Becoming A Chicken Entrepreneur: The Low-Risk Way to Start a Business
Much has been written about the courage of entrepreneurs. How they are willing to risk all their money and often all their family's money on dreams that other people would view as foolish. There are and have been such entrepreneurs. But they are few and far between. Much more commonly, the entrepreneur is a calculating risk taker. Someone who sees an opportunity, analyzes what the investment costs and rewards might be and only moves when he believes that the odds are stacked in his favor.
Calculating. Cunning. Willing to take moderate risks. That's the typical entrepreneur. And thank goodness for them. They are responsible for 50 percent of the growth in our or any economy and 80 percent of the employment.
There is yet a third kind of entrepreneur. A person who somehow manages to start and grow a successful business but who is unwilling to take any risk. I call such people chicken entrepreneurs because they are so extremely risk averse.
I can't claim credit for coining the term. I heard it said once. But I have done my best to popularize it by talking about it in every book I write. And for a reason. I think there are thousands and thousands of potential chicken entrepreneurs out there in the world, dreaming of quitting their jobs and starting their own businesses, but afraid to do so.
I was always afraid. And yet I found a way to do it. The following case study by Jason Holland explains how one chicken entrepreneur succeeded. I talk about several others in Seven Years to Seven Figures. You'll read more about them in future...
Entrepreneurs are essentially problem solvers. They identify a need in the market and create useful products to fill the gap.
You don’t have to leave your job and risk everything to become an entrepreneur. Anybody can come up with saleable business ideas, and release them to the world. As what Michael Masterson calls a “chicken entrepreneur” you keep your job (and a steady paycheck) while you find out if people will buy your product or service. Minimal investment, minimal risk. If you don’t find your market, you try something else. If you’re successful, it’s a great way to get out of dead end job.
A friend of my wife’s may not know the term chicken entrepreneur, but that’s exactly what she became after being inspired to start a business soon after the birth of her son.
Like many new parents (myself included), Julia was shocked and appalled by the high prices of baby carriers, crib sets, clothes, strollers, car seats, and all the other gadgets and accessories that baby store sales people forcefully recommend.
Julia had to go back to work for financial reasons, and because money was still tight at home, many of those items were out of reach and she had to make due with second hand or borrowed baby gear. Nothing wrong with that, many people do the same. However, as an experienced seamstress, she could do something about the overpriced clothes, baby carriers, shopping cart covers, blankets, nursing pillows, and shopping cart covers. To avoid paying retail, Julia, started making them on her own. She bought fabric and other material at the craft store and through trial and error came up with her own handcrafted designs. And her costs came well under what she would pay at the baby store.
Friends and family soon started asking for their own Julia creation, and before long she found success selling at local markets. So far she is managing to make a couple of hundred dollars each week from this venture, but she stresses that she will always keep prices as low as possible because she knows the situation her customers are in.
It is tough to manage this venture with a full-time job and a baby at home, but she is confident that, as she kicks off some marketing efforts (a blog, a newsletter, and building an email list, as well as some more traditional print advertising) and sets up shop online in the next couple of months, this business will be generating enough cash within a year that she can quit her day job.
Chicken entrepreneurship was a main theme of Michael’s Seven Years to Seven Figures. He says a chicken entrepreneur must be dedicated, willing to come home after a full work day and keep working. Some of his other tips for chicken entrepreneurs:
- Start a business you know something about. Know it inside out.
- Listen to the market. You don’t have to sell something new and exciting. Start with a better or cheaper version of a product already in demand.
- Make the first sale before almost anything else. Eighty percent of your time and resources should be devoted to this task. Don’t even think about fancy office chairs and business cards.
- Understand the back end, selling higher margin products to existing customers.
If your new business is working, at some point it will start bringing in more money than your regular salary. That’s when you have a decision to make: keep working for someone else or work for yourself.