The number-one reason entrepreneurs start their businesses is to be their own boss, says the latest small business survey from Guidant Financial (1).
Of those surveyed, 28% of small business owners gave that answer, while a further 23% said they were dissatisfied with corporate America.
Abi Caswell is one of those entrepreneurs who was determined to strike out on her own. She is the owner of Batter, a bakery with two locations in Louisiana. Starting in the fall 2021 on a small scale, her business has grown to a seven-figure powerhouse.
“Since I was a kid, I always knew I wanted to work for myself,” she told CNBC. “I wanted to be able to control my schedule, and I wanted to make my own money.”
The 30-year-old left her full-time role as an executive assistant in 2022 to focus on the business, but she notes it was no cakewalk.
Here are some of her lessons from her entrepreneurship journey, plus practical tips on what you need to know if you want to turn a side hustle into a successful business.
Caswell didn’t start out as a baker, but her story illustrates several key points about scaling a business effectively. First, she and her husband spent six months perfecting her bakery’s signature cookie recipe, ensuring that their product was the best they could make. Second, she didn’t leave her full-time role until the business had steady, predictable demand.
“I was going to work from 8 to 5:30, and then I was coming home and baking till like 1 a.m.,” she told CNBC. “It was just too much.”
Third, Caswell didn’t open a storefront until her demand was so high that her at-home operations weren’t sustainable anymore. Her booth at a local farmer’s market was regularly sold out of 500 cookies within 30 minutes.
“That was when I realized, we’ve got to get in a store,” she said.
Fourth, in spite of her success, many banks rejected her application for a loan, so she had to take a risk and put up her home as collateral for a $40,000 loan. This shows how important it is to ensure your business is generating good income before you plan to scale — and incidentally, Caswell was able to pay off this loan in one year (2).
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Caswell’s slow and steady progress is a useful model for other budding entrepreneurs to follow. Preparing to launch a business is about more than writing a winning business plan — it’s about having the practical tools and support in place, including financial resources. To launch a business successfully, you should consider:
In addition to being able to help you secure a loan — or avoid business loans altogether — steadily saving a portion of your personal income as well as your side hustle income can help you launch your business successfully.
Having a fund to cover your personal expenses is critical, especially in the early days of launching your venture, when business income might not be steady. In addition to six months of personal expenses, you should also save an emergency fund for your business. American Express recommends enough to cover 3-6 months of operating expenses or more, depending on industry volatility and your risk exposure (3).
Depending on the type of business you’re launching, your startup costs can vary widely. Bankrate estimates that the average small business owner spends $40,000 in their first year of operations, though they note that a restaurant or other food services business averages $375,000 (4).
If you have personal debt, this can hamper your ability to get a business loan, and also put a major strain on your personal finances in your lean early years of business. Aim to pay down all personal debt before you leave a full-time role for your small business.
The U.S. Small Business Administration notes that poor credit history is one of the main reasons why small businesses loan applications are denied (5). A low credit score can also impact your borrowing rate, your business insurance coverage rates and how likely vendors and suppliers are to work with you.
Like Caswell, a steady, predictable revenue stream is essential before you invest in a storefront, equipment, or other major expenses for your business. Sticking to your 9-to-5 job might not be exciting, but many entrepreneurs don’t quit their day jobs until their side hustle income is larger than their salary.
While 91% of shoppers prefer buying from small businesses when convenient, and 86% of small business owners say they can pivot quickly when things go wrong, the truth is that 50% of small businesses close within five years. This means that good planning, along with predictable revenue, is essential. Assemble a team of expert advisors, including tax professionals and mentor entrepreneurs you know, to help you understand the financial and personal implications of your early years as a startup.
Can you live on less than you make in your 9-to-5? Many entrepreneurs reinvest all early profits into their business, with 30% reporting that they don’t take a salary at all, and 86% saying they pay themselves under $100,000 a year (6). If you think launching a business is a get-rich-quick scheme, the reality is much more sobering.
Caswell is now developing a wholesale mix for her bakery’s signature chocolate chip cookie recipe, and hopes to get the product into grocery stores soon. But she’s also working in her storefronts, and she steps in to cover shifts when one of her locations is understaffed. She advises that small business owners should be adaptable, open to change and able to wear many hats.
When you own a business, “There is no real downtime,” Caswell said (2). “Even when I’m on vacation, if the stores are open, I’m on the clock.”
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Guidant Financial (1); CNBC (2); American Express (3); Bankrate (4); U.S. Small Business Administration (5); Entrepreneurs HQ (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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