Making Money From What You Already Know – Critical For FIRE And Today’s Tough Job Market

Even though I left a lucrative corporate career in my mid-30’s for the unknown of going into business for myself, I’m actually a risk-averse person. My risk aversion just means that I don’t like taking risks – I still take risks, as long as I can manage them. Going into business for myself was a manageable risk because I was making money from something I already knew. I had been in HR and was starting a career consulting business — essentially in the same area as before, but this time working for myself.

Making money from what you already know is a key part of our FIRE strategy. It enabled us to grow our income since I was no longer capped by what any one employer would pay. This gave us extra cash to save and invest. The flexible work schedule also gave me bandwidth to identify other money-making opportunities. After a few years growing the consulting business, we turned to growing our real estate portfolio, which enabled us to reach our first stage of FIRE.

Making Money From What You Know is one of the lessons in our free course, Making FIRE Possible, which we share our FIRE stories, and help you get started on your own FIRE journey. Sign up today!

Your specific knowledge can help you be competitive in today’s tough job market

Making money from what you already know is especially important in today’s market where finding work is more challenging. If you don’t have a job, you may not have the luxury of waiting till an employer chooses you – you may have to choose yourself and make your own job. Even if you have a job, you may find reduced hours and low or no raise as employers tighten their belts – making your own side hustle can bring in much-needed cash.

There is no shortage of posts to give you ideas on a side hustle. A quick Google search on “how to make money on the side” picks up 26 ideas from Nerdwallet, 30 from Inc, 50 from Entrepreneur and, if you need even more, 113 from Breaking The One Percent. Consulting, our side hustle of choice, frequently makes these lists. But if you look closely at other suggestions (e.g., freelance writing, app development, social media management), many of them are special skills that you either have to already know or invest a considerable amount of time to learn before you could make any money.

It makes sense that you’ll make the most money when you have some special expertise or extra talent or unique value to offer. You can position yourself as a better choice over others offering the same service. Your existing knowledge allows you to do the work more easily than if you were learning it as you go, and this is critical because you have so much else to do – either you’re building up a business or this is a side gig that you have to juggle with your day job.

If you don’t start a business with something you already know, it will take you much longer till you start making money. You could bring in a partner that has the expertise you lack, but then that cuts into your profits. In the case of finding a partner or outsourcing some of the work, you pay with additional money, not additional time, but you’re paying extra in both cases.

You have special knowledge, even if you don’t realize it

Now you might insist you don’t have an expertise to turn into a consulting business, but you’re probably just overlooking it. Things that come easily to you can fall off your radar because you do them so effortlessly. Since it’s easy for you, you think it’s easy for others, but it’s not – and that’s what others will pay for. If you’re thoroughly stumped, ask a few of your friends what they think your unique skills are.

If you’re embarrassed to ask your friends, just think back to what people ask your advice on or ask you to do for them. I have a friend who is a very talented crafter, especially with fabrics – quilting, sewing, etc. I found a random piece of fabric at a yard sale, and I didn’t know what to do with it, but it was so cute that I bought it anyway, knowing I could give it to this artistic friend. She made a beautiful small throw out of it.

This friend could probably monetize her crafting skills, if she wanted to. She’s retired and has no desire or need for the income, but it’s definitely a special expertise.

Some other prompts you can use to discover your special expertise:

• What do friends & family ask you for advice about?
• What comes easily for you that others struggle with?
• What can you talk about for a long time without running out of things to say?
• If you had to give a talk at your alma mater and had zero time to prepare, what topic would you choose?
• If you got picked for a million-dollar trivia contest, what topic would you hope the winning question is about?

Your first customer is someone you already know

Another advantage of going with something you already know is that people around you also know you have this skill. These people already like you and trust you. They can refer you to your first customer, if not be a customer themselves. So, instead of having to go out into a faceless, endless market of unknowns, you can focus first on people you know – family, friends, former colleagues, social media connections.

You don’t need an advertising budget to connect with people you already know. With video conferencing and social media, you can even do outreach well within the confines of social distancing. Since these are people you know (and presumably like) there is the added bonus that you’ll have fun while you get your business started.

Minimize your costs while you grow your business

Judiciously targeting people you already know is one way of minimizing your costs while you grow your business. Since the whole point of starting this business is making money, you do want to mind your costs, or you might get into a situation where the business costs you more to run than it gives back to you.

This is another reason I picked a consulting business for myself and recommend consulting or other service business over something that requires materials, inventory or a specific physical space. Yes, a consulting business will take time – most consulting is quoted by the hour or some other increment of time. However, there are few, if any, start-up costs.

I opened a separate business structure, created a website and joined a few networking groups, but these were still optional – you could simply start as a sole proprietor, using word of mouth or a social media profile for marketing and organize your own networking. Then, as your business starts bringing money in, you can think about investing it back into the business (or not).

Starting a business started us on the FIRE path

I didn’t go into consulting to hit our FIRE number –when my business started, FIRE wasn’t on our radar. I knew the corporate grind wasn’t right for me, and consulting was a way of designing my work around my life. It took four years before my consulting income replaced my job income, so it is not a quick solution but it is a viable one. And I was making money from day one – like many entrepreneurs, I secured clients before leaving my day job.

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How about you? Do you already have a business of your own? Have we convinced you to start one?