If you had $1,000 to start a 5-to-9 how would you use it?
If you had $1,000 to start a 5-to-9 how would you use it?
If you say "buy business cards" we need to talk.
I had an idea the other day. What if someone knocked on my door, handed me an envelope with $1,000 in cash, and said something cool like:
Here kid, go make somethin’ of yerself.
(In this totally hypothetical situation the stranger definitely has a British accent.)
A thousand bucks is a nice chunk of change. If some stranger showed up and gave me $1,000 how would I turn that into a thriving new 5-to-9?
5-to-9’s are intentionally built on shoestring budgets. They’re experimental, mere microcosms of big businesses. Their purpose is to answer one question: Do you have a viable idea?
With that in mind, a $1,000 is certainly a helpful boost to get things off the ground. However, how exactly should we spend it?
Well, I did some research. And it’s not good out there, folks. Searching for “How to start a side hustle for $1,000” yields thousands of listicles with unoriginal ideas to make $1,000 on your side hustle. Hard pass.
Whereas, “How to start a small business for $1,000” came up with random ideas such as “sell gratitude rocks” or “start a dog walking business”.
A Forbes article seemed promising until they mentioned using the $1,000 to buy business cards. No thank you.
All of this failed research lead me to an important conclusion: Most people know what they would do for their 5-to-9 just not how to turn it profitable.
For that to happen, we need to look at $1,000 a little differently.
Setting a baseline
If someone handed you $1,000 and told you to turn it into something more, you could technically do nothing with it. You could put it into a savings account and earn a little interest over the years.
Let’s say you do a little bit more than that. You invest it and it yields 6% interest year over year for the next 10 years. It would look something like this:
Ignoring the fact that inflation will decrease your money’s worth over the next 10 years, you now have a solid baseline: If you can take $1,000 and generate $790.85 of profit over the next 10 years, then you’ve got yourself a successful 5-to-9.
Easy, right?
Right?…
Introducing my hastily-named framework
Preferably, and I’m not just speaking for myself, I’d love to take $1,000 and turn that into much more than $1,790.85. And within a year, not 10.
To do that, we need to make decisions. Sure, you can do what I did and Google a bunch of ideas that’ll probably fizzle out. Or we can be diligent and assess our situation with a framework.
The framework I speak of is no other than my hastily-named: Golden Triangle.
Let’s break this down, shall we?
Product/Service
This is the thing you have to sell to make money. Preferably it’s low cost to produce (ie either it’s digital or trading your time) and simple to distribute (again, digital products or services are preferable).
Technology
This is the stuff you need to make your product or service. For me, all I need is a laptop and good WiFi. Other folks might need specialized software or cameras or recording equipment. Basically, it’s anything you can repeatably use to produce your products and services.
Knowledge
This is the expertise behind the operation. Most likely you are selling a solution to other people’s pain points. You are the expert (or you should be) in this area. Not only that, but you also need to know how to sell, manage, and operate a small scale business. This is an important asset.
It’s your job now to decide how you will divvy up the $1,000 among these three points of the Golden Triangle (you know what, I’m now realizing how cheesy “Golden Triangle” sounds but I already made the graphic so I’m just going to run with it, okay?)
The 40-30-20-10 rule
My son likes to tell me that 1+2+3+4 equals 10. He thinks that is so cool (I think it’s cool too). Thanks to the distributive property, 40+30+20+10 equals 100. As in 100%. In other words:
40% goes to your top need
30% goes to your secondary priority
20% goes to your already established strength
10% is held in reserve
What does this all mean for you $1,000? Well, first ask yourself: What do I need the most to get this 5-to-9 off the ground?
Is it supplies or resources (products/services)
Is it know-how or training (knowledge)
Is it tools to build things (technology)
How ever you answer, the one that needs the most attention gets the 40% chunk (or $400).
Next, you most likely have one thing that is your “strength,” in other words, it doesn’t require you to invest too much into it. This one gets the 20% chunk ($200).
That leaves the third one a nice 30% chunk ($300). The other $100 should be set aside for emergency expenditures. Trust me, you’ll need it.
A hypothetical situation
Let’s look at a practical example.
My main set of skills revolve around writing and web development. If I were handed $1,000 and tasked with creating a new 5-to-9, I’d probably develop some sort of online course to teach people to, oh I don’t know, create online courses.
So what are my needs?
Well, as I mentioned, I already have a computer and wouldn’t need to invest in additional technology. I have some old recording equipment in the closet I could dust off. But for the most part, I’m set on the technology front.
I know a lot about building online courses but I could learn a bit more about selling and running them. Therefore, I might need to allocate more to the Knowledge portion. (Ironically, I’d probably sign up for an online course).
The product itself is digital, but there will definitely be some expenses. I’d need graphics and a logo. If I’m creating video lessons I would need to transcribe those videos into text which costs money. I’d also have to pay for hosting and a domain name for my online course.
So here is my breakdown:
$400 towards product creation (shooting/editing video, transcript services, online hosting, etc.)
$300 towards gaining more knowledge (books, online courses, etc.)
$200 towards technology (in case I need it)
$100 towards an emergency reserve
Based on this budget, I’d create a 10 video lesson plan course and sell it for $197. Therefore, I’d need to sell 10 total to beat the baseline we set above.
Actually, this hypothetical plan is sounding more realistic than I thought…
Recap
I know we covered a lot here and did a bunch of math but if you are about to start a 5-to-9 and have $10 or $100 or even $10,000 the question you should be asking yourself isn’t how to spend but rather where to spend.
I argue that there are basically three areas in a 5-to-9 that need a bit of capital to get going: Your product/service creation, your tools to build said products, and the knowledge to create and sell said products.
You don’t need a fancy office space or business cards or even a website (yet). Instead, keep in mind your Golden Triangle and allocate your money based on your needs.
The important thing is to start.