10 Steps for Setting Up a Side Hustle - Step #6 Assessing Your Business Needs

This is where the research kicks in. You may have been running your business as a random extra-cash generator for fun money, paying for special projects or adding to a savings account, but now you’re looking to turn it into a steady cashflow. Are there things you need to really ramp up your business? This post provides you with food for thought when it comes to what you’ll need to get your side hustle moving in the direction of a full-time job.

Assess Your Business Needs

Sounds like that’s an obvious assessment, but we’re not talking the basics, internet access, supplies, customers, and the rest. In fact, we’re kind of assuming you’ve already been operating your side hustle for a bit and have a handle on those things. BUT, if business suddenly grows, can you handle it?

• Do you have turnaround goals?
• Is it more cost effective to outsource part of your production?
• Would certifications make you more competitive?
• Is marketing a need at this point? Advertising? Client outreach?
• Is there an online aggregator or supplier you could sign up with to reach a broader audience? Anything from Etsy to delivery service sites to agencies. Make sure you know your options.
• Do you NEED a website?
• Do you need a special license or permit to operate legally? I know someone who ran a business out of their home. When they started advertising, they got closed down because they didn’t have a permit to run their business from home.
• Do you need technology? Software? Equipment?

These are the questions to ask yourself. I’m not talking “like” so much as “need.” Some people feed their passion and figure “more is better.” But when it comes to growing your side hustle, you need to ask yourself, “Will these things assist me in bringing in more business?” Will they make you competitive, able to serve more clients, lower your overall costs, and provide a higher level of service to your clients? That’s when need kicks in. It isn’t necessary to get everything all at once. Prioritize your “needs” and consider cost, time, and impact. Then use those as guides to set priorities on acquisition. In other words, if you need to have a license to offer your services or products, but that license requires certification, that certification is your priority. Not a storefront, not a branded vehicle, not hiring support staff to get things done. And definitely not cool t-shirts with your funky new logo emblazoned on the front. That’s fun, and can certainly provide name recognition, but if you get closed down because you didn’t have the appropriate license, or you have to turn business away because you don’t have the capacity to produce, a thousand t-shirts aren’t going to help you!

Keeping It Legal – What Do You Need to Set Your Small Business Up Right?

The SBA offers some great resources on starting a business. Makes sense and it’s a great place to go whenever you have a question. They don’t just provide funding. There’s plenty of information on licenses, permits, contracting, local assistance, and so much more. They have their own list of 10 things to do to launch your business. We’re leaving the whole naming piece, opening a bank account, and the rest to other sources, since they’re a bit deep for our blog, but knowing how to find out what you need to get your business set up legally, especially when it may mean you need to take a course, apply for a permit, etc. is important.

Is your small business regulated by the federal government?

According to SBA.gov, if any of your business activities are regulated by a federal agency, you may need licensing or a permit (or multiple). Check their list which includes information on the following business activities that require licensing or a permit:

• Agriculture
• Alcoholic beverages
• Aviation
• Firearms, ammunition and explosives
• Fish and wildlife
• Commercial fisheries
• Maritime transportation
• Mining and drilling
• Nuclear energy
• Radio and television broadcasting
• Transportation and logistics

Now you may be saying, “wait, wait, wait.. this is a side hustle… nuclear energy?” But better to be fully informed and it’s best not to guess at what someone might have for a side hustle.

State licensing and permits

Licensing and permits vary by state, county and even city depending on what you’re doing and where you’re located. There are also fees involved in acquiring these licenses. Do your research so you’re not caught operating without the appropriate license/permit. Also, keep in mind that some licenses and permits are given for a set amount of time. Don’t let those expire. Visit your specific state’s website to determine what will be needed. It may mean also visiting county and city websites to further investigate. But this is an important step in preparing to launch your business.

Don’t go it alone! Getting the support you need to start things up right.

It’s amazing how simple or how complex starting up a new business, or growing an existing one can be. Inc. Magazine has an article about how you can start a small business in just a few hours! In that article, step one is coming up with a name. Then getting your Employer Identification Number (EIN). While you may not need one initially, it is a way to keep your social security number separate for tax purposes. Maybe you’ve been filing under your SS # up until now. But there’s always time to do things differently. It’s clear that you CAN set up a business fairly quickly, and this may be the way to go for you. But maybe not. Forbes.com offers a 35-Step Guide for Entrepreneurs Starting a Business. That includes financials, intellectual property protection, insurance, HR and so much more. This post isn’t a replacement for legal advice, business advice, or any replacement guides. If you’re going to “go pro” with your side hustle, we’re just trying to provide you with guidance on where to look for the information you’ll need. You can also check out SBA for assistance if needed. SCORE is a resource partner of SBA and gets funding from a Congressional grant to provide mentoring and training to various entrepreneurs. Get matched up with a Mentor who can help you get everything up and running. It’s a free, confidential small business resource that’s worth connecting with.

Professional Level Equipment, Space and Technology – Outsourcing vs. Doing It Yourself

Whether you’re providing online services, cooking, running a bicycle delivery service, or restoring antique furniture (and so many other businesses in between) you may realize that there is some equipment you could use. Yes, you can hire outside sources to complete certain tasks, but is it feasible to do it in-house with the right equipment? And would that save you money and time? And maybe increase security or allow for greater customization? Or perhaps that 3D printer, or multiple monitors and an external drive with storage in the terabyte vs gigabyte size is the issue. Or maybe you need access to a commissary kitchen, or a food truck, or should really stop running that business out of your parents’ basement (I remember gig work when I was very young and spent free time typing and labelling mail-order catalogs… it took up so much room in my mom’s sewing room!). Giving thought to expansion if possible, to a home, or renting a small business space, or even a storefront or warehouse may be in order. The key to these types of changes is cost vs. return. If you pay for that extra space, equipment, technology, will you earn it back? And how long will that take? Sometimes it’s immediate, but most times it takes a while to see the actual income resulting from that expansion. This post isn’t going to go into taxes and depreciation and all, but the rough nuts and bolts, will this expansion of space, equipment or technology help you increase your profits? Or will it mean you have to increase your prices to pay for it? Those are things to think about when you’re considering adding to your “shop.”

Everyone’s Online These Days, Are You?

Maybe you’ve been using your company equipment on the side to do your outside work. Not cool. Or maybe you’ve got a computer/Mac at home that you got a few years ago, and it’ll do. Think again. If you are going to be setting up a website, managing accounting, communicating with clients, or handling social media and advertising online, you’ll need technology that is powerful enough to do all that. Plus, you may need to upgrade your internet access to business/enterprise level. Nothing like meeting with a client on a zoom call and suddenly someone else in the house is using the internet for school, or gaming. All of a sudden everything slows down, calls are disconnected, or there are issues with audio/video. Depending on what you’re doing, this may not matter at all. But if you do need technology, make sure you plan for it. Look into options available as far as equipment and service, and consider the near future, say the next 12 – 24 months. Because after that, who knows what may or may not be available or needed!

Track Your Spending (and Income) on All of It

Keep track of what you spend for your business. I have a small content development business, but I have annually renewable MS Office subscriptions, website hosting, internet costs, and domain costs as well as IT protection services, etc. I also subscribe to some stock image sites. And I have multiple sources of work, some as part of another company’s service, but some come in through stock photos I’ve sold, partnerships for sales, etc. When it comes time to do your taxes, you’ll need to know what you’ve earned and what you’ve spent. Whether you track it all on a single spreadsheet, use business management software, or some great all-in-one business software program, or just outsource that piece of the project. Make sure everything is stored somewhere that is easily accessible, reviewable, and safe. Investopedia lists the Top 5 Best Tax Software for Small Business of 2021 including H&R Block, TaxAct, TaxSlayer, TurboTax, and FreeTaxUSA. The important thing is you’re tracking what needs to be tracked, and speaking to your tax advisor to make sure you’re handling it correctly.

Coming up with a business is the easy part!

Yes, you’ve already got your idea, but there are so many other pieces to running a business. It’s larger than a random task or temping for someone else. It feels like a huge jigsaw puzzle with too many pieces to fit together, so many things to consider, and so many goals and plans to develop. But as with anything, taking it one step at a time, setting out reasonable SMART goals will move you forward.

Making sure you have everything ready to get that business up and running, or ramp up to the next level, 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 technology, equipment and supplies in place when you start. It may mean applying for a loan to pull your small business dreams into small business reality. MIT FCU offers small personal loans that may be just the solution you’re looking for. 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.

If you've reached this point in the series, you're either already ramping up that side hustle, or pretty nearly ready to launch. But are you sure your prices are competitive AND support your business? Step 7 is a post on setting prices. Something you want to make sure to get right. 

Resources

• Investopedia
• SCORE
• Forbes
• Inc
• SBA

Photo by Ketut Subiyanto from Pexels