ASSOCIATES (vol. 1, no. 1, July 1994) - associates.ucr.edu
MAKING ENDS MEET: Starting Your Own Business For Profit by Larry J. Atlow Microcomputer Analyst University of Southern Mississippi When I started at the University as a Librarian Assistant, I was working three jobs. On nights and weekends, I worked in a theater and as a cashier in a convenience store. At that time, I had a relatively good income. From the start of this job, I diverted 10% of my gross pay to a credit union account for emergencies. I had enough money left over at the end of the month to help my father with his medical expenses. I didn't have an extravagant lifestyle. I had three roommates to reduce my living expenses. I rode a bicycle because I couldn't afford the upkeep on a car. My only indulgence was to expand my wardrobe for my new work environment. However, even with annual raises, within four years my expenses rose to meet my income, and then my father had a heart attack. It depleted my savings and suddenly I was getting calls from my creditors about missed payments. I am still paying for the time I spent with the family during my father's recuperation. I couldn't seem to get back to even, much less be ahead of the game again. I realized that inflation was consuming my income. I was also starting to wonder how secure my employment situation was because I have seen increasing numbers of people I know get pink slips from the places they work for; some with more than a decade of service. Also, in a organization/time management seminar that the library sent me to, the presenter made two things abundantly clear: 1. Businesses today are moving away from long term employment and more to temporary help and limited contract employment periods. This is because benefit packages and retirement plans cost money that they don't have in these downsizing times. They look for ways to get rid of the higher paid staff for lower paid newcomers and temps. 2. If you don't improve yourself personally and professionally, you won't get ahead. Not only that, you won't even be able to hold your present position. If you are not improving your business worth, you are falling behind. I have seen this borne out in news stories, magazine articles and acquaintance with people it has happened to. 3. NOBODY is immune to 1 and 2. As a state employee, I am paying more and getting a reduced level of 'benefits' compared to five years ago (e.g. my employee health insurance costs more and my deductible is larger over that time period). In another seminar, a CPA put it into sharper focus -- You look at your paycheck as income. Your employer (in my case, the State) sees it as an expense. A business tries to minimize expenses and maximize profits. It's all a matter of perspective. I just received a scheduled raise for this year. I got a position upgrade in February. I have been doing the work acknowledged by the upgrade for at least a year, but neither took effect until July 1. As a sidelight, job levels here have a cap based on education. I am at the maximum pay level I can achieve without a degree. A degree will have no effect on the job I do, but it is worth more than my knowledge or experience, even if my job becomes complicated to the point where a replacement would require a degree and I learn it (or create it) on the job. A new person with no experience and a degree could make more money to start than I can without one. I will be receiving a degree in Psychology soon which will remove this barrier, but what does a Psychology degree have to do with repairing hard drives? I have been taking tutoring and consulting jobs for a couple of years, but doing most of it for free. I felt guilty about charging people for things that were simple to me. I have been forced to accept payment on several occasions. People were willing to pay, because what I considered simple, they considered invaluable. I could do for them what they couldn't do for themselves. I had never seen it from the customer's perspective before. I could remember times when I was willing to pay TWICE the asking price for a service or product I NEEDED at the time and still considered it a bargain. I didn't advertise for clients because referrals brought them to me. I didn't even have business cards. However, while it gave me a little extra cash, it didn't give me a steady income. To guarantee that steady income, I figured I'd have to spend lots of money and all of my free time doing this. In addition, commercial customers would expect me to be available during the business day, which was impossible. I didn't know what to do. I was looking for a way to supplement my library income. There was no way that I was going to earn enough from my day job to cover my living expenses, pay off my debts and put away anything for those unexpected expenses that occur in everybody's lives. Saving for or investing for retirement was out of the question. About once a year, the university holds a financial planning seminar for faculty and staff to offer them ideas and options for retirement planning and investment opportunities. This year, we had representatives from TIAA/CREF and the Social Security Administration. The SSA scared me. They warn people not to depend on Social Security benefits for retirement. It is only supposed to cover about 40% of retirement income. Some benefits that I am not eligible for, I can BUY from the SSA like any other insurance. In a report from this agency a while back, they said that by age 65, 98% of working Americans could not support themselves on their retirement income. Most relied on some combination of government subsidy, family, and/or charity. It was during this time that two friends showed me two business opportunities. One was in financial planning and networking and the other was in marketing and networking. I examined them both and chose the marketing and networking plan because, for me, it was the better of the two. The financial planning business offered immediate profits and fast growth, but there were also practical limits to how big it could become. The marketing business was a bit slower, but I could see no limit in its potential. It could also expand internationally. My business is not limited to U.S. borders. This meant that people I knew in other countries, including some in the former Communist Bloc, could take advantage of the same opportunity. I found something that worked for me. It lacked the four main drawbacks to operating your own business. It didn't require a lot of startup capital (I had none); it didn't take a lot of time (I had little); it didn't require a lot of expertise up front (I had none); and there was no risk (I wasn't willing to take any). Now hold on a minute thar Baba Looey! It sounds like you've been taken in by some sort of late night infomercial hype. Trust me, I considered that possibility. I can get enthusiastic about new projects easily. I have been taken before. I was excited about the possibilities, yet skeptical about the method. Still, I was looking for a way to pay off my current debts and cover the cost of an MLS without digging myself into the same hole. I looked at this with the most critical eye I could open. I analyzed the situation as thoroughly and OBJECTIVELY as I could and I still felt the same way. Even now when I get especially excited, I ask myself if I am being swept along by the heat of the moment. After quiet reflection, the answer is still NO. Why? This is real, and I have real results. I have options. I am (in my mind) no longer dependent on my job for my livelihood. That makes me more confident about doing things. I have a more optimistic outlook on life. I deal with people better. My job performance has improved. My ATTITUDE about my work situation has improved. While I am still in debt, I am working my way out of it now, whereas before, I was only holding my position (or slipping behind) while the interest on those debts got bigger. I am actually EXCITED about the future because I can see how and WHEN things will improve for me. Instead of focusing on problems at work and home, I look for solutions. Guess what? I find solutions more quickly and more often. *Conclusions* Second jobs are only another way to trade hours that are already in short supply for dollars an employer is reluctant to give up. In this economy, part time help is too easy to get for a second job to be secure, much less get respect and decent treatment from your employer and coworkers. Income is severely limited in proportion to the amount of time and effort expended. This is a bad plan for the most part, especially for people with a family. For most people, an injury or an illness will dry up income from both jobs. If you have marketable skills, I suggest that you do as I did and investigate the possibility of running your own part-time business. DON'T SELL YOURSELF SHORT!! Possibly you have some hobby, skill or talent that you could turn to a profit-making enterprise. Woodworking skills could get you into furniture repair/refinishing for those who don't want to do it themselves. It's less expensive than new. One of our LA IVs makes some of the most delicious pastries anyone has ever tasted. She usually does it for cost for library functions, but anyone around here is sure she could be a success as a caterer or a pastry chef. Do you like to shop? Have a flair for matching color and line? Maybe there are people out there with enough sense to realize they have no taste and are willing to pay someone who does to shop for them or at least advise them on gift purchases (don't laugh). You will never know what you can do to make money if you never ask yourself the question or look and see what your market needs. What I realized through all of this is that the BEST way to make extra money and eventually gain financial independence is by owning your own business. There are lots of business opportunities that can make you money, but a stable, long term income is a different story. What kind of business is dependent upon you and your circumstances. I started out small, sometimes putting only 5 or 6 hours a week into my business. Now there are weeks where I will put in 12 to 15 hours. Sometimes I have to give up a little TV or a pickup ball game, but weigh that temporary pleasure against my future and I don't feel so badly. Besides, there are VCRs, reruns and other pickup games. I didn't say it was always convenient, easy and fun, but neither is never having enough money or time to do the things you want or need to do. Look at it this way--if you don't have the time or money to do the things that you want to now and you don't do anything to change your situation, what are you going to have to work with in 5 years? 10? by retirement time? In the long run, I believe this is better. In his autobiography called _As I See It_, J. Paul Getty outlined four keys for success: 1. You must be in business for yourself. 2. You need a product, service or idea in constant demand. 3. You must offer a 100% warranty. 4. You must be able to duplicate your efforts. Based upon those criteria, find something that works for you.