For many, a side hustle may stem from a passion project or hobby that can be used as a way to make some extra pocket change. Eventually, though, the success of the side hustle may turn into the urge to create a business and even the desire to use it as a main source of income. Before making the transition, strategic preparation and a few key steps are necessary to ensure a successful small business launch.
Here is how you can take your side hustle to the next level.
Take the Leap
A side hustle will remain a side hustle unless you bet on yourself and devote the time to turning your idea into a bonafide business.
Taking the ultimate leap of leaving your day job is not always necessary at first, but you will need to make some sacrifices if you want to advance this new venture. The time that you usually would use to wind-down after your day job will likely be taken up by different projects that you will need to do to move your side hustle along. Instead of hitting up happy hour with some friends, you will need to put the time into developing a plan for your side hustle.
Eventually, you will reach an impasse, where you will need to choose between your keeping day job and developing the side hustle further. If you get to this point, sit down and truly think through the big picture of your side hustle. Starting and running your own business is one of the most difficult things to do, make sure this is something you want to pursue before it is too far along.
Create A Business Plan
When creating a well-functioning business, it’s imperative to have a plan in place to guide your endeavors and success. This formal document will help you organize your thoughts and plans into one cohesive file that you can consistently refer back to, and use as a resource to show potential stakeholders. Business plans vary depending on the type of business you are building and how in-depth they need to be. Regardless of your industry, a few common key components include:
- Executive Summary: A high-level snapshot of the most important elements that are integrated into your business plan. This is the first chance to impress readers and offer the chance to grab their attention from the get-go.
- Description & Offerings: This will include basic information, like location, company size, mission statement, vision, and goals. Here you can also describe the goods or services you offer and what problem you will solve for consumers.
- Market Analysis: An in-depth summary of the marketplace you plan to enter and sell your offerings in, and a competitive analysis of your top competitors in the shared space. This is also when you can analyze your target audience and who specifically your services will cater to.
- Marketing Solutions: An outline that includes your pricing breakdown, promotion plans, and your selling model.
- Company Structure: A model of your business structure, the people of the company, and how management operates.
- Financial Breakdown: This section will describe the financial details of the business in terms of the current state, capital needed to begin and expand, and fixed expenses for operation.
Being as thorough as you can be with your business plan in the early stages will only make your life easier later on.
Set-Up a Homebase
One of the more stressful aspects of owning a business is choosing the right physical location for your business. In the past, most business owners would likely operate out of their home for a bit, or even invest in a tiny office space.
Everything changed in 2020. Due to the COVID-19 pandemic, more people than ever were changing how and where they conduct business. Less companies see the value in having a giant office that comes with large overhead costs.
As a new business owner, it may be worthwhile to jump on the bandwagon and start off with a coworking office space. Coworking spaces will give you all the flexibility and convenience of having an office, without having to front exuberant overhead costs. Modern coworking spaces usually will have state of the art office technology to use as well as appealing conference rooms and event spaces.
As a new business owner, saving money and the headache of looking for your own office will be huge. As you grow, you may decide to get a small office, but coworking spaces appear to be here to stay and can scale as your business does.
If interested, book a tour today to learn more about the Mill’s Coworking Space.
Secure Adequate Funds
Once you’ve completed your business plan and have calculated your estimated costs, you will likely find that you need additional capital to support turning your side hustle into a full-fledged business.
Starting a business with no capital can be a recipe for disaster. The infancy stages of a business is where you will need to build momentum if you want your business to be successful. Failing to invest in the business early on will only negatively impact your ability to build the momentum that is needed.
Consider using the SBA’s startup cost calculator to estimate exactly how much you will need to get your business off the ground. This interactive tool allows users to input their own budgets and costs across a variety of different areas of their business. The tool then gives you an estimate of how much capital you need to get the business going.
In the beginning of your ownership, it will be difficult to find access to business capital. The best ways to access business capital are:
- Self-Funding: Pretty much every business owner will need to put up some of their own capital to get the business started. Using funds from savings, 401k, or even your tax returns, are all great ways to get a base amount of capital built up.
- Venture Capital: If you have ever watched the TV show Shark Tank, you are likely aware of how Venture Capital (VC) works. VC is when an investor gives a prospective business money, in exchange for part ownership of the company. VC is great in industries of high-profitability.
- Crowdfunding: Crowdfunding is when a business pitches their idea to the general public, in hopes that the public will resonate with their plan and donate to the cause. Crowdfunding is a great way to both advertise your business, as well as gain capital to get it going.
Most people would think that a small business loan would be the most viable option here, but as a new business you likely will not qualify for a loan right away. Lenders usually will require businesses to have been in business for at least six months to even a year before they can qualify for funding. On top of that, your business will need to be turning profits before it can qualify for any capital product. After you have found some success, you can use a small business loan to further your business’s growth, but in the beginning you will need to look elsewhere for capital.
Being financially literate and financially stable is a critical component of establishing a small business, so it might be beneficial to work with a trained professional while you’re in the early stages.
Legitimize Your Business
It’s crucial to register your business to not only legally protect your ideas and yourself, but also to utilize benefits for business owners and gain credibility. For most businesses, registration in the state of operation will typically suffice. However, there are different kinds of business filings for various business structures. Some of the most popular business filings include:
- Sole Proprietorship: The simplest form of business ownership, a sole proprietorship is when one person owns the entire business. There is no separation between the individual and the business. Your debts are the business debts and vice-versa.
- Partnerships: A partnership is the simplest form of a business that has more than one owner. Partnerships spread the liabilities and control of the business across multiple people.
- Limited Liability Company (LLC): LLCs offers benefits from being a sole proprietorship as well as being a corporation. LLCs can use the pass-through taxation rules that sole-proprietorships can, while still benefit from the limited liability that a corporation is granted.
- Corporation: A corporation means that the business is seen as a separate entity from any individual. Corporations share a lot of the same rights that individuals do. A corporation will take a large amount of ownership out of the original business owners hands.
Meet with one of our business consultants to discuss what type of business entity would be the best fit for your side hustle.
Celebrate Every Win
When starting your own business, it’s important to celebrate every win, no matter how big or small. This is an exciting venture and time in your life, so don’t downplay any of your accomplishments. Get your friends and family involved in the process so you have a reliable support system throughout the process. Remember to take care of yourself and celebrate every step along the way in your small business journey.