10 Smart Steps for Setting Up a Side Hustle
For some of us, a side hustle is a way to make a bit of extra cash, allowing those little “extras” that make life fun. Whether it’s a new bike, a weekend getaway, paying down credit cards, or supporting your Poshmark addiction, a side hustle can provide the money for your wants. And by that, I mean providing for them without dipping into your budget, or creating a cash crunch when a sudden “want” feels an awful lot like a “need.” It can also become a full-time business. Why not give it some thought. Maybe it's time to take the plunge.
Let's be honest, for some of us a side hustle can be how you survive with day-to-day expenses, including food, clothing, and the rent! The pandemic set a lot of us in panic mode, with the usual part-time jobs, like waiting tables, tending bar, or covering admin tasks in an office, far less easy to find. For many, that extra job that helped “make ends meet” was gone, and “ends” weren't and may still not be meeting so well these days.
A few more great reasons for a side hustle, or turning a side hustle into a full-time job:
- Exploring opportunities in a new industry
- Testing the waters for running your own business
- Learning some new technical skills
- Expanding your network
Side Hustle Opportunities are Endless
Whether for wants or needs, a side hustle can be a great option. And there are so many different ways to earn that extra income:
- Social media management
- Blogging
- Delivering food
- Editing/proofreading
- Flipping items (furniture, vintage items, cars)
- Pet walking/care
- Tutoring or teaching online
- Cleaning houses
- Running errands
This list goes on and on. If you need ideas, check out a few of the resources listed below. But if you know what you want to do, it’s time to get started! As these sub posts are being developed, I'm linking to each in the step title. Feel free to click through to obtain more in-depth tips and resources for each step.
10 Steps/Thoughts to Get Started with a Side Hustle (plus a bonus!)
You’ve decided on the “what.” Next are the steps needed to create your plan, outline your strengths and weaknesses, and build a strategy. The following ten steps can be a guide as you begin thinking about your new business, or how to grow your existing business:
- What do I enjoy?
This is a side hustle that may turn into a career. Why not focus on the skills and talents you enjoy using? That way, if your business explodes and you find yourself doing it full-time, you’ll be working at a job you love!
- Am I good at what I enjoy?
Ah, there’s the rub! You may love cooking but have no experience whatsoever. If you enjoy something and would like to earn some money doing it, you need to be good at it, or at least competitive. “Not knowing how” shouldn’t automatically cross an idea off your list. But if your dream side job is something you’ve been dreaming about and not doing, look for opportunities to build the skills you need to succeed.
Need a side hustle now, because you need cash now? Unfortunately, you’ll do better sticking with skills you already have to get your business off the ground faster.
- Get a customer!
Yes, just one person or business willing to pay for your work. Asking friends and family to try you out for free is a great way to learn what you don’t know, but you need to be confident that what you’re selling is something people want. The best ideas in the world can crash and burn if no one wants what you’re selling.
- What makes your services or products unique?
Figure out what you bring to the table that would make people prefer you over your competitor. Regardless of what you do, to be successful, you need that competitive edge. An introductory rate will bring them in, but what will keep them there?
- Better pricing
- More industry experience
- Better equipment
- Convenient Location
- Personal service
- Higher quality product
- Why are you doing this?
Got a cash goal? Have a specific number of clients that will make your business work? Do you want to learn a particular new skill or set of skills? Or do you have a hunch for a new service and want to see if it’ll fly? Set your end goal, and then some check-in points along the way. You want to feel that sense of achievement and progress and have a point at which you’ll decide whether its time to change things up, move on, or set new goals. The Balance recommends taking advantage of Peter Drucker’s SMART goals criteria, setting yourself goals that are:
- Specific
- Measurable
- Achievable
- Relevant
- Time-Bound
- What’s needed to be successful?
Do you need special equipment? How will you reach your customer base? Are there online service providers you can sign up for to offer your services? Will you need special licenses or permits? Do you need equipment? Are there software programs you’ll need to have?
Making sure you have everything ready will prevent a sudden shutdown or the need to explain to customers why you couldn’t finish the promised work. This may mean you need some seed money to get yourself started. Starting small and expanding as business starts to grow is a good idea. But perhaps you want to give yourself a solid beginning by having everything in place when you start. It may mean applying for a loan to pull your small business dreams into small business reality. Even without a loan, you may be able to do a month to month subscription for things like software, equipment rental, etc. It makes sense to look into your options and understand the actual cost of starting your business.
- How do you set your prices?
Again, you’ll need to do a bit of research. The amount a current employer pays you is different from what you’d ask as a side hustler (or a freelancer if you don’t like that “hustle” name). Do some checking with other freelancers and services to determine whether they set up payment by the hour, by the job, on retainer with a set expectation of minimum hours. Are tips usually included? If you’re signing on with a service, is there an option for benefits? Can you expect to see an increase in payment over time? Is there a set growth structure, so maybe when you start, you earn at a 1-star level, then as you grow and improve, you receive commensurate pay levels? Huffington Post published an article back in 2014 on setting prices, which is still an excellent guide for establishing reasonable prices on goods and services today. Understand how your service or product is being priced and charge that price. Don’t be afraid to charge what your work is worth. So many times, self-employed people, or those selling the products of a hobby, underprice themselves because their work is “just something I do in my free time anyway.” Later, when they’re ready to expand into a serious business, their client base isn’t open to paying more.
- How will you receive payment?
Do you have an online person-to-person payment system like PayPal, Venmo? Depending on how you’re operating your business, you may be able to use your credit union account to receive payment. It’s best to speak with a tax advisor or accountant, a lawyer, or even visiting the U.S. Small Business Administration’s website to ensure you have the correct accounts set up and the necessary tracking in place. If you’re mowing lawns or running errands for someone, it may not be a big deal, but you want to make sure you handle it correctly. MIT FCU offers Pop Money for person-to-person payments.
- Taxes on Earnings
Yes, when you run a side hustle, you should be paying taxes on your earnings. Whether you prepare your taxes yourself or work with an accountant or service, you’ll want to make sure you’re tracking expenses, income, and all the rest. As above, an accountant or the SBA can be great resources to figure these things out.
- Don’t quit your day job!
You’ve got a great idea, you’ve got some customers, and you’re making a fair amount of cash! Great! But be realistic.
- Is what you're doing sustainable?
- Would income cover all the benefits you receive from your regular job?
- Can you survive if you suddenly hit a slow period?
- Is what you're doing seasonal?
- What if competition moves in nearby?
Bonus Thought - Don’t rely on “need” as a motivator.
In other words, don’t quit your day job and figure the threat of losing your home or having nothing to eat will force you to be successful. That’s no guarantee. A side hustle can turn into a full-time career but give your business time to grow, and give yourself time to see your progress towards your goals. Establish a short-term (6 – 18 months) and long-term (2 – 5 years) plan for your business. If taking it to the next step as a stand-alone business seems like a reality, run the numbers with a conservative view. Plan for a few negative months. If it works, great, but if a simple bump in the road could put you on the road to nowhere, think again. And make sure your day job gets your full attention. Just as you wouldn’t want to quit it to run a business that may or may not be successful in the long run, you don’t want to LOSE your day job because you were spending more time at your “extra job.”
A side hustle can bring many benefits in the long run, but doing it successfully may take research, a bit of extra cash, and a lot of extra work. Be realistic and set goals to measure your progress.
If you’re looking for seed money to cover licenses, equipment, or other needs, consider a personal loan from MIT FCU. With loan amounts from $500 - $25,000, we are happy to help you get a start with any endeavor.
Sources
https://millennialmoneyman.com/
https://www.thebalancesmb.com/
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