The pandemic might have given you the opportunity to start a side hustle or to turn a hobby, like baking or sewing, into an income stream. Now, that money-making venture is still going strong and you’re wondering if it’s worth creating a bigger, more successful business out of it.
It’s definitely possible, says Desmond Pang, who is an entrepreneur; the co-founder of the digital creative media agency Stark Media; a lead mentor for MyStartUp Pre-Accelerator, which is designed specifically for pre-seed and early-stage start-ups in Malaysia; an adjunct lecturer with the Singapore Institute of Retail Studies (Nanyang Polytechnic); and a committee member of SAFRA Entrepreneurs Club.
“You just have to understand what it takes to start and run a profitable business and not get caught up in the challenges that many entrepreneurs typically face when they’re starting out.”
Here, Desmond offers his expert advice for turning your hobby or side gig into a proper business.
Q: Before starting a business based on a side gig or hobby, what should entrepreneurs know?
Desmond: They need to understand the different registered company profiles, for instance, a Pte. Ltd. and an LLP (limited liability partnership). They also need to know how to create a profit and loss (P&L) statement and how to properly plan out their investments and returns. Human resource-related matters are essential as well, such as those to do with CPF contributions.
Marketing is something that has to be taken care of, too, since you’d have to brand your side gig or hobby into a business or a company.
Last, but not least, mitigating risk and understanding the risks involved in running a business is important. In short, entrepreneurs must be prepared to step into uncharted waters.
Q: From creating a logo to coming up with a company name, what does one need to know about building a brand?
Desmond: Building a brand is an ongoing process and something that can take a while to come into effect. Here are some guidelines you may want to follow:
- Define your purpose and values: Clarify your brand’s purpose and core values. Ask yourself what your business stands for, what it aims to achieve, and how it adds value to your customers’ lives. This foundation will guide your brand’s identity and messaging.
- Know your target audience: Understand your target audience’s needs, preferences and dislikes. Conduct market research to understand their demographics, interests and behaviours. Tailor your brand messaging and offerings to resonate with your ideal customers.
- Craft a strong brand message: Develop a clear and concise brand message that communicates your brand’s value proposition and that differentiates it from its competitors. Your brand message should be reflected in all your marketing materials and communication channels.
- Be authentic and consistent: Authenticity builds trust with your audience. Be true to your brand’s values and promises. Consistency in messaging and visual elements across all touchpoints, from your website to social media, helps reinforce your brand identity.
- Build an online presence: Establish a strong online presence through a well-designed website and active social media channels. Utilise platforms relevant to your target audience and engage with them regularly.
- Content marketing: Create valuable and relevant content that aligns with your brand’s message and that resonates with your audience on social media. Content marketing can help establish your brand as an authority in your industry and attract potential customers.
- Monitor and adapt: Regularly monitor your brand’s performance and reputation. Pay attention to customer feedback and reviews, and be prepared to adapt your brand strategy as needed, in order to stay relevant in a dynamic market.
Q: How do you get a loan, partner with silent investors, protect your business financially, draw up a business plan, and so on?
Desmond: It’s always best to own 100 per cent of your company. It’s good if your start-up can grow with the revenue from profits, however, this often takes time, during which competitors with more resources may “overtake” you or take you out of the game.
You can always raise funds from family members first, but make it clear to them that those are loans and they’re not buying shares. It’s important to protect your family relationships in this way.
It’s the same thing when raising funds from friends. I’ve seen friends turn against one another because the company didn’t do well after they invested. In short, whomever you bring in must be aware that they may not get back what they put in.
A bank loan is straightforward, but harder, as you will need credentials and proof that the business will take off. Sometimes, it’s hard even if you have a strong guarantor.
A P&L statement and financial projection are important for a start-up. It can help you strategise and work out how budgets can be used effectively, increasing your chance of business success and lowering the possibility of accumulating debt.
Along the way, you may also want to seek the advice of mentors and experienced entrepreneurs and business owners. Their experience will help you avoid making amateur mistakes.
Q: How does one market their business on social media or get the word out in other ways to attract customers?
Desmond: You must identify the audience for your products or services before deciding which platform to market them from (for example, Facebook, Instagram and so on), and the type of marketing content you want to create.
A new social media channel is always hard to grow, so you need to give people a reason to follow your channel.
Can AI tools like ChatGPT help you get ahead in your career? Find out more here.
Q: How can you tell if your business isn’t working and you ought to give it up?
Desmond: The decision is numbers-driven. Your sales figures and P&L statement speak volumes. Looking at these, you will know how much you are actually making and how much leeway you have. It’s hard to give advice on when to give a business up, but I will tell you to make sure that you don’t become a burden to your family. If it gets to this point, you may want to stop and find a stable job.
Q: What should one know about the costs involved in opening a physical store?
Desmond: Deciding to open a bricks-and-mortar store is a significant decision that requires careful consideration. Here are some factors to help you determine if you’re ready for a physical store and what you should know about the costs involved:
- Market demand: Assess the demand for your products or services. A physical store may be a viable option if there is a strong demand and potential customer base in your target area. Look at your sales data, market research and customer feedback to gauge demand.
- Business stability: Evaluate the stability and success of your business. If your online or side gig sales have been consistently growing and you have a steady stream of customers, it may indicate that a physical store could further enhance your business.
- Financial preparedness: Opening a physical store involves significant upfront costs and ongoing expenses. Assess your financial position and ensure you have the funds to cover the initial investment and operating costs.
- Location: The location of your store is crucial to its success. Research potential locations and consider factors like foot traffic, visibility, accessibility, and proximity to your target audience.
- Competitive analysis: Analyse the competition in the area where you plan to open your store. Consider how you can differentiate your business and offerings from competitors in the local market.
- Operational experience: Running a physical store requires a different skill set than an online business or side gig. Evaluate your operational experience and figure out whether you have the expertise to manage a physical store effectively.
- Customer experience: Consider if a physical store can provide a better customer experience than your current setup. Some businesses benefit from allowing customers to interact with products in person and receive personalised assistance.
Q: Is hiring staff something you’d recommend a new business owner do right after starting a business?
Desmond: Your first and second hires are very important. They need to be aligned with you and even entrepreneur-minded to move at the pace you want them to. But it also depends on the type and size of your business.
When you hire, you need to make sure your balance sheet can afford it, and that the new hire can bring in more revenue or create revenue and take over some of your work so that you can focus on strategies and sales.
Do not hire simply because you do not want to do certain things, or want to rest and be lazy. Hiring for the wrong reason is a no go.
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Main photo: Courtesy Desmond Pang