April 16, 2024


Supportive Business Potential

He Used 401k Cash to Start a Side Hustle With $1M+ in Sales

He Used 401k Cash to Start a Side Hustle With $1M+ in Sales

This Side Hustle Spotlight Q&A features Michael Pan, who built his side hustle, Pan’s Mushroom Jerky, into a full-time business over the course of a decade. To date, Pan’s Mushroom Jerky has seen more than $1,000,000 in sales.

Image Credit: Courtesy of Pan’s Mushroom Jerky

What was your full-time job and/or primary source of income prior to starting your side hustle? Did it change over the course of your side hustle journey?

I earned an electrical engineering degree from the University of Illinois, and I spent most of my career at Motorola/Continental Automotive in Chicago.

Along the way, I launched a tech startup with friends until we sold the business in 2016.

These full-time jobs allowed me to test the market, learn and iterate along the way. Finally in 2016, I was in a position to dedicate everything to Pan’s, and I made the transition to work on the business full-time.

Related: These Sisters Started a Side Hustle After a ‘Light Bulb’ Moment Standing in Line for Coffee — Now Their Business Has Done $100 Million in Total Sales

When did you start your side hustle, and where did you find the inspiration for it?

I took a trip to visit family in 2006 in Malaysia, where I met a vegetarian cousin who had been making our family’s mushroom snack for years. As vegetarians, they had trouble finding foods that not only tasted great but also had great texture. And they found that mushrooms were very satisfying and healthy.

This opened my eyes to an amazing culture with innovative foods that mimic the texture of meat. I fell in love with the product and its history, and I knew our family had a snack that needed to be shared with the world.

What were some of the first steps you took to get your side hustle off the ground?

I first learned how to import the product from my family in Malaysia. I sampled the product as often as I could to test demand and gather consumer feedback. I quickly found out that many types of people, including non-vegetarians, loved it because it was a healthy snack that tasted great.

I started selling on our website (which we powered through Shopify) and Amazon for direct business. I started to cold email, call and visit as many stores as I could to get more sales and distribution.

Meanwhile, I also did some product development and worked on transferring production to the United States. I rented small kitchen spaces, made products, tested, iterated and repeated that process frequently. I used the cash from online sales and sampling events to reinvest back into the business.

Related: I Spent the Last 3 Years Building My Side Hustle Into a Full-Time Business. Here’s What I Learned.

What were some of the biggest challenges you faced while building your side hustle, and how did you navigate them?

It’s hard to avoid the amount of capital it requires to get started from scratch. Luckily I had some 401k cash along with debt I could leverage to help get the business off the ground.

How long did it take you to begin seeing consistent weekly or monthly revenue?

It took about two years.

When did it surpass the income of your full-time job?

After about year three, I started making enough income to match my previous full-time job.

When did you decide to go all-in and transition from side hustle to full-time business?

After wrapping up another startup venture in 2016, I decided to go all in on the business.

Luckily at that time, all the trends were aligning. Mushrooms were trending; healthy, on-the-go snacking was still gaining popularity; and plant-based foods were booming. I felt confident that we had product-market fit and a quality product that would succeed.

Related: She Started a Furniture-Flipping Side Hustle to Pay Off a $10,000 Dental Bill. It Surpassed Her Full-Time Job’s Income Within a Year — Earning Up to $37,000 a Month.

What’s your advice for other side hustlers who hope to turn their ventures into successful businesses?

Being mentally ready for challenges ahead is very important. Having the mindset to grow and learn is essential. The right mindset will prepare you to embrace challenges as stepping stones to success.

Learn and iterate as quickly and cheaply as possible! Push to learn and iterate quickly instead of waiting for everything to be perfect before moving forward.