thought that she and I were on the same page, and turns out, we were not. So this influenced greatly how we were thinking about this particular business, this particular building of the business, and then also the exit. And it influenced the building of the business because we wanted to make sure that when we were building it out, it was able to be sustainable when we stepped away from full-time income. And it influenced the exit because, well, both of us never wanted to go back to that situation where we were not on the same page and worried about where money was going to come from, I don't know, because we hadn't planned appropriately. So what ended up happening is, because we had done this poorly in the past, we very much created some different interactions and processes and even agreements about how we were going to do it this time around. And so for us, that meant that I wasn't leaving until we both unequivocally agreed that it was okay and we had hit some certain milestones. Milestones like having a certain specific amount in savings, which in our case, was way more than what we thought we might need. And I'm so glad we did because there was a point in time where we used almost all of that savings in a year, oh my goodness, after I left, it was probably a year, I don't know, maybe 18 months in, during year two. So, yeah, there it was. It definitely influenced all of that, and consequently, that, having done it well and also done it terribly multiple times over, then that influences, you know, how I encourage other people to think about this type of transition or even starting about business in the first place, especially when there's other family members involved.

Samantha Martin 04:27

So when people come to you– clients, everybody knows that we listed– what do you usually find is holding them back where they're, instead of taking action, they're asking you, "What should I do?"?

Scott Anthony Barlow 04:42

That's a great question. You know, I think the things that tend to hold people back are, they think that it's going to take, most of the time, they think it's going to take a huge amount of investment from themselves upfront to even start a business. And what I find is that if you're, I don't know, going to be building a factory where you manufacture widgets, like, yeah, that requires a massive amount of capital upfront. But for most people, most people, if you're starting a small business, it doesn't require that. Even if you're starting, say, like, I don't know, an online retail type of situation, that doesn't necessarily mean that you have to hold tons of inventory and service-based businesses, for the most part, you have to have very, very little in order to get started. So I find that most people have this perception that you have to have this massive amount of capital to be able to start a business. And that's just not true. All you have to have is a particular offering and someone who's willing to pay. And voila, that is, by definition, where you're having that exchange of money for something valuable, a business.

Samantha Martin 05:59

So it seems like, once you get started, you realize, "Oh, like, this is somewhat easy. It doesn't have to be this huge thing." But then, on the flip side, I know you've discussed before, once you get into, "Oh, I have a business now. I have customers. I have products", whatever it is, you start realizing the reality of running a business, owning a business, that... And I know there's a lot of things there that many people don't think about.

Scott Anthony Barlow 06:26

Oh, yeah. Well, and, you know, here's another thing that tends to hold people back too, as well. And you and I have talked about this concept many times over because we've tried to represent this psychological barrier on the podcast in different ways and through other content that we've made. But there's this funny phenomenon where, as humans, if we can't go all in and sort of do it perfectly, then why even start. You know, yeah.

Samantha Martin 06:59

Okay, call me out.

Scott Anthony Barlow 07:00

Specifically for you, like we all do it, right? We truly all do. I do as well. So the way that I see that that shows up for people is they feel like they have to have all the pieces figured out before they start. So that might be exactly all the suite of services that they're going to offer, they might feel like, "Oh, I can't move forward until I have my website set up. Like, are people even gonna take me seriously? Or until I have, like, certain credibility indicators. Or until I have..." I don't know, insert your thing here. 100% of the time, people are always feeling those things. Then they may not realize that they are. So if you're listening to this and you're thinking about starting a business, and you are like, "Nope, I don't have any of those things", then that means they're probably blind spots for you. That's okay.

Samantha Martin 07:50

I have my entire business plan written out so I cannot begin.

Scott Anthony Barlow 07:54

Yeah. So instead, part of the advice I tend to give people is, what is the quickest way to get started? How can you get to your first clients, first customers, to test this out in a small way, without even actually formally declaring that it's a business? And people are a little bit apprehensive about that because they're like, "Well, wait. I need to have, like, a business license, don't I need to have all of these other things." So of course, this is where I throw out the disclaimer that some industries are regulated in certain circumstances, and you may need to check with, you know, your accountant, your attorney, to see if the one that you're interested in is, but for the most part, most industries, most offerings, just to get started, and you know, see if you can even get your first client, first customer, first person, to pay you money, like that is the best way to start because then, you have a proof of concept, then you can do all of the other pieces. Once somebody has paid you money, it becomes a lot easier to say, "Oh yeah, this is working. Now, let's get this set up. Let's now get this organized. Let's now take additional steps forward." But most people never get to that point, so there's no need.

Samantha Martin 09:08

So once you've gotten 1, 2, or 3 customers, clients, whatever it is, and you're like, "Oh, okay, this thing is real. This is a business", then that brings about its own problems, as we know. Do you want to talk about that?

Scott Anthony Barlow 09:25

It does. And I think even before we address what those problems are, it's relevant to point out that most people are invested in the idea of a business, not necessarily the actuality of a business. Most people like what they perceive that a business is going to bring them in terms of flexibility or freedom or focusing on something that they are interested in, and they perceive that a business is the only place that they're going to be able to get that. So, by the way, if you're not sure about it, if you haven't already tested it out and already gotten some level of experience or experimented to figure out what a business is actually going to be like, I'm going to give you some previews here in a little bit. However, if you haven't done that, then I would encourage you to do that first, and that's the type of work we would do with many people all over the world when they're investigating starting a business. Let's figure out what you actually want. Figure out a way to test it before you go to all of the trouble and effort to start this massive endeavor that might take, might take years to get up to speed. So back to your question, Samantha, about, you know, what are some of those realities? I think it's probably important to point out that starting and running and operating a business is one of the largest learning curves a person can ever go through. And we were joking about this yesterday, it can be comparable to raising not like one child or two children, but even a herd of children, it can be comparable to doing that, partially because, like, when you become a parent, there's no amount of books and everything else that's going to prepare you fully for that. It just isn't. And especially if you have a herd of children, have you run across the herd of children books? Anyhow, starting a business requires, well, the reason for that is it because it requires so many different skill sets. You know, sometimes it's technology, sometimes it is finances and taxes and operations and service delivery and marketing and sales and all the things that you have to learn to make all of those work together in one way or another. And so, I think an interesting thing that tends to happen, everybody's seen this situation over and over again, where somebody who really loves a particular topical area, like they're a crafts person, or they, you know, love making blankets, or they are really good at golf, and then so they want to run a blanket business, or a golf business, or, you know, whatever else, the the person who is good in the one area, and then now has to figure out all of those other moving pieces, the tech and taxes and everything else that we just mentioned a moment ago. And so people underestimate what that is going to require by, not a small amount, by a long shot, every time. And the bigger the business gets as you are developing it, if one piece is working, then you're sort of thrust into the other pieces, having to figure out, like, "Now I have sales in multiple states, and those require different sets of taxes. And I didn't even know I was going to have to become an expert in taxes. I don't even like taxes." And so these are the pieces that people tend not to think about in one way or another. And I actually personally love putting together all of those pieces. I love the individual challenges of it. But if you don't love it, it can turn into something that is not fun and not desirable, and that sort of sexy idea of having all this freedom in an area that you are excited about, having a business in, can disappear really quickly. So all that to say, if you are, in fact, really, truly interested in all those pieces of running a business, starting simple is key. Starting with the smallest, easiest way to begin, truly is key because it's easy to over complicate.

Samantha Martin 13:48

It kind of reminds me of the situation we see a lot where, of an amazing sales person, it's a promotion to sales manager.

Scott Anthony Barlow 13:57

Oh, yeah, such a good parallel.

Samantha Martin 14:00

"I really loved sales, and now I'm not in sales. I'm managing sales people", or insert the industry in the role. So many people want to start their own business because they love what they do so much, but don't recognize that a business is marketing and sales and taxes and everything you listed. So enlighten me of that.

Scott Anthony Barlow 14:21

That's a great, great point. And so you and I have even had those conversations about like, because we have so much work here that you could dip your hands into all kinds of things, and you have, however, that doesn't necessarily always mean it's a great thing. And we even had that conversation, it's like, "Hey, would you want to lead a portion of a team or an entire team, or anything else?" And it's not always the right decision automatically for someone.

Samantha Martin 14:49

Right. So what would you say to someone who wants to start their own business because they love, I guess, their current side hustle, or whatever you would call it, a passion project that they've been doing for a while, but is nervous about those other parts.

Scott Anthony Barlow 15:08

That's a wonderful question. And I think that one of the things that we teach over and over again, it's probably not gonna be a surprise if you've listened to very many episodes of Happen To Your Career, that if you choose to set up useful experiments that are going to give you insight, real world insight, into what that's going to be like, then it allows you to make better decisions about moving forward. So just a quick example of that. Let's say that you've never had experience with managing finances for a business, then there are some simple ways that you might be able to set up that experiment. You could go take an online class. There's a lot of them that are even available for free or a small amount of money. You could go and shadow a small business owner and say, you know,"Show me. How do you run through QuickBooks?" Or you could go and you could talk to an accountant and pay an accountant a small consulting fee in order to say, "Sit down with me and let me ask you a variety of questions about what this is actually going to be like." And so all of those are different forms of experimentation. Another way that you could do it is you could go out and literally get your first client, or first couple of clients and first couple of customers, and then try to run through all of the finance tracking in a small way and see, "Do I want more of this? Do I want to go deeper in?" And if the answer is 'no', when you have very, very limited finances coming in and limited finance tracking, then you might have your answer, "Okay, if I'm going to build a business, then I need to find somebody else to take care of this." Or, "I really have no desire to do anything beyond the, you know, beyond the craft portion of it", and all of that is useful feedback, which allows you to be able to decide, "Do I dive deeper in, or is it ending with this experiment, and do I need to consider with something else?" Either way is good. Either way saves you time.

Samantha Martin 17:11

When you've decided that you are prepared to raise the herd of children or run a business, same thing. You just mentioned finances, and you also mentioned finances when you were talking about you and Alyssa's situation. What recommendations do you have for preparing financially to start your own business and scale it?

Scott Anthony Barlow 17:35

Yeah. This is, in some ways, the question. I think that a lot of people, their minds go to this. And what I find, this is not true for every business. So this cannot be blanket advice. When we're helping people start a business behind the scenes, which that's not the main thing that we do, but so many people that we work with find that as they go through and they're trying to identify what creates an extraordinary life for them, what's the life that I want to build, and how does my work fit within that life that I want to create, a fair amount of them, I'm not sure exactly what percentage it is, but I'd guess someplace between 15 to 20% of them are interested in building their own thing in one way or another, business or otherwise. And so when we get to be a part of that, as we've helped people build literally hundreds of businesses over the years, we find that on average, it takes some place between three and four years, like, three and a half years. And so that I encourage people to build a three to five year plan when they're focused on building a business, when they're focused on creating a sustainable business. And so that means that before going full time, you need to either have the financial runway saved, or you need to be working at another place that's providing you income, and then when you leave, and then whenever point in time when you leave, if it takes you three and a half years to be able to get to the point where it's sustainably bringing in the income that you want, well, then I would also encourage you to have a year to 18 months worth of expenses saved. That way, you make better decisions. Because what tends to happen is you get to this really critical point where if you're making... if you've left and you don't have money coming in the door, that creates extra pressures, and those extra pressures cause you to make short term decisions or bad long term decisions for your business. And that's a very human thing to have happen, but it's not necessarily a great way to make it further sustainable. And I think that that's one of the reasons why, even when people do all this planning and have this intention, you know, just not having enough financial runway saved, changes the decision making and strategy.

Samantha Martin 20:08

I think you had said before when we were discussing this, that most of the people that we have worked with to start their own business have taken an average of three to four years. Is that right?

Scott Anthony Barlow 20:20

It is. And to be clear, three to four years to get to the point where it is sustainably bringing in what their target income. A lot of people are tending to target someplace between, you know, $100,000 a year to $200,000 a year, a lot of the people that we've worked with in the past. So they want it to be bringing in $10,000 or so a month, or $8000 to $16,000 a month.

Samantha Martin 20:47

At what point, or, I guess, that is the decision in itself, does it become less of a side business and more of it's the decision to step away. When does the, I guess, do the scales start to tip? Or when should you... what's your advice on that decision?

Scott Anthony Barlow 21:05

I think that's a really personal decision. I could answer that in a pretty logical way, saying, "Hey, you know, if you're trying to build this particular type of life and have this type of impact, are you able to have more of the impact in your, you know, current situation, or the business situation?" And so we could look at it that way, in terms of from a holistic, mutually dependent what's the impact that I'm having in the life that I'm building. But also another way to look at it would be to say that "How comfortable am I with shifting to 100% of the income is reliant upon me in a very, very different way than working with somebody else, whether it's an employee relationship or a contract", or whatever your your current situation is, and that's something where the shift is never going to be fully comfortable, but instead, it's about what pressures it's putting in place for you. And I think that's another consideration because for some people, it might stretch them to have two types of work that they are doing, but it still might create a better quality of life for what they're trying to do, compared to moving from a side business to a full time business, full time situation. So I think those are the considerations. You know, first, what type of life are you trying to build, what impact are you trying to have? And then also, what else is this going to do to your quality of life in making this decision overall?

Samantha Martin 22:52

And that type of a big decision often or always, if you have a spouse, should likely include them.

Scott Anthony Barlow 23:01

Yes, this would be good life advice. If you have a partner or spouse or other people who have a significant vested interest in what you are doing, where your income is coming from, and where your time is spent, yeah, 100% I'm in agreement with you. Samantha. You've got to make it a collaboration, if you will. It has to be a bigger decision than just you saying, "Yep, totally doing this. All right, let's go. Get on board."

Samantha Martin 23:27

Oh, I did want to ask before we jump more into talking about that conversation. Just from your experience, did you find that your feelings about the business changed once it became like went from being your side gig to your full time gig?Was it, I feel like a side gig or a side job or a side hustle might be like your passion project, or you might be the thing that's exciting you outside of your job, but then when it becomes your full time thing, there might be more pressure there. Did you find that?

Scott Anthony Barlow 23:59

I definitely did, and each time too. So I've made multiple transitions from having another job into a business and then relying on that business for income, where it is, you know, paying my bills and everything else, and yeah. And every single time, it introduces additional pressures, even though, when we created Happen To Your Career, I left. Maybe, I don't remember the exact time, but it was close to three and a half years into the start of the business. And we were sustainably producing at that point about $100,000 a year profit, roughly. I knew that I wanted to have a team from the beginning. So we were, we had, you know, quite a bit more revenue than that, but that was part of how I wanted to build the business. And that said, even though Alyssa and I had still set aside a pretty good chunk of money and savings for if and when things went wrong, it still creates additional pressures that you just don't think of. For example, here, I'll give you a one that just people don't anticipate. What I thought, and I've done this multiple times before, so I should have learned the first couple of times around or first time around, what I thought is that I'd have so much more time when I went from full time job with doing Happen To Your Career on the side, building Happen To Your Career on the side, and then shifting into no job, and 100% Happen To Your Career. And what I found is that what was causing me to be so productive with the full schedule and all the things we had going on for our kids and everything else, as soon as that one pressure went away, and as soon as that one set of time was no longer filled, then I became far less effective, which then created its own weird set of additional pressures. So those are the types of things that people don't anticipate. And that's just one example of many, many of them.

Samantha Martin 26:13

Another thing you have talked about before while you are when you're working and you have another business on the side is deciding whether or not you're going to talk to your employer about the fact that you have a job on the side. So when does that make sense? When should you discuss it with them? What would that do for them, for you?

Scott Anthony Barlow 26:37

Yeah, it's a great question. And I think most people I found are really hesitant to talk their employer. And I understand that. Totally understand that. I've done it multiple times over, and it feels highly uncomfortable, even when you have a great relationship with the people around you, and even when you've got a situation that will be supportive of that, and if any of that is not there, I would not encourage you to just jump ahead and have the conversation. But, you know, consult with somebody who can help you evaluate the situation first and has done this many times before. Obviously, we do this, but take a partner in this, in one way or another, whether it's us or somebody else that has had many of these conversations, and, you know, has done lots of negotiation and is used to navigating through potentially conflicting situations, take a partner. But the considerations there are usually people feel like they need to give people an end date. If I say I'm going to leave, I need to give people an end date. And that means that I'm like, all in on this, which makes people nervous. I don't think that you actually necessarily need to. And I'll just give you an example from my situation. You know, I had a great relationship with my boss and my boss's boss, and, you know, some other people that I reported to, and the plan was for me to stay around and basically become a VP in a certain HR segment. And I told them from the very beginning that my long term plan, probably 10 years out, was going to be going back to running my own business, and I didn't know what that was going to be at the time. Obviously, it turned out to be Happen To Your Career. So the conversation that I was having with them was, "Hey, you know what? I definitely am going to make a move to starting my own business. I don't know exactly when that's going to be. I don't know exactly when it will become profitable enough for me to leave, but I wanted to begin having this conversation with you now. That way, we can plan accordingly. Because what that does mean is I probably will not head down the VP track. I don't think that that makes sense to you, and I want to make sure that I'm setting you up for success. And also, what that means is I'm not jumping ship, like, I'm not jumping ship tomorrow. You know, this could be years in the future, and I want to make sure that we are both on board so that we can plan accordingly here." So that was what the first initial conversation looked like. It was really similar to that and reassuring my boss that even though my plans have changed slightly, nothing really had actually changed. I'm still there. I'm still all in. And that is, that's the type of conversation people might have at first. Again, this is a negotiation type of conversation. So take a partner. Don't just go and have this conversation. Have somebody help you think through your plan and evaluate, "Is this the right situation to be able to have this conversation or you can get the support that you need?"

Samantha Martin 30:01

Another concern that we have seen when people are thinking about starting a business on the side of their job is the time commitment. And I know that comes up a lot when they talk to their spouse about it, if they have a family and a full time job, and they're like, "but I also want to do this thing." So what's your advice for the time management aspect of it all?

Scott Anthony Barlow 30:23

Well, I think this really goes back to what you mentioned earlier where if you have a spouse or a partner or family members, they have to be on board. And this can't be a single decision by you. It has to be a collaborative decision, and that means that you're going to have to be clear with yourself, first of all, about why this is important to you, and then you're going to have to be able to articulate that to your partner. So when you go and have that conversation, it can't be like, "Hey, I want to start a business, and I really want to leave 12 months from now", because what your partner is going to hear is, "Oh, my goodness, all our income is going to disappear 12 months from now." That's not particularly helpful to either of you. Instead, it has to be much more about, you know, "I'm really, really interested in building a business. I believe that this will allow us to live this type of life. The other reasons that I'm really interested in doing this are because, whatever insert here." In my case, I really wanted to be a role model for my kids. I really was interested in allowing Alyssa and I to build a situation that allowed us to be able to travel in a way that, you know, we couldn't otherwise, and now there's many jobs that will allow you to, doesn't require a business to be able to do that. But for us, it really was the right thing, because we wanted to be able to have the flexibility to build other businesses too. And so when I was having that conversation, the time that I did it well, it was much more about I'm committed to figuring out with you, in this case, Alyssa, what that looks like, how much money we would need to have in place, what would make you comfortable for that type of transition, how we can do this well as a team, essentially, as opposed to me just leaving, I'm not interested in that at all.

Samantha Martin 32:21

So maybe I'll turn your normal question back around on you. If there's someone out there that is thinking about wanting to start their own business while they're still working full time, what advice would you give them for maybe taking the first step, or how to start thinking about it differently. How would you summarize? Just some advice for that person.

Scott Anthony Barlow 32:45

Figure out why you want to build this. This business. And then determine, does that actually need to happen with a business? And I think that's step one. Once you've determined that, "No, I really, actually am interested in building a business, and not just the idea of a business", then I think step two is, what is the quickest way that I can get to customers? What is the quickest way I can actually go and test this out and create an experiment to determine, am I going to like this? Is this going to function in the way that I think it's going to function? How will I be able to navigate through the challenges that are likely to pop up? And what are even those challenges? How can I investigate this? So putting together a series of small experiments, and a lot of times the easiest way to do that is just getting your first customer in a very, very small way.

Samantha Martin 33:39

Great advice. I think it's interesting just from listening to you talk about this over the years and today, it seems like there's kind of two buckets of people that we find. There's someone who is very passionate about something that they're doing, maybe it's like knitting, and they're like, "Maybe I should turn this thing I love into a business." And then there's a lot of people that come to us and they're like, "I've always wanted to start a business. I've always wanted to be a business owner, but I'm trying to figure out what I should do." So I guess, is that advice the same for both of those buckets of people? Or does it change at all?

Scott Anthony Barlow 34:16

I think it is the same. I think it looks different. The types of experiments you might be running look a little bit different. Now, for people who are in the United States, our tax code is heavily, heavily slanted to where it's advantageous for business owners. I feel like anybody who makes more than $60,000 a year should probably have a small business under their name. And, you know, just do one or two transactions or something a year, because it's so beneficial on taxes, so beneficial on taxes. And this is another situation where I say, "Go talk to your accountant to figure out specifically", but in general, that becomes a pretty big advantage, at least in the United States, not always the case in other countries. And that said, to go back to your question, I really do think that the full scale developing of a business requires getting a little bit deeper in, whatever way makes sense, to see what it's actually going to be like. And then waiting even a little bit deeper beyond that. When people initially start to wade in, it gets them more excited, and until they encounter something that is really hard for them, then that's where they can evaluate. Like keep wading in deeper, until you encounter something that is truly more difficult for you, or that you have to overcome, and that should give you some better feedback about, "Is this something that I'm willing to work through?" Because those challenges will pop up, even more so, when you are relying on any kind of income.

Scott Anthony Barlow 36:06

Okay, so at this point, if you still believe you're interested in a business, building a business for the sake of a business, or you want to find out if that's going to be right for you, then I would encourage you to email me directly, Scott@happentoyourcareer.com, you can put 'Conversation' in the subject line. In fact, put 'Conversation About Business" in the subject line, and I will make sure that you get in touch with the right member of our team, and we can figure out how to support you, even a custom plan to be able to figure out the very best way that we can help you get to, not just a business, but the life that you want to build.

Scott Anthony Barlow 36:43

All right, here's what's coming up next week, right here on Happen To Your Career.

Scott Anthony Barlow 36:49

When you first consider a career change, it's impossible to predict all the obstacles that could get in your way. But there's one obstacle that I am 100% sure without a doubt that it will be there. What is that obstacle? Well, drum roll, please. It turns out it's you. Yep. The biggest obstacle standing in the way of your ideal career is you– your indecision, your doubts, your overthinking, your tendencies, your procrastination, your comfort zone, all of it. It's keeping you from what will likely be the best decisions for your career and your life. All you have to do is just get out of your own way.

Scott Anthony Barlow 37:33

All that and plenty more next week right here on Happen To Your Career. Make sure that you don't miss it, and if you haven't already, click subscribe on your podcast player, so that you can download this podcast in your sleep, and you get it automatically, even the bonus episodes every single week, sometimes multiple times a week, until next week. Adios, I'm out.