With the cost of living increasing every month, you might well be considering a second source of income. But where should you start?
First and foremost, identify something you are good at and can use to supplement your income. For example, you might be an excellent baker. Specialty cupcakes or novelty cakes for birthdays are always in demand. Or you might be handy with tools and could advertise your services as a “handyman for hire” on the weekends and after hours.
Identifying how you can supplement your income is just the first step. There are several other things you need to do in order to ensure your success:
- Research: Once you have identified your skills and strengths, you should research the market to find out how you can make the best use of your talents. Identify a gap or a need that you can meet. For example, a young South African launched iFix, a company that specialises in repairing Apple products when he realised there was a gap in the local market.
- Target market: Decide who your target market is going to be and then carry out research so that your product or service is appropriate. For example, if you are selling products that are intended for teenagers find out what the current trends are and tailor your products so that they are appealing.
- Sourcing: Think about all the “extras” you need to market your product well. For example, if you are selling cupcakes, you want to present them in the best possible way. Find out where you can get the best and most cost-effective packaging. You could also negotiate a discounted rate from the supplier if you are going to place large, regular orders.
- Pricing: Find out what your costs are going to be and then work out your pricing so that it covers your costs and so that you make a profit. You should also check out comparative pricing of similar products or services so that you are priced correctly. When you are calculating your pricing, don’t forget to factor in the cost of your labour and time.
- Funding: Find out if you qualify for government incentive funding or entrepreneurship programmes. This can help you with the initial capital outlay required to get you started.
- Marketing: Once you have everything in place, your business needs to be advertised. Word-of-mouth advertising is always great. You may want to kick off with a promotional discounted offer to get your products out there initially. Take advantage of mediums such as social media and maybe even have leaflets printed that you can then distribute yourself or leave with your suppliers. A once-off newspaper advertisement is also not a bad idea. Make sure that your marketing is visually appealing.
- Networking: Meeting other people that are in the same line of business or in the same industry cannot be under-estimated. These people have the ability to refer you to others. Networking also provides you with the opportunity to find out what’s new in your industry and to get new ideas for your business.
- Find a mentor: A mentor can help point you in the right direction and advise you so that you don’t make costly errors when you are starting up your business. Identify someone who has proven themselves in your field. You could also join a business incubator programme, where you are likely to be matched with an appropriate mentor.
Bear in mind that if you are earning a second income, you need to declare this income to SARS and will have to submit tax as a provisional taxpayer. Use the services of a tax consultant to ensure that you don’t fall foul of the tax man.
Becoming an entrepreneur is not for everyone. You need to be focused, able to make decisions independently and willing to take risks. That said, the rewards of being your own boss are worth the effort.
Some helpful websites that you could visit include:
“As long as you’re going to be thinking anyway, think big.” – Donald Trump.