When was the last time you took time off and still made money? What would happen to your finances if you got sick? Who will create, market, and sell your products or services?
Every person who makes a living off their skill or talent should ask themselves these three questions.
Why?
Because your answers will make a difference in your life and business. Your answers will also determine whether you’ll end up broke in the future.
Having coached women entrepreneurs for many years, I’ve identified 3 categories of people who call themselves entrepreneurs:
- Serious entrepreneurs who run their businesses professionally.
- Business owners who make just enough money to slide by.
- People who have expensive hobbies that they call businesses.
Those in the first category grow their businesses and end up having an easier time in business. The second group has the potential to turn their businesses around by working more strategically.
For the third group, life is really hard financially. They have high highs and low lows. Business is a struggle and they’re never sure where their next paycheck is coming from.
Many people I’ve met who make a living from their skills and talents land in the second or third categories.
How can you avoid this if your skill or talent is your main source of income?
How to turn your skill or talent into a business
The only way to make this work optimally for you is to treat your work like a business. Many skill or talent based entrepreneurs, have the following system:
- You sell something (product, service or skill).
- Use the money for personal expenses and supplies.
- Get broke.
- Wait to make another sale.
- Sell.
- Repeat the cycle.
When you do this, you’ve created a job not a business because you only make money when you’re actively selling or are in demand.
What happens when you haven’t sold? Or if you get strong competition? Here’s how you can turn any skill or talent into a business.
Elements of a business
Below are some basic elements of a business. Note that some of these elements don’t apply if you’re working with an agent because the agent takes care of them.
(Read my article on how to create a business model if you want detailed instructions on how these elements tie up)
1. A marketable product, service, or skill
This is something that people need or want to buy. It’s something that you’re skilled at creating or doing. If you rely on a skill such as music or sports, this skill is your product.
2. A marketing system
People need to know about what you’re selling, and this is done through marketing. Unfortunately, letting people know about you is not enough. Your marketing should target people who:
- Want what you’re selling.
- Can afford to buy or pay for what you’re selling.
- Are willing to buy or pay for it.
These 3 points are critical because you can waste a lot of time trying to attract customers or fans who are interested, but they’re not willing or able to buy.
3. Well-defined sales process
Make it easy for people to buy from you. If you’re selling something physical, determine where to sell from (e.g. shop, home, car boot, online, door-to-door, etc).
Also, have a way of providing receipts to customers. Receipts can be physical, virtual or through an MPESA Buy Goods/PayBill number.
Finally, outline how the customer receives what they’ve paid for.
4. Customer service system
Customer service begins before someone buys and continues after purchase. Return customers and referrals from satisfied customers will grow your income faster than any other form of marketing.
Your customer service system should also identify how you’ll handle orders, complaints, requests for refunds, and returns.
5. Financial management system
How do you handle money? Does it go into your wallet or personal account? Or do all receipts go into a business account?
At the very least, register a business and open an account in the business name. All income goes into this account and you pay yourself a salary. If your business cannot sustain a salary, decide on a percentage of the income as a salary.
Poor financial management brings down many people who work with agents and promoters. While these people care of marketing, public relations (PR) and talent growth, it’s your duty to manage your income.
It is in your best interest to know and control how your money is being spent. So keep an eagle eye over your agent or promoter’s spending.
It also pays to have clearly defined legally binding agreements that you go through with your lawyer before you sign up with an agent or promoter. Also hire a qualified accountant and financial adviser once you can afford it.
6. Administrative system
This will help you handle the above functions. At the beginning, you’ll probably be everything in the business (creator/producer/performer, marketer, agent, secretary, accountant, CEO).
With time, you can hire people to take over some jobs while you concentrate on developing your skill or talent.
7. Growth plan
Create a plan for moving from simply earning from your skill or talent to having a business that runs without you.
Plan to hire and manage staff, create passive income, and for your financial investments. This growth plan can also double as your retirement plan.
Examples of passive income include (but are not limited to):
- Stock market investments.
- Rental properties.
- Having an online store for product/service-related merchandise.
- Writing a book about your experiences.
- Setting up an online course using your knowledge and experience.
- Hiring experts to run your business while you concentrate on the creative part of the business.
You can also expand by helping others:
- Actors, footballers and musicians can set up talent academies.
- An artist or sculptor can open a gallery and sell or showcase other people’s work.
- If you love striking deals and negotiations, you can set up an agency in your industry.
- A writer can start a publishing company to help others self-publish.
- A web designer can outsource work to others and get paid a portion of the sales made.
As your income and business grows, get expert advice for your investments and growth plans so that you don’t waste time, energy and money.
Your way forward
Luckily, it’s easier today to make money from your skill or talent than ever. On the negative side, you only get paid or make sales when you’re in demand.
Turning your skill or talent into a business can also take time as you build credibility and visibility in the marketplace.
All things considered, when you plan carefully and start treating your skill or talent as a business, the more likely it is that the business will grow and exceed your dreams!
With time, this business will provide you with steady income at all times, whether you work or not. Isn’t that a goal that’s worth working towards?
Looking at the business elements outlined in this article, do you have a business or a lowly paid job? I’d love to hear from you in the Comments below.
(Image credit: Unsplash)
