When Ramona Ortega comes on the show you know we’re going to talk about all things money! On our last episode we dove into entrepreneurship and the massive amount of power the Latino and Black market command in the US. But mainly she educated us on how to surpass the fear of taking the leap into being full time entrepreneurs or even just taking the first step in starting a business. Ramona had so many amazing tips perfect for first time entrepreneurs we had to write it down. Here is her definitive checklist on how to make your side hustle legit.
Understand what you’re selling
In order to form a legit business you need to know for sure you have a good idea. You can do a survey and ask the people who you trust and respect for their honest opinions. Also ask yourself: does the world want what you’re offering? If the answer is “yes” then next you should define:
if it’s a service or a product
what problem you are solving
how your product or service solves it
2. Be SUPER Specific About Who Your Market Is
Large companies can spend millions of dollars hyper focused studies of their target markets, but whether if you’re just getting started or have years in the game, getting customer data is super accessible. If you’ve already been making sales, profile your customers looking for things like location, age, gender, income, education, etc. then look for what they have in common. Definitely make use of google analytics and create a business Facebook/Instagram page so you can look at the insights. With that information you can create a customer profile and an empathy map. Empathy mapping will help you identify your customer’s pain points and how you can better fulfill those needs. Don’t neglect your data!
3. How Are You Going To Make Money?
This is KEY! Because there is no point in starting a business that isn’t going to be profitable and we have a tendency to undervalue ourselves. If you have a product your overhead costs and time should be included in the price and the markup should be at least 50%. If you are offering a service do your research and ask people how much they charge to gauge what your price point should be. If you don’t know anyone personally explain your situation in an email or DM and make the ask. Identify your revenue streams as well as which ones to focus on based the ones that make the most money. It’s also smart to identify what sells well and what doesn't to make the necessary adjustments to your production.
4. Create a Business Plan
It doesn’t have to be super official but writing it down helps. Ramona says we should create a one or two page document that includes: What you are selling, who you are selling it to, how big your market is, what your prices are, how much you will negotiate, what your revenue streams are, what are your quarterly and yearly goals. This is a great time to come up with your 30 second elevator pitch, as well as your company mission statement.
5. Get a Handle On Your Tax Structure
There are several tax options that may or may not be right for the stage and size of your business. It’s important to know which one is right for you.
Sole Proprietorship: If you’re just doing business as yourself you can file Sole Proprietorship. You don’t have to file paperwork but it might be a good idea to get a business account.
Doing Business As (DBA): You can also have a separate business name but not a business entity, you can say you’re Doing Business As “whatever name you choose.” You’ll have to file a form with the City to let the public know you’re doing business under a certain name but the laws depend on your state.
Limited Liability Corporation (LLC): When you start to grow you want to think about becoming an LLC, which includes a name finding process that protects you from getting sued. With an LLC there is no liability to your personally if something goes wrong in that business. Its limited liability, and because it lets you track your taxes, more tax credits, doesn’t have to be a separate name as long as no one else is using it.
C-Corp: This is usually used by a much bigger company that wants to use a smaller business as a holding company since the smaller company will be taxed separately from its owners.
6. Keeping Your Money Straight
Don’t commingle funds, which basically means don’t mix personal and business money. If you’re mixing funds you’ll have no idea how much money was spent and how much money was made. We tend to underestimate how much money we spend and schedule c taxes are much easier to file when you have your business and personal money in a separate business account.
Drop some of the tricks of the trade you’ve learned in your entrepreneurial journey in the comments! For the full convo with Ramona you can listen or re-listen here and don’t forget to like and share with the entrepreneur in your life.