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!
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 own schedules.
With a successful side hustle, there is no limit to how much you can make. And with some extra money in your pocket, you can save, utilize the best way to get out of debt or take that trip you wanted.
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.
10 Actionable steps for starting a side hustle
Finding the perfect side hustle that helps you make a little extra cash is only half the battle. You must also find out what business will work well for you and your lifestyle.
And then, of course, there’s how to start a side hustle and the rules and laws to follow. Here are all the details for how to begin your side gig.
1. Determine how much time you have
A crucial part of getting started with a side hustle is to think about how much time you have to spare. Are you free most evenings, or are you already super busy and you struggle to find a few hours a week to yourself?
If you have a couple of hours a day that you could work on your side hustle, you can pick something that requires more time from you on a consistent basis. But if you don’t have much extra time, you might create something that is mostly passive income after it’s set up.
Look at your calendar
In order to find out how much time you have and consequently what side hustle to choose, use a planner or calendar. Add the tasks that you do each day and the specific times that you do them.
You likely already do something like this, so it should be easy to take a look at your schedule.
You may find surprising results. For example, perhaps you have several hours free in the afternoons on Monday and Wednesday. Or maybe your schedule is busier than you realized, and you can only devote time on Saturday mornings to your side hustle.
Find out (realistically) what times you have available and how much time you can spare. Remember that your side gig should not interfere with your regular job, time with family and friends, or other responsibilities. Then, create your side hustle time management plan.
After you know how many hours and what times you are available, then you’ll know what to choose, whether it needs to be mostly passive income or if you can spend a few hours a week working.
2. Pick something that interests you
Think about what interests you. Since your full-time job probably takes most of your energy, finding a side gig that you’ll be excited about long-term is essential. Choose something that is easy for you or that you enjoy.
For example, if you love freelance marketing, you might have a career as a social media marketer. Find something that focuses on what you’re good at.
Let your hobbies guide you
If you aren’t sure where to begin, look to your hobbies for ideas. Maybe you love to write, bake cakes, garden, or organize and clean. See if any of the things that you enjoy doing could be part of a niche business idea that makes you an income.
If it helps, write down as many hobbies or interests as you can think of. Then highlight the hobbies that make money or that have income potential, and go from there.
3. Decide the amount of money you want to earn
It’s easy to say that you want to make extra money each month, but how much is a little extra? Consider some examples of financial goals and the amount of money you need to achieve them.
For example, how much additional income will you need to pay off debt? Perhaps you want to buy a new car; what is the cost involved? Knowing how much money you want to bring in can help you determine which side hustle to start with.
Some side hustles like taking online surveys or dog walking will bring in a couple of hundred dollars a month.
However, suppose you’re looking to replace your current salary or surpass it. In that case, you’ll want to start with a side hustle you can eventually transition into full-time.
How to know what amount you need to make
First, ask yourself why you decided to launch a side hustle gig in the first place. Is it for a one-time payment for something? Is it an ongoing need to make more money?
If it’s a one-time payment, determine exactly how much you need.
On the other hand, if you need an ongoing income, decide precisely the amount you need to be getting paid monthly.
After that, choosing a side hustle will be easier because you’ll know what will make the amount of income you need and what won’t. You’ll also be able to determine if a side hustle will be short or long-term, which may affect what you choose.
4. Create a solid business plan for your side hustle
If you’re in the process of starting a side hustle and do not have a business plan, you need to create one now. A business plan is essentially your roadmap for your side hustle to achieve your goals for a small business. You can’t have success in life without a plan!
Your business plan doesn’t need to be 100 pages long. Instead, it needs to focus on key things to help you build a successful business and show how you’ll start a profitable side hustle.
Your initial business plan should be fluid and will possibly change—a lot! These changes are expected because as you put your ideas on paper and your business comes to life, you may realize other factors.
As a result, you’ll better determine what you want and don’t want in your business or come up with entirely new ideas.
Below are some topics you should include and some questions to get you thinking as you create your business plan.
Create an executive summary
Your executive summary outlines your business and the problem you are solving with the product or service you’re offering. The executive summary section, usually a one-pager, will be easier to complete once you’ve built out the main sections of your business plan highlighted below.
Identify your target audience and avatar
When starting a side hustle, you need to know who you’ll sell to. Here, you’ll define your target audience, which includes identifying key demographics such as location, age, and income of your ideal clientele. You’ll also want to consider why your target audience would be interested in your business.
You should also know your ideal client and how you will find these clients. Since social media is a big part of everyone’s lives, LinkedIn, Facebook groups, and Instagram can be helpful in how to get clients online.
Decide on what products and services you’ll offer
Every business offers a product, such as jewelry or a pre-owned designer handbag, or a service like editing or photography. When deciding which side hustle business you should offer, think back to your executive summary. Whatever you offer should align with the problem your business will be solving.
Once clear on this, it’s a good idea to sketch out thoughts on how you will price your products or services. You’ll also want to consider how you’ll be selling them.
Figure out your operating model
A clear operating model helps you understand and lay out how you intend to deliver value with your products and services. It will also help determine the type of experience you plan to provide your ideal customer.
Start by asking yourself, are my products packaged in a way that aligns with the experience I want my customers to have? Is my website in line with my brand?
Once your operating model is fine-tuned and running, and you are branding for success, it will allow you to scale your side hustle because you’ll have well-established processes in place on how to run your business.
Research your competition
Ahh, competition. Everyone hates it, but everyone needs it! No business plan is complete without some insight into your competition.
Where is your competition located? What are the strengths and weaknesses of their offering? And how can you differentiate yourself from your competition and improve your offer?
Finding the answers will give you more clarity and help your business succeed.
Calculate start-up costs and financing
We’ll cover this in more detail below, but in short, this is a critical part of your business plan and something you won’t want to overlook when thinking of how to start a side hustle.
Here, you’ll outline your initial start-up costs, registration fees, branding costs, website development costs, etc. Then, consider your potential sources of funding and whether or not you’ll need investors. It can help to consider your financial goals and how the business fits them.
Figure out your cash flow and budget
Also called your working capital, your cash flow is how much you need to keep your side hustle running day-to-day. These costs need to be laid out as part of your operating expenses. They will give you a baseline of how much you’ll need at a minimum each month to keep your business going.
And, of course, you’ll need a plan for staying on track with your cash flow. That’s where your business budget comes into play.
Having a solid business budget and using budgeting best practices is essential to the success of your business. It allows you to manage your business finances properly and stay on top of your expenses.
Outline your revenues and profit forecasting
You can’t turn a profit if you don’t have a solid revenue stream. Your business plan should outline the products and services you plan to sell. Outline exactly how you will communicate those products and services to your potential customers.
It also means fine-tuning your revenue stream as you learn what works best (or doesn’t). Once you have a solid revenue stream, it becomes easier to forecast your business earnings and profitability.
Also, take a look at potential profits. Becoming profitable and finding out how to increase your income is great, but ideally, you want to have a clear understanding of exactly how much profit you are generating on each product or service you offer.
You can then assess how to maximize your profitability by reducing costs or competitively increasing your prices (or doing a combination of both).
5. Determine what type of business entity to set up
Before you start providing services or earning money when starting a side hustle, you must ensure it is set up correctly, legally and tax-wise. To do this, you’ll refer to the structure of your business.
There are different types of business structures to choose from that are recognized by the IRS. They include Sole Proprietorship, Partnership, Limited Liability Company (LLC), or Corporation. Be sure to talk to your accountant about the tax implications of each of these entities.
The different business entities include:
Sole Proprietorship
In a sole-proprietorship business structure, you run the business alone and are personally responsible for all of the related liabilities.
Partnership
As the name implies, in a partnership, you run the business with a partner or multiple partners. So, the business is managed based on the agreement you set up. You and your business partner(s) are responsible for all the related liabilities.
Limited Liability Company (LLC)
A Limited Liability Company gives you limited liability (similar to a corporation), which means you have no personal liability for business debts and claims.
You’ll also have flexibility in your management structure and ownership, similar to a partnership. LLC owners are called members.
Corporation (S or C Corp)
In a corporation, your business is a separate legal entity, and only the entity itself is legally responsible for any liabilities. Owners are called shareholders.
C corporations and S corporations are the two main types of corporations. The main difference is the way each entity is taxed.
6. Leverage free resources when starting your side hustle
Below are two invaluable resources you will need as you begin your small business journey.
These resources go into much detail regarding the business structures mentioned above. They include the pros and cons and what you need to do to establish your business under these structures.
In addition to these, be on the lookout for ways to gather information and learn new skills for your business. You may be able to find free courses, Facebook groups, etc., where you can learn more about the skills you need for your side hustle without paying any money.
7. Decide what you will call your side hustle
The next step in operation is to decide on a business name (if you haven’t already).
FYI—Your business name is a big deal! It will reflect your brand identity and be the world’s first introduction to your new venture. But before you decide on a business name, here are a few things to consider:
- Will your business name appeal to your demographic?
- How unique is it?
- Is the web domain available?
- Is your business name under someone else’s trademark?
Once you’ve answered these questions, you can register your business with your respective state.
8. Consider setting up business credit
Having a credit profile for your side hustle allows you to maintain a credit history for your business. Just remember how to use credit cards wisely! And this business credit profile is separate from your personal credit profile.
With separate credit profiles, none of your personal credit details will be tied to your business credit inquiries, approvals, or financing.
Different business credit also allows a clear separation of assets between the business owner’s personal assets and the assets that are tied to the business itself.
A separate business profile also means protecting yourself from business identity theft. If your business credit is intertwined with your personal credit, you might not be aware of any theft. You can also monitor your business similarly to how you would monitor your personal credit.
You want to ensure the credit bureaus and your business creditors and vendors can confirm your business information when you apply for financing or do business with them. Below are the steps you need to take to set up your business credit properly:
Incorporate your business
Set up a corporation or an LLC (Limited Liability Company) to ensure your company is considered a separate business entity. For businesses that are sole proprietorships and partnerships, the business is the same as the owner.
So to have separate business credit, your business needs to be a corporation or LLC.
Obtain a Federal Employer Identification Number
An EIN, or an Employer Identification Number, is the number you’ll use for tax filings and business registration. You’ll also need to provide this number to vendors you work with.
Your EIN is like your social security number but for your business. It will tie into your business taxes, hiring employees, and other essential and required legalities.
Open a business checking and savings account
You’ll need to open a business checking account and possibly open a business savings account in your registered business name. These accounts are where you’ll make your day-to-day business transactions.
Establish your business credit profile
Getting a business credit card, which you use for business transactions, can help establish business credit. Another way is through buying products and services from vendors and repaying them within a specified period, also known as net payment terms.
These vendors then make reports to the credit bureaus with your on-time payments. The three major credit bureaus for business are Experian, Equifax, and Dun & Bradstreet.
Pay your bills on time
Not just on time but in full where possible to build your business credit score, i.e., your Paydex Score. Paying on time not only helps your finances but it helps you build a good reputation for your business.
9. Create a plan to obtain funding for your side hustle if you need to
When starting a side hustle, one of the biggest roadblocks is being able to fund it. Even if your business idea is excellent, you still need money. I touched on this above, but here I’ll outline the different types of funding you should consider:
Self-funding
Self-funding your business from savings should be your first resort. Funding your business is beneficial, so you don’t start with debt.
If you have no savings (or not enough) to put toward your business immediately, use free and inexpensive resources to get set up. Start saving a little bit at a time for your business.
Use a free blog platform, create a social media following, and create a small sample set of products instead of a full-blown product line. Also, consider using free online scheduling and planning tools.
Self-funding means you may need to start small and follow a slower growth progression than if you had a ton of money, but it comes with less risk.
Family and friends
The general rule is to keep friends and family separate from your business, but it depends!
Your friends and family can be great resources when it comes to funding. Why? Because you know and trust them, you can work out low or zero-interest payments with them.
But be careful not to ruin relationships. Loaning money to family can be difficult in some cases. Draw up contracts and make sure you are all in agreement with the contract terms.
Angel investors
Angel investors are typically high-net-worth investors who invest in your business. An angel investor is most likely looking for equity ownership in your business.
Although angels can be great investors, they mostly invest in companies vs. side hustles.
Bank loans
There are pros and cons of personal loans, but it may be an option. A business loan is also something to consider. The good news about getting a loan from a bank is that you don’t have to give up a share of your business in exchange for a loan.
However, you’ll need good credit, AND you’ll be taking on debt that you’ll have to pay back with interest over a specified period.
Crowdfunding
Crowdfunding collects money from various people (usually online) to contribute to your product or service creation in exchange for a reward.
The reward might be the first available offering of your product or some extra equity (shares/ownership in your business). Examples of crowdfunding include kickstarter.com and fundable.com.
With crowdfunding, you don’t always have to give up equity. You also won’t have to go into debt to fund your business.
However, it’s important to know that you will be paying the crowdfunding platform fees when you raise money via crowdfunding.
These fees will be based on the total amount that you raise. In addition, there are also significant tax implications.
Plus, you’ll have to put in a lot of work (including marketing) to ensure a successful funding campaign.
10. Make a schedule that works
One of the most vital things to do when starting a side hustle is to create a daily routine schedule. So be sure to make a schedule that helps you have enough time for a lucrative side hustle and your day job.
With freelance work or an online side hustle, it will probably be easy to work on it whenever you have free time. But something with set hours will require a bit more planning.
Figure out your hours
How many hours a week or day can you devote to your business? Look at your schedule and see if you can take anything off your plate to make more time for starting a side hustle.
If not, you may find that working on it a little each day, even if it’s just for an hour, is most effective.
Stay organized
Stay organized when planning how to start a side hustle, including organized finances, scheduling, and time management. Get a planner or stick to a strict schedule to ensure you have enough time to devote to this new venture.
Remember to keep track of appointments and meetings and regularly check your emails.
Hire some help
At some point, consider bringing someone onto your team to help out. A virtual assistant can be helpful if you have the money for it.
While this won’t be needed for a while, it’s something to be aware of later when you can afford it and your time becomes more limited.
Expert tip: Be aware of your energy levels
As you can see, there is a lot to starting a side hustle, including setting up a business entity and finding funding. All of this is necessary work but it can leave you a bit drained if you aren’t careful. Remember to make time for self care and free time when possible, so you don’t get burned out from working too much.
11 examples of profitable side hustle ideas
Do you need help brainstorming ideas for starting a side hustle? Here are some great ideas to get you thinking! Also, check out the CGF book by Bola Sokunbi, The Side Hustle Guide!
1. Dog walker or sitter
If you love dogs or even if you’re a first time dog owner, dog walking and pet sitting are the perfect side hustles. Many people need someone responsible to help care for their furry friends. Plus, you can make a lot of money!
Check out sites like Rover to help you get started!
2. Real estate agent
While this requires time, licensing, and learning, becoming a real estate agent can be incredibly lucrative, especially if you live in an expensive neighborhood. Real estate professionals also get to set their hours to an extent.
3. Etsy shop
If you’re creative, consider opening an Etsy store. People love to find unique products like jewelry and blankets on this online marketplace.
If you can create a popular product, making a full-time income may be possible. You also get to make money doing something you love!
4. Blogging
If writing is one of your passions, or you love sharing what you know, a blog could be for you. Blogging works well as a part-time job and could lead to plenty of income in the future.
In addition, blogging is a great platform to earn additional profits through affiliate marketing and selling digital products.
Some bloggers make enough money to live on or even more than that. Find out how to make money with a blog for beginners and try this side hustle out.
5. Freelance writer
Enjoy researching and writing articles? You can become a freelance writer.
Help bloggers and companies to explain their products and services or share information with their readers. Freelance writing is a good side hustle that is profitable and flexible!
6. Graphic design
Love art? Graphic design is a fun and creative idea. What makes it one of the great side hustles is its versatility.
For instance, you can do website design and sell your work on Etsy, or check out Upwork, or Fiverr.
7. Social media manager
If you are really into social media, become a manager or marketer, or start a consultancy company. As a manager, you can help busy entrepreneurs and businesses find the right clients through Facebook ads, Instagram, Twitter, and other digital marketing.
8. Rent out your spare room using Airbnb
Do you have an extra room? Try using Airbnb. Or better yet, if you have a lot more space to rent or money to invest, you can make money from rental properties by buying a house to rent out.
There are a variety of YouTube channels to help you set up an attractive space for potential guests.
9. Freelance editor
A freelance editor can work with several clients at once and edit the work of writers. As a bonus, you can choose what hours you want to work on your side hustle since freelancers rarely have specific work schedules that must be followed.
10. Create a side hustle with Amazon
If you think about all the money you’ve spent on Amazon, it’s about time you start earning with them instead. Amazon offers a variety of ways to make a profit. Some of the side hustle ideas from Amazon include:
11. Start a food delivery business
Bringing food and groceries to people who don’t want to eat out is a simple and profitable side hustle business. You can work under numerous companies, such as DoorDash, or Uber Eats, or even Lyft and other delivery services.
You can choose your schedule and work when you want. Plus, starting a food delivery service is a great way to get familiar with restaurants in your area.
Can I start a side hustle with no money?
Yes, it is possible to start a side hustle with no money! There are several ideas for side hustles, including dog walking and food delivery, that don’t require any upfront costs. In fact, you may already have everything you need to get started and all you need to do is learn how to start a business with no money.
Start by brainstorming side hustle ideas, leverage free resources (e.g YouTube to learn skills, Canva to design graphics, Mailchimp to build an email list etc) and start saving to put some cash aside. Having savings is necessary because eventually, you might need to put some cash into your side hustle.
How do you start a side hustle with no experience?
To start a side hustle with no experience, choose something that allows you to begin without specific knowledge about the work.
For example, cleaning houses or offices, pet or house sitting, or taking surveys are all good ideas if you don’t have experience with the gig economy. Even if you’re thinking, “I have no skills!” these are all things that don’t require special training, or they are easy to learn about quickly.
How do you start a side hustle from scratch?
You can start a side hustle from scratch by choosing something that doesn’t require a lot of equipment or money to get started. There are plenty of options in the gig economy, such as driving Uber, delivering groceries or food, or even things that take more time, like writing eBooks.
Find something that either takes time but not money or something you can start quickly without a lot of effort. Discover more ideas by reading our article on how how to start a business from scratch.
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Starting a successful side hustle is possible!
Now you have all the specifics to set up your side hustle the right way, and you know what some of the best side hustles are. Remember to start with the logistical side first. Create a business plan. Make sure you have proper funding and set up your business entity.
Once you’ve established all that, you can choose a name for your side hustle and decide whether to offer a product or service.
As you can see, there are many unique side hustles to choose from.
However, if none of the above suggestions caught your attention, other resources, such as side hustle books or online courses, can give you more detailed guidance.
It’s time to follow your dreams and make them a massive success! It is possible to build an incredibly successful side hustle with patience and hard work. It may even become your full-time hustle one day if you decide!