Jun 18, 2020
Side hustles can barely be called side hustles any more. For many Americans, they are essential sources of supplemental income—not to mention primary sources of passion and pride.
A 2019 survey from Bankrate found that 43% of full-time workers and 51% of part-time workers had a job in addition to their primary source of income, and 30% of those side hustlers needed the extra income to cover basic living expenses. Despite the stressful necessity of these side hustles, 27% of people with a secondary job said they are more passionate about it than their primary job. So why does the side hustle stay secondary?
“We just got through the worst recession since the Great Depression and people are still scared,” Jeff Strohl, director of research at Georgetown University’s Center on Education and the Workforce, told NBC News in 2019. “The idea of leaving your job to go chase your dreams isn’t a safe bet.”
Now, as we head into an economic downturn that could be even worse than the Great Recession, even those primary hustles might not be safe bets. Perhaps now is the time to diversify your income stream and make your side hustle into a full-time business. In this article, we’ll look at concrete steps to transition a side hustle into your main job, and what jobs are best suited to become full-time businesses.
Few people make the jump directly to full-time self-employment. Spend some time freelancing first. At this stage, you can have fun with the work and take more risks. Don’t worry about having a plan yet—just try to get some experience.
Kristin Wong, a personal finance writer who went from freelance to full-time, advises that new freelancers learn when to say yes and when to say no.
“There are lots of reasons it’s important to say yes. You open yourself up to new opportunity,” she writes. “After a while, though, your plate becomes overwhelmingly full.”
Once you have tried out freelancing, you can think more seriously about your future business. Now is the time to develop a business plan.
We’ve written an easy, step-by-step guide to creating a business plan that will take you from answering a few simple questions to structuring your formal document, and we also outlined the process in our guide to starting an at-home business. The basic sections of your final business plan will be:
What you want to do and how you will do it. Be sure to make your business goals SMART—Specific, Measurable, Attainable, Relevant, and Timely.
What is the current state of your business? For brand-new businesses, this overview might include available resources like savings, prototypes, and home-office equipment.
Is your chosen industry booming or struggling? How will that affect your strategy? Market analysis requires market research. Fortunately, you don’t need to pay a consultant big bucks for informative insights—most small businesses can perform effective market research on their own.
Who are your direct and indirect competitors? How will your company distinguish itself from them and fill a demand in the industry?
How will you generate revenue?
How will your company run? This section is a great place to highlight any human resources you may have. If your company is light on infrastructure but heavy on industry experience, it could count for a lot with investors.
How much will your plan cost, and where can you get the money?
Many professionals stumble when making the transition to self-employment. Being the boss takes a whole new set of skills and responsibilities, and one of the main ones is bookkeeping. Practicing proper bookkeeping for your small business will track your actual cash flow, save you money at tax season, and better position you for financing.
At its most basic, bookkeeping tracks incoming revenue and outgoing expenses. You will also want to track your existing assets (like inventory) and your existing obligations (debt, accounts payable). These 4 factors will give you an idea of your business’s financial health and worth.
When your business is brand-new, you can keep your books on a simple spreadsheet. But you’ll want to upgrade to real bookkeeping software soon. Free software like Sunrise can make bookkeeping simple, allowing you to focus on the work you want to be doing. Track all of your expenses. After a few weeks of tracking your revenue and expenditures, you can forecast your finances. That will help you plan for your jump to full-time work.
Once you understand your side hustle’s earning potential, you can start planning for life at a new income level that will almost certainly be lower—at least at first. Studies and estimates suggest that new small businesses operate for 1 to 4 years before reaching profitability. And once your business is profitable, you will have to decide how much profit you want to take as a salary and how much you want to reinvest in the company. Even under the best circumstances, most entrepreneurs take a significant pay cut when first striking out on their own. Plus, your established side hustle might hit a snag when you attempt to grow it to full time.
So how much should you save? Most finance experts suggest being able to cover 6 months of all expenses from your savings. Remember, your expenses might not be the same now that you are self-employed. If you had employer-sponsored group health insurance before, you will now be responsible for premiums yourself.
In addition to bookkeeping, marketing is a hugely important part of a successful business, and its responsibility falls on the small business owner. At a bigger company, you might have relied on a dedicated marketing team to spread the word, but now you’ll have to bring in new clients yourself. No matter how good you are at what you do, it won’t matter if no one knows about your business.
Search Engine Optimization (SEO) is the most important marketing tool for many new businesses since many consumers begin their search for goods and services on a search engine. Businesses that can get themselves on the first page of Google search results for common search phrases will see a significant increase in web traffic and brand awareness.
Figure out what keywords you want to target, including your location if you’re a local (not remote) business—next, ensure those keywords are featured prominently in your website’s headlines and copy. In addition to pursuing organic search traffic, buy ads based on targeted searches. Ads and organic traffic shouldn’t be an either/or proposition.
Reviews are also hugely important for standing out from your competitors. Whether you’re a local business on Google and Yelp or an Amazon seller, solicit reviews from satisfied customers and use negative reviews to improve your customer experience.
Photography is another important part of marketing for small businesses. Especially for product sellers like food businesses or craftspeople, high-quality photos are necessary to make your products look appealing—but any business will be judged based on the quality of their images, which are a huge part of web presence. Invest in professional headshots and photos of your work product, whatever it is.
Many entrepreneurs who left full-time jobs for side gigs describe the power of community in their decisions. When you find inspiring, reliable collaborators, it will make the transition easier.
“Seek out and find a group of people who you can associate with, and that you want to share the good and the bad times with,” said Jessica Hilbert, founder of Red Duck Foods, to Fast Company. “They don’t have to be within your organization, or even in the same industry. They just have to be people who you want to share a laugh or a ranting session with.”
If you’re lucky, your side gig might take off. Once you have so much side work that you cannot continue working at your current full-time job, you should take the opportunity to devote yourself entirely to your new operation.
If this point doesn’t arrive on its own, you will have to take a risk if you want to pursue your goal of self-employment in your chosen venture. Making an actionable business plan and earning some safety-net savings are good indicators. If more time devoted to your small business would allow you to generate business for your side gig, that is also a good sign that you should step down from your current full-time position.
Career consultant Joseph Liu writes in Forbes that a small business owner’s personal life should also be a factor in the decision to take your side hustle full-time. “When you’re in the early days of turning your side gig into your full-time job, you can expect some turbulence,” he writes, “so consider making your move when you and your family are in a position to absorb some of the inevitable bumps along the way.”
Financing can help bridge the gap for new small businesses. SBA loans, business credit cards, and equipment financing can allow entrepreneurs to launch their venture with less upfront capital.
As we noted earlier in this article, starting a small business forces founders to wear more hats than they’re used to—which means that many of the best side gigs are covering those extra tasks for small businesses, to lessen the load for owners. Marketing falls under this category.
Most marketing is online now, and content comprises a major part of online marketing. Content creation can take many forms, from writing branded content to press releases to articles and more. You could also be hired to edit existing content or optimize it for SEO. With so many websites “pivoting to video,” many hiring managers are looking for freelance communications workers who are one-stop-shops for text, video, and even graphic design.
Are you a writer with tech savvy? If you can code, offer to create websites from the ground up. According to CNBC, creating websites will earn you 4 times as much as writing articles.
Accountants and bookkeepers are also professionals who can help out small businesses at a particular point in their growth: they’re too big to do the work themselves but too small to support an internal employee for the job. Accountants tend to do well even in tough economic times, as businesses still need expertise to save on their taxes.
Everyone has tech needs these days, whether business or personal—but not everyone has their own IT staff. IT support business can provide networking solutions, hardware repair, and emergency troubleshooting.
Online learning is a hot option for remote work and side gigs. This includes tutoring and making video lessons for platforms like Udemy. What you will teach is up to you—pretty much any skill or area of expertise has a market for teaching.
Does everyone tell you that your cookies, tomato sauce, or kimchi should be sold in stores? Food products can be a fun and lucrative side gig—you can start right in your own kitchen, once you’ve made sure you meet local food safety guidelines.
Stephen Hall, author of From Kitchen To Market, tells O Magazine that having a unique angle is vital for food products: “You have to know why your cake is better than all the others out there… A cute name? Unique packaging? Is it the first completely organic carrot cake?”
Many full-time businesses have begun as craft sellers on Etsy. The biggest hurdle to most Etsy shops is not producing an amazing product—it’s getting people to notice and buy that product. People starting a crafts business have to switch hats from being a maker to being a marketer.
At Etsy’s blog, curriculum specialist Lauren Weisenthal suggests tagging your products and item titles with popular keywords and checking their performance once a week. She also highlights the importance of quality product photos: “Taking photos that are sharp, simple and illustrative is key to selling success,” she writes.
Event planning has distinct pros and cons as a side hustle. The major downside: there are so many logistics involved that people might be hesitant to trust a special event to a rookie. On the plus side, event planning has few upfront costs and low overhead, so you could begin to build clients through networking and gain initial experience pro bono.
Event planning is a great field to gain experience in a volunteer role before striking out on your own. That’s exactly what Lauren Schaefer did according to CNBC—she was working as an event planner for Columbia University when she began helping her friends with their weddings. She proved so good at it that venues started asking if they could recommend her to couples.
As we noted above, good photos are essential for online sellers—and really any online business. While small business owners might master some basic photography techniques, it could be worth it in time, money, and outcomes for them to hire a pro. Photographers can also court business from those looking for family portraits, pet photos, weddings, and other life events.
Stock photo sites provide another avenue for budding photographers. Small business site Oberlo notes that selling stock photos is a “numbers game.”
“The more pictures you take and upload, the better chance you are to be found,” writes Nicole Martins Ferreira. “You’ll need to make sure you use the right tags so that people can easily find your photos.”
You might have heard some scary statistics about how many small businesses fail, but the truth is that 80% survive their first year. While you might not start one of the biggest companies ever to begin in a garage, you can see from this guide that starting a full-time business from your side hustle is no mere fantasy.
Ben has almost a decade of experience covering personal finance and business. From 2014–2017, he was blog editor and spokesperson for the shopping website DealNews.com, where he regularly appeared on programs like Good Morning America and Fox and Friends to offer consumer advice. Ben graduated from Harvard with a BA in English and lives in the Hudson Valley of New York.
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