In our last post I talked about why we should go for additional income in our path towards financial freedom. I listed out 4 ways, of which while one is not limited to only one of them, the advice is to focus on one first. In this post we will explore the topic of side business.
Side business not does not require huge capital outlay. We invest what we can afford to lose – time and energy. While there needs to be something of a decent plan and direction, there is no need to write fanciful business proposals with organisation charts, financial forecast and all those fluff. We are not going to pitch to venture capitals. We are going to start a small business that earns us some coffee money for the start and if all goes well, the fanciful stuff can come in later.
Dropshipping is a type of business where one sells goods to another without ever seeing the product. For example: I sell light bulbs on eBay or on Facebook marketplace for $5. Buyer sees my product and pays for 1 light bulb. I do not hold any light bulb with me, but I have talked to either a local or overseas light bulbs supplier to supply me light bulbs for $2 and to help me deliver it at an additional cost of $1. Once I have received payment from the buyer, I immediately arranged to have the supplier ship the product direct to my customer’s designated address. I earn a profit of $2.
Dropshipping allows you to set up shop online at zero cost (Facebook marketplace), or a fixed cost (setting up your own mini website), or a percentage of your revenue (eBay commissions). Regardless of the method you choose, you either spend zero to a very minimal sum to start. Depending on what you sell and your source of goods, you can sell either locally or worldwide.
Of course there are groundwork to be done. What to sell, which platform to sell on, finding suppliers, finding logistics route, calculating profit and cost etc etc. You will have to research widely, ask people, make the effort to find online or maybe offline. It takes time and effort.
Note: I only sold my first product via dropshipping 3 months after I set up shop.
Be The Middleman Providing Services
Do you know a friend who is good at painting houses? Or someone who is a plumber? Partner with him. Advertise online and get customers, then engage him to work on your projects. You friend may charge $500 to paint a whole house. Talk to him, tell him you will get him customers and let him give you a price of $400. Tell the customers you will get their house painted for $475. You may think this is a ridiculous idea, but it is not. Lack of information is one thing that drives businesses. Not all customers bother to research what they buy. Some of them need certain services urgently.
My real life example: In the country where I live, there are many migrant workers doing a variety of lower level hard labour chores. Their work range from construction, to painting, to being an electrician. These migrant workers are paid a miserable sum, often the victim of blood sucking companies who cannot wait to squeeze every cent of profit out of them. These people are willing to take on extra side jobs because their main jobs pay too low. I talked to one of them and he offered me painting services for a cheap price, and I have managed to get a few houses painted. The migrant workers do not know any locals who want to get their houses painted. The locals do not know which of the migrant workers specialise in painting and could only approach those painting companies instead. This is one good example of a lack of information between buyer and seller. This is where the middleman who put in the effort to find out the information and link the 2 parties come in. It is a win-win situation.
Love baking, painting works of art, or creating small accessories? Use your skill, market it online and get customers for it. Think about what you like to do and are good at. There are quite a few people who manage to use their skills to earn the side income.
The above 3 methods are what I know the cheapest and most straightforward way to start a small business. Remember, you may not have much room to fail.
Successful businessmen can tell you they failed 3 times and got into a 5 million dollars debt, yet they never gave up. People like Warren Buffet, Bill Gates or Jack Ma has rich and/or influential parents to be their backup plan. They can afford to fail. You cannot.
If you fail, your children has no money for school, your wife or husband has to suffer with you and you will have no money for your housing. Successful businessmen are smart, experienced and we want to be like them. But always remember that their advice, while good for them because it worked for them, may not apply to you. Nobody is going to applaud you for dropping out of school or quitting your job to start a business, because if you fail, your family sinks with you.
Of course, business is not for everyone. Some are cut out for it, some are not. Worry not, the next post we will explore another option. As mentioned in my previous post, there are more than one options available.