The Biggest Mistakes You Can Make Starting Your Side Business

By Motley Fool Staff Markets Fool.com

In this video, theMotley Fool Answersteam is joined by special guest Kimberly Palmer to talk about her book,The Economy of You: Discover Your Inner Entrepreneur and Recession-Proof Your Life. After speaking with hundreds of people who have taken on side jobs, Palmer shares some important takeaways.

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One major error people make with such pursuits is the age-old placement of the horse before the cart. Before you begin investing money and time into your business, you should have your financial house in order and make sure there is enough demand to launch.

A full transcript follows the video.

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This podcast was recorded on Nov. 15, 2016.

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Robert Brokamp:So in your book you highlight lots of success stories. I'm sure you came across people who tried it and didn't succeed. Anything that's common among those stories? What are the big reasons why people don't find a way to make their side gig a success?

Kimberly Palmer:Yes. The biggest thing -- and I actually made this mistake myself -- is when you sink a lot of money into your side gig before you've even generated any traction and aren't building sales yet. So doing things like spending a couple of thousand dollars for a professional to design your website when you could probably just do it yourself with a few hours on a weekend. So sinking money into the business before it's really taken off the ground.

I made the big mistake of spending a few hundred dollars printing my money planners before I realized that people just wanted to buy the PDF and not the printed version. I actually still have like a closet full of spiral-bound planners that are not going anywhere. So just looking for the cheaper way to do things.

Brokamp:It's interesting you bring up the point about money, because you touch a little bit in the book on getting your personal finances in order for this business. So if someone is thinking of taking this risk, what should they be doing in their personal finances to get ready to be doing this side gig thing?

Palmer:It's so important to take a close look at if you have debt. If you have credit card debt, you're going into it in such a vulnerable place already. That's why it can really make sense to kind of get your finances in order before you start something new.

So doing things like making sure you're paying off your credit debt if you have any, or making a plan to pay it off so you're not burdened by that going into it when you're trying to launch something new. Because when you do launch your side business, you need all of your energy focused on it to really make it a success, and [when] you have all these stressful financial things going on outside of it, it can be hard to do that.

So just kind of making sure you're being responsible and have things set up in a way so you're ready to focus on this new project.

Brokamp:Got you. One of my favorite stories in your book, by the way, is the one about your dad who, if I understood correctly, was a wildlife filmmaker and photographer...

Palmer:He still is, yes.

Brokamp:... and then he decided to try being a stand-up comic.

Alison Southwick:Oh, wow!

Kimberly:Yes, he did.

Brokamp:Which came with, I would say, mixed success?

Palmer:Yes, and I definitely would not call it a failure, because even though he's not a full-time stand-up comic today, he learned a lot from the experience. He gives really funny speeches. He's so good at giving speeches, so his work life was completely enhanced by that experience, even though he's not performing live anymore.

Brokamp:And he had the British accent, I assume ...

Palmer:That helped.

Brokamp:... which helped a little bit ...

Palmer:Yes.

Brokamp:... but he wasn't -- if I understood it correctly -- raunchy enough.

Palmer:He was so G-rated that it didn't work. Stand-up comedy is not usually G-rated.

Brokamp:Got you.

Palmer:Yeah.

Brokamp:So let's say people are thinking about this and they go, "This is a good idea. I have some ideas." Where should they go first? In your book you had all kinds of great ideas in term of websites and resources. Are there any go-to resources that people should check out first?

Palmer:Yes, there is such a strong infrastructure for e-commerce. So, sites like Etsy, which of course I love. Also Fiverr is a good place to start if you're selling services. There's also a bunch of freelance websites, so if you're using your own professional background ... Say you have an architecture or a legal background, you might just be able to find contracts that way. There's actually new sites launching all the time. It can be hard to keep up on things, so you have to think about what field you're in and a simple web search can probably bring you to the latest and easiest app or website that helps you sell that and find your customers.

Brokamp:Got you. You listed the top 50 side gigs in your book. Number three was financial services provider. You used to be the senior money editor atU.S. News & World Report. Have you ever thought of being a financial planner?

Palmer:Oh, my gosh. No way.

Southwick:Why?

Palmer:No. Yeah, that's not for me.

Brokamp:That's not for you. Got you. That's my idea for a side gig, by the way. Maybe one day in the future. We'll see what happens.

Alison Southwick has no position in any stocks mentioned. Robert Brokamp, CFP has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Etsy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.