Side hustles have been growing in popularity over the past few years. According to an article published on CNBC.com, 44% of Americans work a side hustle to make ends meet. That’s a lot of people working a side gig or side job to bring in some extra cash. A side hustle can be anything from tapping into your talent to earn some extra bucks or driving for Uber or DoorDash to creating your own online shop.
Are you ready to turn your side hustle into a successful business? Starting a new business means a big time commitment. If you’re confident that your side business is something that you want to turn into full-time work, then read our 8 tips to turn a side hustle into a successful business.
1 Formulate a business plan
Creating a business plan is the first step in taking your side hustle to business status. A business plan outlines your goals and how you will meet those goals. It will also help you determine if your side hustle can earn you the income you need to cover your expenses, as well as additional funds for saving and discretionary spending. Take all costs into consideration when planning. Forecast expected sales, expenses, profits, cash flow, and more. If you need to secure funding, will you have personal investors or business loans? How will you market? A business plan will help you lay a strong foundation for a successful business.
2 Establish a legal business
You will need to register your company, and before you do, you need to decide what type of entity it is. Your business structure affects everything from filing your taxes to personal liability. Your business may be structured as a sole proprietorship, partnership, corporation, or limited liability company.
You will need to register your business and get an employer identification number (EIN) from the IRS as well as a state tax ID. Some businesses may also need federal, state, or local licenses and permits to operate. You will also need a business bank account.
3 Seek financing
Turning a side hustle into a successful business can be expensive. How will you fund it? SBA loans and credit loans can be great options for funding your small business. For instance, Benchmark Federal Credit Union offers small business financing and other commercial lending services.
4 Purchase business insurance
Business insurance helps protect your business and personal assets. Each state has different laws regarding insurance. You may need liability, commercial property, commercial auto, workers’ comp, or others depending on the type of business you start.
5 Set goals
Goal setting will give you milestones to reach and a timeline for reaching them. Goals can help keep you focused on your business objectives.
6 Understand your customer base
Market research is important to truly understand your target market. In today’s business world, it is important to connect with your customers and develop loyalty. Look at your competitors. What are they doing? What can you do better to ensure a better customer experience?
7 Focus on your finances
You will need a good understanding of business finances right from the start. This includes learning certain software and accounting tools to help you closely track and manage your finances. Will you be acting as a bookkeeper, or will you have someone else in this position? If finances are your weakness, you may want to consider outsourcing your payroll and accounting. The person working with you on finances needs to be someone reputable who you trust. Finally, it’s important to stay very involved in the day-to-day financial aspect of your business.
8 Don’t bite off more than you can chew
Most successful businesses didn’t start out that way. They started small and worked their way up into what they are today. Although you might be tempted to throw lots of money into buying a big new building and hiring a large staff, you don’t need to invest in all of that expense immediately to be a success. Start small and add what you need as you grow. Always be cautious about taking on too much unnecessary debt. Scale in as they say.
9 Prioritize learning
Perhaps most important, we encourage you to prioritize learning as your business continues to grow. The more you invest in learning, the more able you will be to adapt to changes in your industry. This will help you pivot as need be. Learning can include everything from reading and listening to podcasts to attending conferences and online education courses.
Keep on hustling
While working your side hustle in addition to your full-time job, you may feel there is never a right time to quit and jump into your new business venture. You obviously have the talent. If you do your homework, have your finances in order, and are sure there is a customer base for your business, then it just may be time to take the leap.
Learn more in our blog “8 Questions to Ask Yourself Before Starting a Business.”