When Should You Treat Your Side Hustle Like a Business?
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Many individuals utilized their leisure time to pursue their hobbies even before the continuing COVID-19 outbreak. Side gigs are becoming increasingly frequent for folks with traditional 9-to-5 day jobs, whether it's knitting scarves and selling them on Etsy or performing home repair work for neighbors.
For many individuals, side hustles are a terrific alternative since they provide an additional source of income, help you make ends meet, or allow you to save for retirement. Depending on your current circumstances and future ambitions, the money you earn from a side employment may be used to a variety of uses.
Aside from the money benefits, side hustles provide you the opportunity to perform something you like and are passionate about, something your day job may not provide. Professionals in the corporate sector often change careers and embark on a new company venture that is more closely aligned with their interests.
Why are side jobs so popular right now?
Many professionals have reflected on their professions as a result of the outbreak. Some people choose to quit their day jobs and devote all of their time and money to their side business.
This adds to "The Great Resignation," as it's been dubbed. It's a time when an unprecedented number of Americans are leaving their jobs for a variety of reasons.
According to Census Bureau statistics, the number of new businesses in the United States increased by 47% in 2020. This demonstrates the large number of professionals who are taking advantage of the possibility to start businesses.
However, determining whether or not your side hustle can scale might be difficult. You're probably asking yourself, "Will this work?"
When will I be able to leave my day job? Is this feasible given my current financial situation?
Signs that your side hustle could become a successful business
Here are some obvious signals that your side business is ready to scale up:
- You've discovered a market need and are prepared to address client requests.
- Your side hustle has evolved into a full-fledged business.
- Your side venture is already paying off for you.
- You need a break from your daily routine.
- You're a respected figure in your field.
- You've established a name for yourself among your competition.
Of course, when considering whether or not your side hustle may be turned into a full-fledged company, you could spend hours deliberating over every little aspect. It's also worth mentioning that the way you talk about your employment might influence your judgment of how successful it will be.
If you continue to refer to it as a side gig, for example, that's exactly what it will remain. If you sincerely believe in your goods or services, you should consider referring to them as a company. Only you can make your dreams come true.
- Here are several indicators that your side project isn't going to work as a business:
- It saves you time at work without costing you money.
- You invent emotional justifications to explain your side business.
- When it comes to your side hustle, you are inconsistent.
- You haven't prepared yourself to put yourself out there.
- You're not filling a need for a current consumer.
It's ultimately up to you and your financial circumstances to make the choice. Before you decide to take your side hustle to the next level, you should have six to twelve months of saved revenue.
It may take that long for your firm to make a profit, and the last thing you want to do is deplete your money. For anybody joining the business world, financial stability should always be a primary goal. To remain afloat in the event of an emergency, entrepreneurs must be clever in their saving plans.
How to turn a side hustle into a business
If you've chosen to take your side hustle to the next level, you'll need to take measures to guarantee that it succeeds. Your firm will be more likely to survive and grow in a competitive market if you do it this way.
Make a business plan first
It will be difficult to determine whether this is something worth fighting for without putting your company ideas on paper. If you don't already have a business plan in place, develop a list of everything you'll need to know ahead of time.
Start with your mission statement and the general aim you wish to attain, for example. An executive overview, firm description, organizational structure, and financial breakdown should follow.
When it comes to starting a company, planning is important, so take some time out of your day to write a solid business plan.
2. Conduct in-depth market research
Market research will be crucial in establishing your target market and assisting you in running your firm as it grows. It also allows you to assess the viability of your company strategy.
Let's say you have a side business selling handcrafted jewelry to local friends and family. While this is an excellent side hustle, you may not be aware of consumer wants.
The ultimate purpose of market research is to find out what your consumers like and dislike about your goods and services. This will reduce the risks that come with starting a new firm.
3. Create a legal company
Taking the proper measures to separate your company and personal funds is crucial. Your side business may have provided you with some extra cash, maybe via the use of a payment tool like Venmo, CashApp, or Zelle. If you want to push your side hustle to the next level, this won't work.
Choose whether you wish to form a single proprietorship, a limited liability corporation (LLC), or a partnership to incorporate your firm. Although incorporation may seem difficult, it is rather simple if you have a few hundred dollars to pay expenses.
You must also register your company with the state and get an employment identification number (EIN).
4. Think about getting business insurance
Insurance for your business is a must. It would safeguard your organization in the event of a disaster, such as fires, floods, or property damage.
While the sort of coverage you need depends on your state, it's worth looking into and investing in. Small company insurance comes with a slew of advantages:
- It brings in new customers to your company.
- It allows you to recruit and retain new personnel.
- It defends your company from litigation and accusations.
- It ensures that your business remains successful year after year.
- It assists you in meeting legal standards.
5. Make marketing and advertising investments
Every company must participate in the marketing and advertising arena. How would you attract prospective clients if you didn't have these essential components? When starting a firm, you must have a feasible plan in place and choose a suitable advertising strategy.
Consider posting advertisements in your local newspaper or on a news website. As your company grows, you may want to consider employing specialist advertising or marketing experts to assist you with this aspect. You can utilize marketing to your advantage in a variety of ways, so make it a priority as you prepare to launch.
6. Make a decision on when you'll quit your day job
Now that you've completed some essential stages in the formation of your company, it's time to consider when your day job will no longer be required. It may take a few months before you can resign, and a lot depends on how lucrative your new business is.
Keep in mind that accumulating enough money to retire may take longer than you think. Some advise estimating how much money you'll need before leaving and then double that figure since it's best to be safe and financially secure before resigning.
This choice will be based on your unique circumstances, and if you need to speak with a financial advisor, do so. Your future self will appreciate you for considering your financial security in the long run.
You'll want to keep these measures in mind as you get ready to promote your side employment. Starting a company should be a joyful and pleasurable process, but there will be challenges to conquer. Many entrepreneurs will employ new technology to simplify their operations, so be open to trying new things to make your new business a success.
Own your side hustle and refer to it as a company
In today's economy, side hustles are growing increasingly widespread. They have advantages and disadvantages, and it's important to note that not everyone will work for a well-established company. Many new businesses, on the other hand, may be viable provided the proper measures are taken prior to debut.
Entrepreneurship is not for everyone, but if you have the drive, dedication, and love for the goods or services you provide, you can succeed. Start referring to your side hustle as a company and take the necessary actions to ensure your success.
You'll be ready to start making money doing something you like if you follow your passion and maintain a level mind.
Thanks to Devin Partida at Business 2 Community whose reporting provided the original basis for this story.