All entrepreneurs need a parachute.
Because whether you’re selling a product or a service, starting a new business involves risk. I’ve been an entrepreneur all my life. Looking back, I’ve relied on safety nets at every stage in my career. I think not having the right safety net is what stops a lot of people from pursuing their entrepreneurial ambitions.
When I was in my early twenties, I began designing products. The first one was a novelty baseball cap that had foam fingers you could rearrange to send a message, like the peace sign. I ran an ad in a magazine to test the market for demand. This only required fabric, a sewing machine, and money for the ad. I didn’t need a safety net. I didn’t sell very many.
The answer why is simple: even though I’m an entrepreneur, I’m risk-averse, and with licensing there’s basically no risk involved. Your licensee is already in business and on the hook for the heavy lifting of product development, meaning manufacturing, marketing, and fulfillment. In other words, they take on all the risk.
Later, I started a business selling uniquely-shaped guitar picks. We sold mostly to fans, not musicians. Four of us pitched in a little bit of money so we all had equity. Soon enough, our picks were being sold in thousands of stores including Walmart and 7-Eleven. We became a Disney and Taylor Swift licensee. Getting into Walmart was exciting as well as daunting. We had to scale up, and to do that, we needed capital. The bank would not loan us, so I invested my own capital (about $250,000) to fulfill the Walmart order. This was money I had saved as well as inherited.
5. Consulting- Worlds of Wonder hired me to be a consultant after I left. The pay was great and I was also able to submit my ideas to them. And although I didn’t license anything, I was once paid a large holding fee of about $15,000.
Before you start pulling out your hair and not sleeping at night, create a safety net. Please realize, you will always doubt yourself a little. And it will be rough, always. These are the only constants. With the right safety nets, you can become an entrepreneur without putting your future and the future of your family at risk.