Tips for generating side income with online business: how to start & what can you do

In today's economy uncertainty added with loss of jobs, one of the solutions this is take the opportunity to do online business to generate steady stream of income. 

However, this may not be as easy as it seems. Therefore, it is crucial for you to obtain knowledge first on how to start your own business so that you start with a strong basic. 

Here are 3 useful tips that you can practice. 

1. Set a realistic business goal

When you open media social, you are served with multitude of lucrative business offers. They are looking for agents, showing off their cars and money, but you need to take a breath and calm down first.

If not, you will be overwhelmed and want to try all sort of businesses just to chase the wealth status that you have been shown off to.

It is not wrong to be rich, but you already set a misguided goal from the beginning. Once you have the intention to do the business in order to get rich only, it shows that you are not thinking far ahead.

In plain language, you have a mindset to get rich fast. This type of mindset will get you easily trapped with get rich quick schemes.

One of the positive side of Covid-19 is that we can learn from the actual reality.

The importance of personal and business financial management are closely related. For example, during the pandemic, what matters is your survival. The will to live, which relates to the financial aspect.

Therefore, we will only spend on things that are important only to ensure positive cash flow. If your cash flow is positive, then you can use the excess during critical times.

Cash Flow Formula = Income - Expense

The financial management method will be explained in detail in the next point.

In relation to business, you need to focus to ensure positive cash flow as well. The main goal to do business is to get profit, no matter how small it is. If you want profit, then your cash flow must be positive.

For example, the overall business cost including salary that you want to make is RM5,000. So, your sales target should be more than that. Even though you achieved sales of RM5,001, that is enough because you made profit of RM1.

Remember, the most important thing is positive cash flow. For the first phase of the business, you need to aim to sustain. Most business guru will say that the business survival phase is for the first three years of operation. If you can sustain, best believe that you will reap the benefits after that phase.

2. Choose the right motivation

Things are not smooth all the time, so is in business. Not all the time you will make high profit or sales. There will be times when your sales will drop. Besides having positive cash flow that can help sustain the business during hard times, you also need motivation to keep your spirit high to continue the business.

Some people use their wealth such as luxury home and cars as their motivation. However, this type of motivation would not last that long. Imagine that you have achieved everything that you want up to the point you feel empty. So you set a new or more expensive materialistic goal to stay motivated.

This is called short-lived motivation, you achieved but not feeling satisfied. So you find another motivation that is more enticing. Sadly, the material thing that you chased will be a liability to you that can be a loss to your business.

If possible, choose motivation that can give long-term satisfaction. For example, settling debt, give to charity or fulfil Umrah or Hajj obligation.

The feeling and experience of having these type of motivations will give satisfaction and make you more motivated to grow your business. Islam also encourage us to help our close relatives first before helping others.

It will be more meaningful when we see our own family live a better life.

3. Ways to manage financials

Next, let’s discuss about personal or business financial management; which includes calculation formula.

We do not need to know everything or complex things to become great. Understanding and doing the basics are just enough. These are some of the formulas that you need to know.

Most new entrepreneurs fail to do this because they think the money made from the business is also their personal money. The obvious symptom for this is making many sales but not seeing the money. So you will repeat the same thing which is doing sales but not seeing the result.

The problem worsens when you want to pay tax. When everything is not tracked with missing receipts, eventually you will fall behind paying the tax. This will hamper the growth of your business as the bank will not recognise your business.

To solve this problem, you need to set how much will you take as your income. For example, you want to take RM2,000 as income. Keep to that amount and do not take more even though there is excess.

Register SSM and create a current bank account for your business. Every month, put aside your income into your savings account. Then you can see clearly the money in your business account and see it grow little by little.

Cash flow formula

As explained above, in order to ensure a positive cash flow, the income needs to be bigger than the expense.

Cash flow = Income - Expense

Based on this formula, in order to maximise profit, you need to think of ways to increase your income and reduce your expenses.

One of the ways to reduce the expenses is by doing business without capital such as dropship or affiliate. By doing this, you do not need to advance your own money to buy and keep stocks. You would only need to promote the buying of the product and receive commission from the sales done from your promotional link.

Net wealth value formula

Not stopping at getting positive cash flow only, you also need to ensure your wealth or business value is also positive.

Net value formula = Asset - Liability 

By understanding this formula, you can avoid taking financing to start your business. This is because all financing will fall under the liability category. As long as your liability is higher than your asset, your business will be always be in a negative value.

Therefore, regardless of personal or business financial management, you need to have a mindset to grow your asset to produce money. Remember, taking financing is usually to grow your business. So if you are just starting, it is not advised to take financing.

If we understand and practice the basics, it will definitely give a positive impact in our life.

This is not only limited to those who lost their jobs, but to those who are doing work from home or working online, who have more flexible time to generate side income by doing online business. In addition, this can be a Plan B if something unexpected happen to you such as loss of job.

Sources:

• 11 Tips to Manage Your Small Business Finance https://medium.com/swlh/11-tips-to-manage-your-small-business-finance-9110c64531f2
• 10 Tips for Managing Small Business Finance https://www.businessnewsdaily.com/5954-smb-finance-management-tips.html
• 5 Personal Finance Tips for Business Owners https://www.forbes.com/sites/allbusiness/2020/02/23/personal-finance-tips-small-business-owners/