According to Bankrate, 44 million Americans have a side hustle. Also, a study by The Hustle found that individuals who have a side hustle make a little over $12,600 a year. This data clearly shows that we live in a society where many Americans and even others around the world are creating supplemental income with a side business.
However, what happens if you are one of these individuals who see that their side hustle is taking off, or are interested in turning these projects into full-on businesses? There are steps you can take to transition from being a full-time worker to a business owner. While the process can involve many steps and missteps, it is well worth it if you are looking to become your own boss. So, read on for five steps to transition your side hustle to a full-fledged business.
Switch Your Mindset
You have to no longer look at your side hustle as just “the thing to do when you aren’t working.” You have to start to see it as a full-scale business venture and not just a hobby. Understanding this will allow you to begin to treat your side business as your main gig. This step means purchasing business cards, monitoring your business budget, and creating a business plan if you haven’t already. Switching your thinking allows you to set up structures to manage your core business processes. Once you begin to see yourself as an entrepreneur and your side hustle as a business venture, then it is easier to set up the procedures necessary to run your business.
Decide on Your Business Structure
You may now be working as a freelancer or contractor. However, you need to determine if this is the best path for your business. As a freelancer or independent contractor, you are designated as a sole proprietor. You can take on this entity without having to fill out the paperwork; however, there are liability and tax policies that could be an issue depending on your needs. So, become familiar with LLCs, LLPs, S Corps, and B Corps to determine if changing your structure from a sole proprietorship to one of these categories is the best option for you.
Set up a CRM and Accounting System
Before you quit your day job, you need to ensure you solidify your client base, and monitor finances. There are a variety of processes you should set up to make the transition to business ownership. Two of the most crucial are customer relationship management and accounting systems.
A CRM is a software tool that enables you to store all your customer contacts, track all client communications and interactions, and even organize documents and invoices associated with vendors and clients. On the other hand, an accounting system enables you to monitor your spending, set up a budget, and send invoices. Setting these systems up before you step into ownership will make the process of turning your side hustle into a business much smoother.
Tap into Helpful Resources
For a while, you may be able to run your business on your own. However, you need to be realistic about what you are going to need to run your business successfully. Begin to look out for free and low-cost resources. For example, SCORE is a nonprofit arm of the U.S. Small Business Association that provides free opportunities for business coaching and mentorship.
Also, check into freelance marketplaces. These sites allow you to hire freelancers for various tasks. This is a great way to receive help with administrative duties or marketing tasks at a much lower cost. So, take stock of what you need, and seek out resources that can provide you with free or low-cost help.
Skill-Up as Much as You Can
In the beginning, you are going to be HR, accounting, marketing, and operations. In the previous entry, we discussed the importance of finding low-cost help; however, it is also a great idea to learn as much as you can to keep your budget lean. As you transition from full-time work to full-time business ownership, you will need to be smart with your money. According to a Hiscox study, the average entrepreneur felt they needed their side business to make $43,862 before leaving their full-time job. This number may or may not be your benchmark.
However, learning how to manage your own business budget or marketing through social media can help you maximize the money you do make each year. So, take the time to identify what you are comfortable with learning and the amount of time you have available. If done well, handling some things yourself can help you save money and understand the inner-workings of how your business operates.
Business ownership isn’t easy. However, stepping into entrepreneurship is more straightforward when you have already been running a business on the side. As mentioned above, once you start thinking about your efforts as less of a side hobby and more like a business, it will be easier to see success eventually. Before you know it, with discipline and diligence, that side business can become your primary source of income.
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