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Start Here: “The Ultimate Guide to Making Money”

How to start your own business (in 5 steps)

Starting your own business on the side is one of the most powerful ways to take control of your life and make extra money month after month.

You can start with just a few hours a week — even if you have a job. And best of all, you get to choose your hours, pick projects you find exciting, and meet interesting people.

And getting started isn’t hard. You don’t need an LLC, a fancy storefront, or employees. You just need the right system.

That’s why I’m going to give you my five-step system on starting your own business now.

They are:

At the end, I’m going to give you some resources to invest in yourself to give you more of an edge when starting your business. I’m also going to break down some of the most common excuses when it comes to starting a business.

Let’s get started.

How to start your business in 5 steps

Below are steps to start your side hustle. This is work you do on the side to create extra income along with your normal job.

Once you’ve been generating enough money and getting experience, you can start to transition your side hustle into your full-time gig. If and when that happens, be sure to check out our sister site GrowthLab. It’s our website dedicated to entrepreneurship and actionable systems for building your online business.

Learning how to start your business on the side is the first step to that though. The nice thing is this process is easily scalable. This means that you can generate as much money as you want — as long as you devote the time to it.

It also means you can scale back if you want to focus your energy elsewhere.

Without further ado …

Step 1: Find a business idea

This is probably the most daunting area for people. In fact, the most common reason why people haven’t started a business on the side is because they “just don’t have a good business idea.”

This is just a mental barrier though — one that you can easily get past if you look at one area: your strengths.

Here are four questions you can ask yourself to find a solid business idea:

  1. What skills do you have?

    Now, what do you know and know well? These are the skills and knowledge that you have acquired.

    Think of it another way: We pay for expert knowledge all the time (e.g., language classes, college courses, instrument lessons). Guess what? You can be that teacher too.

    Examples: Fluency in a foreign language, programming knowledge, cooking skills, etc.

  2. What do your friends say you’re great at?

    I love this question. Not only can it be a nice little ego boost — but it can also be incredibly revealing.

    Message your family and friends on Facebook or ask them IRL: What am I great at? The answers they give you can be turned into side business ideas.

    Examples: Workout routines, relationship advice, great fashion sense, etc.

  3. What do you do on a Saturday morning?

    What do you do on a Saturday morning before everyone else is awake? This can be incredibly revealing to what you’re passionate about and what you like to spend your time on.

    I have a friend who LOVES clothes. Her Saturday mornings consist of reading fashion blogs and maintaining a Pinterest account overflowing with outfit and design ideas.

    Here’s what I find interesting: She never thought about turning this into a business! It’s just something she likes to do BUT I guarantee you that there are a lot of people who’d pay $500 for a style consultation over Skype that she could do from the comfort of her own home. Some people might even pay her thousands to be their personal shopper.

    Examples: Browsing fashion websites, working on your car, reading fitness subreddits, etc.

  4. What do you already pay for?

    You don’t even have to play to your strengths and talents. Instead, you can look to things you already pay for.

    After all, we pay people to do a lot of different things. There’s no reason you can’t turn one of those things into your own online business.

    Examples: Clean your home, walk your pet, cook you meals, etc.

Find at least 3 – 5 answers to each of those questions. By the end, you’ll have 12 – 20 business ideas you can start on the side.

For now, just pick one of those ideas and move onto step two. Don’t worry. If you’re not feeling it. Later you can always return to your list and pick another one. That’s the beauty of this system.

Step 2: Find top-paying clients

Finding clients doesn’t have to be a nightmare of cold calling/emailing. You just have to remember that the vast majority of your competition is downright terrible.

They’re so terrible that if you just put in a little bit of effort into your initial reach out, you’ll immediately separate yourself from 99.999% of others. This is especially true on job boards like Craigslist.

Yes, that Craigslist. In fact, it’s one of the best places to generate leads as a freelancer.

That’s because potential customers and clients who turn to the sites looking for freelancers aren’t getting the best applicants. Instead, they’re getting people who shoot off boilerplate emails (if that) en masse hoping to nail a gig.

You’re not going to do that though. Instead, you’re going to take some time crafting a perfect pitch for your services to them using the email in step three.

This doesn’t apply to just Craigslist either — you can use this with any job site. The key is to just be slightly better than average and willing to test a few different emails.

Here are a few suggestions of great sites freelancers can use to find business:

Go through both Craigslist and at least two other sites for potential leads. Find at least 5 – 10 potential clients you can reach out to and move onto the next step…

Step 3: Pitch them your work (with scripts!)

The key to reaching out to potential clients and customers is speaking directly to their needs.

It’s basic human psychology. Imagine you’re on a first date and all the other person can talk about is what THEY want and THEIR needs. You’re going to be sneaking out the bathroom window within minutes.

But imagine if they asked you questions about you and seemed genuinely interested in your life and problems. You’d be much more interested in a second date, wouldn’t you?

Same truth applies to pitching yourself to a client. You need to craft your initial reach outs to their needs and concerns.

Because I’m a nerd, I’ve developed a 5-line email template you can use to send the perfect email pitch. It includes:

  1. The introduction. You’re going to want to build rapport by introducing yourself and how you know the client.
  2. The offer. Talk about them. What do you want to do for them? Why are you good for that role? You’re going to want to do some research on the organization to see what they need help with.
  3. The benefit. Walk them through how your work will benefit their company. Are you going to free up more time for them? Are you going to maximize profits by X amount?
  4. The foot-in-the-door. This is a classic technique that utilizes an old psychology trick to get the client to agree to a small agreement so you can ask for a larger agreement later.
  5. The call to action. Be clear with this and ask them if they would like to proceed. The call to action is a critical part of this script.

When it’s all put together, it’ll look something like this:

CLIENT’S NAME,

[Introduction] I read your article about X and noticed that you’ve recently started using videos on your website.

[The offer] I’ve been doing video editing for three years and I’d like to offer to help you edit your videos and get them optimized for the web.

[The benefit] That would make them look more professional and load faster, which is important for your readers. And you’d free up time that you could use to create new content.

[The foot-in-the-door] We can discuss the details, of course, but first I wanted to see if this is something you might be interested in.

[The call to action] If so, would it be okay if I sent you a few ideas on how to help?

Best,

Ramit Sethi

Of course, you’re going to want to change the email from client to client — but the truth here remains the same: People love benefits. They want to know what you can do for them. Once they see that, they’ll be willing to pay top dollar for it.

Which brings us to …

Step 4: Tune the perfect price

Pricing is confusing for every beginner. And it’s fraught with questions like, “Is $XX / hour too much? Is it too little?” or “Should I be charging per hour or by the project?”

There aren’t any hard set rules for rates — but there are a few handy rules of thumb that you can use to find one that works for you.

  1. Drop Three Zeros Method

    Simply take your ideal (read: realistic) salary, drop three zeros from it, and voila, you have your hourly rate!

    For example, say you’d really like to earn at least $40,000. Just take out the three zeros from the end and you now have your rate: $40/hour.

  2. Double your “resentment number”

    I love this one because it’s both really interesting and effective. Ask yourself: What’s the lowest rate you’ll work for that’ll leave you resentful of your work?

    Say you’ll work for $15/hour at the VERY LEAST. Just double that number so now you’ll earn $30/hour.

  3. Do what the next guy does

    This method is incredibly simple: Go to Google and search for the average hourly rate for whatever service you’re providing. You’ll get a good sense of where to start when you’re charging your clients.

Just pick one of the methods above and use it as your initial price. Once you start charging your clients, you’ll have a good idea if it’s enough for you.

After your first few clients, you can start “tuning” your rates. Were you making $30/hour? Start charging $40 or even $50. Again, there’s no hard and set rule for how much you should charge. Just start tuning until you find a rate you’re happy with.

Step 5: Invest in yourself

Your goals are going to change once you learn how to start a business.

You might want to earn more money just to supplement your income.

You might want to scale so you can leave your job and work full-time on your hustle.

The best way to get started doing anything of that is to begin investing in yourself. 

Now, one thing that you will find very common with people who have not taken the time to invest in themselves and learn how this stuff works is they will create what’s called levels of abstraction.

That’s why I’d like to offer you somewhere to start: my newsletter.

Click on the link and join this private list to see the tips, strategies, and techniques you WON’T see on my blog.

Another solid investment in yourself is learning the mindsets to tear down mental barriers stopping you from achieving your goals. With that, I want to address some of the most pervasive excuses to starting a business.

Excuses, excuses, excuses.

They’re totally normal.

Each day my inbox is filled with people telling me why they haven’t started a business yet. And each day I offer solutions so they can adopt the mindsets and systems needed to reach their goals. That’s why we’re going to smash the common roadblocks and show you how to get past it all so you can get right to living a Rich Life.

How rich? One that lets you earn money while you travel, relax, or spend time with your family.

online business revenue screenshot 1
Sample revenue from a single day.

But this stuff doesn’t happen easily or quickly. So if a starting a business doesn’t sound like it’s for you, I’ve covered how to make more money elsewhere on this site.

For now, we tackle all the things that stop us from FINALLY starting our own business.

Excuse 1: I can’t start my own business, I have no money!

Candidly, if you’re struggling financially, I would not try to start a business first. I would get a good job, get financially stable, THEN try to create one. I have tons of free material around finding your dream job here — just use the free material for now.

Excuse 2: Running a business seems like a lot of work. I just want to sit with my laptop on a beach.

Whenever I ask my readers why they want to start a business, most of the answers focus on THEM.

why mark dan and joe want to start their own business 300x274 1

“What excites ME.”

“MY terms.”

Rarely do I hear things like:

“I’m really good at helping my friends with their relationship problems. I don’t want to just help people 1-on-1 … I want to help THOUSANDS of people.”

“I love helping people get in shape. I want to help as many people get fit as possible.”

“My friends are always coming to me for cooking advice — and I LOVE it. I want to share my delicious recipes with as many people as possible!”

Look, I get it — we all want to go into online businesses because it will give us flexibility, time to spend with family, more money, and a bunch of other great reasons…

…but those shouldn’t be the ONLY reasons. That can’t be where you start but it can be where you end.

If you really want all those things, you need to learn to dig deep into what your customers really want and put their needs first. This takes work, and you need to be prepared to dedicate time EVERY week to make it happen.

Only by factoring your customers into your system can you turn your dream or passion into a real business that’ll make you money.

Excuse 3: My boss/spouse/friends won’t let me start a business.

It’s not up to them to approve of your idea or let you know whether starting a business is right for you. Only YOU can do that. This is very different from what we were taught as kids.

Starting in kindergarten, we had to raise our hand. “Mrs. Kundle, can I go to the bathroom?” “Yeah, you can go to the bathroom, Timmy.”

We had to get permission for everything we did.

At a certain point though — and this is scary — there is no one to ask permission from.

It’s your decision.

And when you’re running your own business there is often no one to ask, no guide to consult, no manual to read. It’s all on you. So get used to it!

Excuse 4: I’m so overwhelmed by all the options. What kind of online business should I start?

Calm down, killer. I’ve studied thousands of online businesses and there are only SIX viable options.

  1. Software (including apps)
  2. Physical products
  3. Advertising
  4. Affiliate marketing
  5. Coaching
  6. Online courses

But not all businesses are created equal. You want the right mix of PROFIT and COST.

As you can guess, I’m a fan of online courses and coaching.

Excuse 5: I’m not sure my idea is any good.

If you ask people about an idea, they will all say “YEAH! THAT SOUNDS GREAT!” And then they don’t buy. Get past this base level of feedback. To figure out if your idea has legs, it helps to plot it on a demand matrix like the one below:

demand matrix worksheet 1024x625 1

This is a very simple way of taking your ideas and figuring out what is worth your time. As you can tell, you want ideas in the “Golden Goose” quadrant, one where there are lots of potential customers and a high price. Plotting your ideas on this matrix help you to not fall in love with your first idea, something we call “idea one-itis.”

But most importantly, it helps you start to contextualize your ideas by how they will play in the real world. Not how you HOPE they will work out or not by what you’re the most excited about — but by what has the best chance of working.

As an example, here are some IWT products and where they stack up.

iwt product matrix 1024x701 1
How IWT products fit into the framework.

Excuse 6: Business cards, bank accounts, sales pages … I have no idea where to start!

Stop worrying about stuff that doesn’t matter. So many people think PASSION is the key to business success. That if you just care enough the rest will take care of itself. First, any successful person who says this doesn’t take into account the PASSIONATE people who failed. Second, passion is just where we need to start. To truly succeed in business we need SYSTEMS. Three, specifically:

  1. A system for getting people’s attention
  2. A system for getting them to subscribe to your email list
  3. A system for selling them your product

That’s it. All of the tools, emails, and business cards mean nothing if you can’t hone these basics. For details on how to build those systems, I wrote an entire post.

Excuse 7: But what if I don’t live in a city / didn’t go to college / have long hair / am a special snowflake / blah blah blah.

Tell me if this has ever happened to you: You hear about some super successful friend or famous person and you immediately tell yourself that they had some special advantage that let them be successful.

This is “The Shrug Effect,” or a way for us to shrug and say, “Well, maybe that works for HIM, but not me.”

We do this all the time. We see a famous CEO and point out how “he took 5 companies public and got a Harvard MBA.” We see a successful children’s book author and point out how “she already knew four publishers, so her book got published immediately.”

But that’s simplistic, and it’s an excuse to stay in your current state and do nothing differently. Instead of thinking of the reason they succeeded, ask what you can do TODAY to get closer to your goal. The fact that a famous entrepreneur went to Harvard has NOTHING to do with you finding your first customer or testing your first idea.

Excuse 8: But what if I fail?

The last excuse is the MOST important one. So many of us SAY we want to “take risks” and “start a business” for YEARS but never act. Why? We’re afraid of failing. Which really means we’re afraid of what people will think of us for failing.

The most successful people I know have the most failures. Because they take the most chances.

It’s not IF you will fail. It’s WHEN and what you do about it. The faster you can accept this paradigm the faster you can get over excuses like these and onto FINALLY starting your own business.