McSmartypants Software

Want to start a business on the side? We've seen successful businesses start on as little as 5 hours per week.

Here's what you need though:

1) Something that excites you. What could you talk about nonstop? You'll need to do some form of marketing and likely need to produce content weekly- what do you envision doing that around?

2) Something that excites customers. If other people don't value it or aren't curious, they'll never buy. Then, you won't have a business. You'll have a hobby.

3) Something with good margins. Usually you can charge more by combining things in unique ways. This keeps you from being compared easily to other companies, and makes it easier to be top in your marketplace.

So, if you can think of something that you can charge a good amount of money for, that you could get excited about constantly, that customers get excited about, the only remaining ingredient is:

PERSISTENCE!

It'll take time for people to get to know and trust you and your brand. And, no matter the initial feedback, unless you have tons of money, it'll take time to grow and expand. Plan on doing something for years. That's just how long it takes for something with modest growth to actually hit decent numbers.

Is there anything else you think is necessary?

Post in the comments!

Launching a new product or service? Focus on something high-ticket with a defined end period instead of a recurring payments model.

This has several benefits, both for your business and the customer:

Clients are willing to pay more for not being "locked in" and the higher price point allows you to deliver more value.

Also, the cash flow could forever change your business. Most businesses sink in a lot of cash upfront to acquire a customer and then take months to make that money back.

That means you could go bankrupt by getting too many customers at once.

Isn't that insane?

Instead, with a higher upfront cost, you immediately receive all of the cash. That cash covers all of your deliverables and should be high enough to acquire more customers.

No bottleneck in your business this way.

How do you know if your company is growing at a solid rate?

In 2015 Brad Feld introduced the "Rule of 40" to the world.

For small businesses, this is a great guide because many people might get discouraged when they don't knock it out of the park immediately.

The rule is essentially that every year the % of revenue growth + the % of EBITDA should equal 40%.

This means you could have 40% revenue growth and no profitability, and that's fine. Or you keep revenues the same but profits grew 40%.

Or it's 20+20, 60-20, etc etc

For small businesses this is a great guide because many people might get discouraged when they don't knock it out of the park immediately.

Many sales guys see higher priced things as "extra commission" while others feel badly about charging more.

For salespeople turning into business owners, both thoughts are a recipe for disaster.

Salespeople, take note that you need a higher price to have a proper margin. AND, this margin shouldn't go all into your pocket.

You need to account for your business and its future growth.

More money in your pocket = less money to grow the business.
..Which ironically = less money in your pocket in the long run.

For those struggling to charge higher prices, think of it like this:

If you don't have lots of cash coming in on each sale, you can't treat the customer as well as you could.

You also cannot expand and pay other people to help take care of customers to an even higher degree.

You also cannot attract new customers at the highest levels because you won't have an appropriately sized sales and marketing budget.

And, the fewer customers you have, the less you are able to help them because you really don't know them that well.

Getting lots of customers is a prerequisite to being an expert in your niche.

Think of the margin as what is actually helping you run and grow the business while also delivering better results to people.

So, what are good margins?

Well, this really depends on the industry.

But, that being said, here are some rules of thumb:

60% is the bare minimum if you're ever looking to get beyond a one-man show.

80-95% is where growth companies are.