MBA2411 Q&A Wednesday: How do I go from one client to replacing my job while working full-time? - The $100 MBA Show

Summary

The $100 MBA Show: MBA2411 Q&A Wednesday – Transitioning from Side Hustle to Full-Time Entrepreneurship

Release Date: January 3, 2024

In episode MBA2411 of The $100 MBA Show, host Omar Zenhom addresses a common and critical question from aspiring entrepreneurs: "How do I go from one client to replacing my job while working full-time?" Drawing from his 20+ years of entrepreneurial experience, Omar provides a comprehensive roadmap to help listeners navigate the challenging transition from maintaining a side hustle alongside a full-time job to embracing full-time entrepreneurship.

1. Introduction to Dan's Dilemma [01:09]

The episode kicks off with Dan’s question, highlighting a scenario many entrepreneurs face:

Dan asks: "How do I go from one client as I'm side hustling in my business to going full time as an entrepreneur in my business while working full-time?"

Omar empathizes with Dan, acknowledging the delicate balance between sustaining a full-time job and scaling a side business:

Omar Zenhom: "This is a question I get asked a lot because pretty much every entrepreneur that starts a business while they're in a full-time job will experience this challenge."

2. Understanding the Core Challenge [02:15]

Omar delves into the primary obstacle entrepreneurs like Dan encounter:

Omar Zenhom: "Your biggest challenge is actually changing your mindset. You're still thinking like an employee, exchanging time for money."

He emphasizes that the traditional employee mindset limits the potential for scaling a business, as entrepreneurship offers opportunities to leverage resources beyond just personal time.

3. The Importance of Leverage [04:30]

A significant portion of the episode focuses on the concept of leverage, which Omar identifies as a cornerstone of successful entrepreneurship. He categorizes leverage into three main types:

a. Leverage of Capital

Using money to generate more money through investments or reinvestments in the business.

b. Leverage of Labor [05:45]

Outsourcing tasks to others to expand capacity without proportionally increasing personal workload.

Omar Zenhom: "If somebody else did it for him, he can pay per gig, meaning for every client they fulfill, they get a flat fee. This incentivizes them to fulfill more clients."

c. Leverage of Code and Media [07:20]

Creating systems, such as websites or automated marketing channels, that allow the business to operate and generate revenue independently of the entrepreneur's direct involvement.

He underscores that effectively utilizing these forms of leverage can transform a side hustle into a scalable, full-time venture.

4. Strategies for Transitioning to Full-Time Entrepreneurship [08:50]

Omar outlines actionable strategies for Dan to transition smoothly:

a. Maximize Existing Clients

Instead of immediately seeking additional clients, focus on enriching relationships with current clients by offering more services or premium packages.

Omar Zenhom: "Keep your one client. See if you can offer them more services, products, maybe even increase their pricing if possible."

b. Outsourcing and Hiring [09:30]

Begin outsourcing tasks to freelancers or part-time help to manage increased workload without sacrificing quality or personal time.

Omar Zenhom: "You can pay per gig, and as long as you're making a margin, you're still coming up on top."

c. Scaling Through Documentation

Document all business processes meticulously to ensure consistency and ease when onboarding new team members.

Omar Zenhom: "Your business's value is really the systems that you build... document how are you hiring them."

d. Leveraging Media and Automation

Invest in creating content and automated systems that continuously attract and engage clients without requiring constant manual effort.

Omar Zenhom: "Create some sort of lead magnet on your website. Maybe you want to create some content so that you can attract your clients."

5. Mindset Shift and Long-Term Vision [10:00]

Omar stresses the necessity of a mindset shift from being a doer to becoming a leader and manager:

Omar Zenhom: "Your job is to manage, to lead, to bring in customers... Entrepreneurs are really the conductors of an orchestra."

He encourages entrepreneurs to view themselves as orchestrators who empower specialists to handle various aspects of the business, allowing for scalable growth.

6. Practical Advice and Personal Anecdotes [11:00]

Wrapping up, Omar shares personal experiences to illustrate the transition process:

Omar Zenhom: "I was on a full-time job as a teacher for over a decade before I transitioned to full-time entrepreneurship back in 2012."

He advises on temporarily reducing personal expenses to bridge the financial gap during the transition phase, highlighting the importance of financial discipline and temporary sacrifices for long-term gains.

Omar Zenhom: "There will be a moment where you'll have to take a leap, a leap of faith... maybe cut out your holiday this year or downsize your car. It's temporary."

7. Conclusion and Final Thoughts [16:14]

Omar concludes the episode by reiterating the importance of leveraging various resources and maintaining a strategic mindset to achieve successful entrepreneurship. He encourages listeners to subscribe and engage with future episodes for more insights.

Key Takeaways:

Mindset Transformation: Shift from an employee mindset to an entrepreneurial one, focusing on value creation and scalable solutions.
Utilize Leverage: Harness capital, labor, and automated systems to expand business operations without being constrained by personal time limitations.
Maximize Existing Resources: Optimize relationships with current clients and enhance service offerings before seeking new ones.
Documentation is Crucial: Systematically document business processes to facilitate efficient scaling and team onboarding.
Strategic Sacrifices: Be prepared to make temporary personal financial adjustments to support the growth and stability of the business during the transition.

By following Omar Zenhom's guidance, entrepreneurs like Dan can strategically navigate the transition from a side hustle to a full-time business, ensuring sustainable growth and financial independence.

Transcript

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Omar Zenhom (1:09)

Hey O. Welcome to the $100 MBA Show. Business Insights you can count on with our practical business lessons. I'm your host, your coach, your teacher Omar Zenholm and today's Q and A Wednesday where we answer a question from one of you, one of our listeners. If you've got a question you want to ask, go ahead and email me over@omar mba.net and I'll make sure to answer it right here on Q and A Wednesday. Today's question is from Dan and Dan asks how do I go from one client as I'm side hustling in my business to going full time as an entrepreneur in my business while working in a full time job, do I just take the plunge and go all in on my business? This is a question I get asked a lot because pretty much every entrepreneur that starts a business while they're in a full time job will experience this challenge where they're working on their side. Also, they're working on their business and they're not really sure how to transition out of their job by making enough to replace their income while working full time. It's a little bit of a catch 22 because they're spending a lot of time working full time in their career and their job. So therefore scaling their business on the side is challenging. I'm going to get into detail in answering this question and helping Dan out and I'm going to offer some creative ways, some creative ideas for you to think about. I'm going to challenge you to change the way you think about how you will transition from full time job to full time entrepreneurship. I'm going to share with you what worked for me. I was on a full time job as a teacher for over a decade before I transitioned to full time entrepreneurship back in 2012. So let's get into it. Let's get down to business. Believe it or not, this is the hardest part of becoming an entrepreneur is that leap from part time side hustle, working on the side with your business to making it your full time thing, making it your full focus, which means leaving your job. It feels incredibly risky because it is. And that's why Dan asked the question, should I just take the plunge and just work on my business and hope for the best? Well, we'll definitely get into that if that's a good idea in a moment. But let me first give full context to Dan's situation. He's currently in a service based business. He's taking on one client. He's going to need five to seven clients in order for him to go full time in his business and replace his income that he has right now in his full time job. Right now he's already pretty much at capacity taking on this client. With his full time job, he probably can squeeze in a second client, but that's probably the maximum. So what does he do? How does he make more hours in the day? How does he actually bridge this gap so that he can safely land on his feet as he's moving into his business full time? The first thing I want to say is the biggest challenge you're having here is not the number of hours, it's not how much money you're making, it's not how much free time you have between your job and your business. It's none of that. Your biggest challenge is actually changing your mindset. You're actually still thinking like an employee. You're still thinking like somebody in a job when where you're exchanging time for money, where you feel like, you know, I have X amount of hours and I can make this much money in these hours. That's not how business works. That's not how entrepreneurship works. This is the beauty of entrepreneurship. The beauty of entrepreneurship is you can scale, you can move beyond the clock. You're not exchanging time for money, you're exchanging value for money. And to prove this point, let's just look at an extreme example. Somebody like Elon Musk. Forget about trying to juggle a job and a business. This guy's juggling multiple million and billion dollar businesses. SpaceX, Tesla, SolarCity, the Boring Company. He's got a bunch of other small projects as well. He does. Plus he's on interviews, he's doing the news, he's on podcasts. He just recently bought this year Twitter. Right. Which became X. So if there's only a certain amount of time for everybody in the day, how is this guy doing this? More importantly, how can we do the same? How can we be able to first make that transition to full time entrepreneurship while we're in a job, while all our time is being taken by the job? Now, the reason why we're struggling, or anybody struggling from full time job to full time entrepreneurship is because in the job you have no leverage. Leverage is a key word in, in entrepreneurship. And there's different forms of leverage. There's leverage of capital, there's leverage of labor, there's leverage of code and media. But right now all we're doing is leveraging our own time. But in entrepreneurship, you have to use different forms of leverage. You can't just use your time as leverage. Let's go through some of these. First of all, let's talk about leverage of capital, which is money, right? Some people use their money to make more money, meaning they invest in other companies, they invest in the stock market. They literally just have their money sitting in a savings account making interest. This is using money to make money. And this is a very common way to leverage and get ahead and make more money with money, right? This is not something new. It's been around for, you know, hundreds of years. Another old and tried and true form of leverage is leverage of labor, which means human labor, humans doing the work for you. Did one person with their two bare hands build the pyramids? Of course not. It was built by a lot of people, a lot of workers. Forget the pyramids. Look at your local city. Look at the skyscrapers in the skyline, right? Who built these skyscrapers? Just some guy with an idea and a blueprint? No, lots and lots of people. This is called leverage of labor. And the same thing goes with any business. You're going to need to leverage labor in some way, meaning you're not doing the work, you're leveraging other people to do the work for you. And then lastly, of course, leverage of code and media. This is producing something once and allowing it to work for you. Code is like a website, right? When you're sleeping, somebody could buy your product on your website. You don't have to do anything. You've built the Code or you built the website once and it's working for you 24 7. Same thing with media. You create a YouTube video, you create a podcast like this one, you put it out there and it serves your business as content marketing over and over and over. That way you're not just using your words anytime you say it live, like in person, and that's it, it's gone, it's vanished. No, you record it and you distribute it through podcasts or YouTube or the written word with books or blog posts. These are powerful forms of leverage. And we got to start thinking like this as entrepreneurs, especially when you're getting started. Why? Because you only have a limit amount of time. So you got to leverage your time with these forms of leverage. So in Dan's example, there's several ways he can leverage capital labor as well as code or media to be able to grow his side hustle into his full time thing. So he says he can take on one, maybe two clients with his free time between his full time jobs. So this is him using no leverage. But what if he raised his prices? What if he offered those one or two clients more products or services where he made more average income per customer? This is leverage of capital, Right? Right now he's thinking, I can fulfill the work I need in my service for one client, maybe two, but what if somebody else did it for him? Leverage of labor. Right now this is going to take some investment of time and effort and focus to train this person to do what they do. And by the way, a lot of us, we think, oh, no one's going to do as good as me. Probably not, but they're going to do good enough for you to be able to outsource it. And that person can do it day in and day out, full time while you don't have to. So train them up, hire somebody. Let's say one person can take on five or six clients a month, but then you got to pay that person, right? But as long as you're making a margin, let's say you pay 50% of what you're charging, you're still coming up, up top. And then once you train one person, you could train another person and start leveraging that person. In fact, the person that you first hire can train the second person because you might have documented everything and they can train them up and therefore you now can scale the business easily. You just rinse and repeat, right? You can just hire the next person. The next person, they take on more clients. And your job as a leader is to Bring in business. And how do you do that? Well, leverage of media, leverage of code. Maybe you want to create some sort of lead magnet on your website. Maybe you want to create some content so that you can attract your clients. And this is the fastest way to get out of the rat race to get out of your job and into your full time entrepreneurial career. It's also low risk because you're only going to spend money unless you're going to make money. And you're not quitting your job and just taking this leap, hoping that you can just do all the work yourself and ramp up. So now you can see why I'm saying you got to change your mindset and you got to start thinking in forms of leverage.