Your Guide to Start a Side Hustle

9 Actionable Steps to Start Your Next Side Hustle

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A few weeks ago, I wrote to you about some ideas you can use to start a side hustle (if you haven't read it, here it is). Are you considering starting a side hustle? Perhaps you imagine quitting your job one day to take your business full-time, or maybe you just need to make a little extra money in your spare time. When launching a successful side hustle, there are several foundational things you should have in place.

But before we dive into how to start a side hustle, let’s talk about what a side hustle is and the benefits you can gain from having one!
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What exactly is a side hustle and how can it benefit you?

A side hustle is an additional job or income stream generated alongside a primary job. Side hustles are beneficial because they allow people to make more money while utilizing and practicing other money-making skills and also working according to their schedules.
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With a successful side hustle, there is no limit to how much you can make. This additional income can not only help you save, get out of debt, or take that dream trip, but it's also a powerful tool for achieving financial freedom and building wealth.
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As exciting as starting a side hustle may seem, you must have a solid plan to fully reap the benefits. In addition, you have to start with the hustle idea that is best for you.

9 Steps to Start Your Next Side Hustle

1. Assess Your Available Time

One of the fundamental steps in embarking on a side hustle journey is determining how much time you can realistically allocate. Take a close look at your daily schedule and identify pockets of free time. Whether it's a couple of hours each day or only on specific days, understanding your time availability is crucial.

Consider your commitments, job, family, and social life while doing this. It's important that your side hustle complements rather than interferes with these responsibilities.

Once you've assessed your available hours, you can make an informed decision on the type of side hustle that suits your schedule. Some options may demand regular time investments, while others can be more passive once established. Planning your side hustle around your availability is a key part of setting yourself up for success.
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2. Choose an Interest-Driven Hustle

Selecting a side hustle that aligns with your interests is vital for long-term success. Since your primary job likely consumes a significant portion of your energy, opt for a side gig that genuinely excites you.

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If you're unsure where to start, turn to your hobbies for inspiration. Your favorite pastimes could hold the key to a niche business idea that generates income. Whether it's writing, baking, gardening, or organizing, examine if any of these activities can be transformed into a lucrative side hustle.

To pinpoint the ideal hobby-based hustle, list all your interests and hobbies. Highlight the ones with income potential or those that could evolve into a profitable venture. This will serve as a valuable starting point in your side hustle journey.
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3. Define Your Financial Target

Setting a clear financial goal is crucial when embarking on a side hustle journey. While the desire for extra income is a common motivator, quantifying this objective is key. You need to determine how much "extra" you actually need.

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Begin by identifying specific financial goals and the associated amounts required to achieve them. For instance, if you aim to eliminate debt, calculate the total sum needed for debt repayment. If your goal involves purchasing a new car, determine the exact cost.

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Understanding the financial milestones you want to reach will guide your choice of a side hustle. Some options, like participating in online surveys or dog walking, may generate a few hundred dollars per month, which is suitable for specific goals.

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However, if your ambition is to replace or exceed your current income, you'll need a side hustle that can eventually transition into a full-time pursuit.

Start by clarifying why you're venturing into a side hustle. Is it for a one-time financial need, or do you seek ongoing supplementary income?

For one-time financial needs, precisely calculate the required amount. If you're pursuing ongoing income, specify the monthly income target.

With these figures in mind, selecting a side hustle becomes more straightforward. You can assess which opportunities align with your income goals and whether the hustle will be a short-term or long-term endeavor, impacting your choice accordingly.
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4. Craft a Robust Business Blueprint for Your Side Hustle

Starting a side hustle without a well-structured business plan is like navigating without a map. Your business plan serves as your roadmap, guiding your side hustle toward success. It doesn’t need to be lengthy, but it must focus on key elements to help you build a profitable venture.

Understand that your initial business plan is not set in stone and will likely evolve as your ideas develop and your business takes shape. These changes are natural and often beneficial, as they help you refine your objectives and strategies.

Here are essential components to include in your business plan:

Create an Executive Summary: Begin with a concise executive summary that outlines your business and the problem it addresses with your product or service. This one-page summary will be easier to complete after you’ve elaborated on the main sections of your business plan.

Identify Your Target Audience and Profile: Define your target audience, including key demographics such as location, age, and income. Consider why your target audience would be interested in your business. Determine how you will find and engage these clients, especially through online platforms like LinkedIn, Facebook groups, and Instagram.

Specify Your Products and Services: Decide what products or services your side hustle will offer, aligning them with the problem your business aims to solve. Consider pricing strategies and sales channels.

Develop Your Operating Model: Outline how you intend to deliver value with your products or services, and ensure it aligns with the experience you want to provide customers. Evaluate whether your products are packaged to match your desired customer experience and whether your website reflects your brand.

Analyze Your Competition: Research your competitors to understand their locations, strengths, weaknesses, and offerings. Identify ways to differentiate yourself and enhance your offerings.

Calculate Start-up Costs and Financing: Detail initial start-up costs, including registration fees, branding expenses, and website development costs. Explore potential funding sources and assess whether investors are necessary to achieve your financial goals.

Manage Cash Flow and Budget: Determine your working capital needs for day-to-day operations and incorporate them into your operating expenses. Develop a business budget to track expenses and ensure financial stability.

Outline Revenue and Profit Forecasting: Describe the products and services you plan to sell and how you will market them to potential customers. Fine-tune your revenue streams as you learn from your side hustle’s performance. Track profitability on individual products or services, allowing you to optimize costs and pricing for maximum profitability.

A comprehensive business plan provides a solid foundation for your side hustle and increases your chances of achieving long-term success.

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5. Choose the Right Business Structure

Setting up your side hustle correctly from a legal and tax standpoint is crucial before you begin providing services or earning money. This involves selecting the appropriate business structure, a decision that should consider the legal and tax implications. Consult with your accountant or financial advisor to make an informed choice among the recognized business entities:

Sole Proprietorship: In a sole proprietorship, you run the business independently and bear personal responsibility for all related liabilities. This is the simplest and most common structure for small businesses.

Partnership: As the name suggests, a partnership involves running the business with one or more partners. The business operates according to the agreement you establish with your partner(s), and both you and your partner(s) share responsibility for liabilities.

Limited Liability Company (LLC): An LLC offers limited liability similar to a corporation, shielding your personal assets from business debts and claims. It provides flexibility in management structure and ownership, akin to a partnership. In an LLC, business owners are referred to as members.

Selecting the right business structure is essential for legal compliance and tax efficiency. Consulting with a professional can help you determine the best structure for your specific side hustle and financial goals.

6. Choose a Name for Your Side Hustle

Now it’s time to select a name for your side hustle if you haven’t already done so. Your business name carries significant weight as it reflects your brand identity and serves as the first impression of your venture. However, before settling on a name, take these factors into account:

• Appeal to Your Target Audience: Ensure that your business name resonates with your target demographic. It should attract potential customers and align with their interests and needs.
• Uniqueness: Opt for a unique name that distinguishes your business from competitors. A distinctive name is memorable and easier to build a brand around.
• Domain Availability: Check if the corresponding web domain is available for your chosen name. Having a matching domain can simplify your online presence and branding.
• Trademark Considerations: Verify that your selected business name doesn’t infringe on someone else’s trademark. This step is crucial to avoid legal complications in the future.

After addressing these considerations and confirming the availability of your chosen name, you can proceed to register your business with the appropriate authorities. Your business name plays a vital role in shaping your brand’s identity and should resonate with your target audience while remaining legally compliant.

7. Establish Business Credit for Your Side Hustle

Creating a credit profile for your side hustle comes with several advantages, particularly in maintaining a separate financial identity for your business, distinct from your personal finances. By managing credit wisely, you can benefit from this separation and safeguard your assets. Here’s how to set up business credit properly:

Incorporate Your Business: To ensure that your company is recognized as a separate legal entity, consider setting up a corporation or an LLC (Limited Liability Company). For sole proprietorships and partnerships, the business is typically intertwined with the owner’s personal assets, making it challenging to establish separate business credit.

Obtain a Federal Employer Identification Number (EIN) for US, or Business Number (BN) for Canada: An EIN/BN is essential for tax filings, business registration, and interactions with vendors. It serves as a unique identifier for your business, similar to a social security number or social insurance number for individuals.

Open Business Accounts: Open dedicated business checking and savings accounts in your registered business name. These accounts will handle your day-to-day financial transactions and help establish a clear separation between personal and business finances.

Build Your Business Credit Profile: You can initiate your business credit profile by obtaining a business credit card for your transactions. Another effective method is making purchases from vendors and consistently meeting payment deadlines, adhering to specified net payment terms. These vendors report your payment history to major business credit bureaus.

Timely Payments: Ensure that you pay your business bills punctually and, if possible, in full. Timely payments not only contribute to your business’s financial health but also enhance your business credit score. This practice not only bolsters your financial stability but also fosters a positive reputation for your business.

Establishing business credit offers several advantages, such as a clear separation of personal and business assets, protection against business identity theft, and the ability to monitor your business’s credit health. By adhering to these steps, you can create a strong financial foundation for your side hustle while safeguarding your personal finances.

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8. Develop a Funding Strategy for Your Side Hustle

Securing adequate funding is often a significant challenge when launching a side hustle. Even if your business concept is exceptional, you’ll likely need financial resources to get started. Here’s a comprehensive look at various funding options you should consider:

1. Self-Funding: Your first choice should be to self-fund your business using personal savings. This approach minimizes the risk of starting with debt and allows for more control over your financial resources. If you lack sufficient savings, you can start small, using free or low-cost resources, and gradually allocate funds as your business grows.

2. Friends and Family: Friends and family can serve as valuable funding sources. Since you know and trust them, you can negotiate low or zero-interest repayment terms. However, be cautious not to jeopardize personal relationships. Formalize agreements with written contracts to ensure everyone is clear on the terms.

3. Angel Investors: Angel investors are typically high-net-worth individuals who invest in businesses in exchange for equity ownership. While they tend to focus on larger-scale ventures, some may consider side hustle investments. Be prepared to offer equity in your business.

4. Bank Loans: Personal or business loans from banks are viable options, provided you have good credit. These loans don’t require you to relinquish business ownership but do involve repaying the borrowed amount with interest over a specified period. Assess the pros and cons of taking on debt before pursuing this option.

5. Crowdfunding: Crowdfunding platforms like Kickstarter and Fundable enable you to collect contributions from a wide audience, usually online. In return, backers may receive early access to your product or service or even equity in your business. Crowdfunding can help you raise funds without incurring debt, but it requires marketing efforts and may entail platform fees and tax considerations.

When determining your funding strategy, consider your financial situation, risk tolerance, and the nature of your side hustle. Careful planning and a clear understanding of your funding options will set you on a path toward financial success in your side venture.

9. Establish an Effective Work Schedule

Creating a well-structured daily routine is paramount when embarking on a side hustle journey, particularly if you’re balancing it with a full-time job. Here’s how to devise a schedule that optimizes your time for both your side gig and primary occupation:

1. Define Your Hours: Determine how many hours per week or day you can allocate to your side hustle. Analyze your current schedule to identify any commitments that can be adjusted or removed to free up time. If your availability is limited, consider dedicating a small portion of time daily to your side hustle, even if it’s just an hour.

2. Stay Organized: Organization is key. Invest in a planner or utilize digital tools to manage your time effectively. Track appointments, meetings, and deadlines meticulously. Regularly check your email to stay on top of important communications. Maintaining order in your scheduling and time management will help you juggle your responsibilities seamlessly.

3. Consider Outsourcing: As your side hustle grows, you may find it beneficial to enlist help. A virtual assistant or part-time support can handle tasks that consume your time and allow you to focus on higher-priority activities. While this step may not be necessary initially, keep it in mind for the future when your business and resources expand.

Crafting a well-thought-out schedule and adhering to it diligently will enable you to efficiently manage your side hustle alongside your primary job. This approach ensures that you make the most of your available time and maintain a healthy work-life balance.