Side hustles have become very popular as a way for people to supplement their income. Especially with the rise of the gig economy and remote work. Many folks now have side gigs to bring in extra cash on top of their regular job.
But when should you consider turning that weekend side venture into your own full-time business? In this article, we’ll provide guidance on evaluating when and how to make the leap from side hustle to full-on entrepreneur.
Questions to Consider Before Committing
Before taking the plunge of starting your own business, you need to seriously analyze your side hustle’s profitability and growth potential.
Here are some key questions to ask yourself before committing:
- How much money are you bringing in monthly from this side hustle? Is it enough to replace your current income and live comfortably?
- Does your business model and industry have room for growth, or is the market saturated? Can you carve out your own niche?
- Do you have the time it takes to build your own business?
- Could you handle operations solo, or would you need to hire employees to scale?
- If employees are needed, do you have what it takes to be a manager?
- What are all of your business expenses, and have you created a monthly budget? Be realistic.
- How much time are you willing to commit? Running a business takes long hours and dedication.
- Do you have sufficient capital and cash flow, or will you need a business loan? Do you have the necessary credit?
- Do you have a solid, detailed plan for expanding your side hustle? If you don’t have time to plan, you probably aren’t committed.
- Are you truly passionate about this business idea? Enough to make it a full-time career?
- Is now the right time? Consider both the state of the economy and your personal finances.
- Will this business model have longevity or is it just a passing trend? Will advancements in Artificial Intelligence make this opportunity obsolete?
- Are you and your family ready for you to make this career change? Do you have their support?
Really examine your motivations and goals as well to determine if this is the right path forward, or if you may just need a new full-time job rather than truly building your own business as a full-time enterprise.
When to Make the Leap
Generally, it’s time to go all in on your side hustle and start your own business full-time when:
- Your side hustle is steadily profitable and generates enough income to cover personal living expenses. Analyze the numbers to determine if it can replace your current salary within the next 1-2 years. Ramen profitability may sound cool, but you won’t want to be stuck there forever.
- You have a solid business plan detailing your growth strategy and next steps. Make planning a priority. If you don’t have a plan, your chances of success will be slim.
- You are clear about where you expect the business to be in 1, 5 and 10 years. If you don’t have a vision of what the business will look like in the future, you likely haven’t spent enough time thinking it through.
- You’ve thought about the end game, and how you intend to exit the business in the future. It’s okay to be uncertain about how you’ll eventually exit the business, but you should have a goal in mind.
- You’ve tested and validated demand for your product/service, ensuring sufficient current and future customer demand. Make sure that you don’t ONLY ask friends and family. In most cases, they’ll just tell you what you want to hear. Seek input from your target market instead.
- You have a true passion for the business. If you’re going to spend all of your time and energy on building your own business, you’d better enjoy it.
How to Turn Your Side Hustle into Your Own Full-Time Business
If you’re ready to go from a side hustle to building your own business full-time, here are some steps you’ll need to take:
- Come up with a unique business name if you haven’t already. Rebranding is expensive, so take the time to make sure that the name is available. Read these tips for choosing a business name if you need help. Don’t forget to make sure that the relevant domain names and social media usernames are available. These will be important in the future.
- Determine the appropriate business structure. In most cases, if you’re moving beyond the side hustle stage into a real business, you’ll want to consider incorporating. If you’ve considered incorporation pros and cons, but still need help figuring out if a corporation is right for you, take our Incorporation Quiz. If you’ve decided to incorporate your business, we can help.
- Obtain required licenses, permits, and registrations. Research regulations. Use Bizpal.ca to help you determine the requirements for your own business.
- Set up separate business banking accounts and well-kept financial records. You’ll want to know where the money goes and to be able to track your progress.
- Use accounting software to manage accounts, expenses, taxes, payroll, etc. Get accounting advice early to avoid making simple mistakes.
- Set KPIs (Key Performance Indicators) for the business. Track everything you can to make sure that you are staying accountable and on track to achieve your goals.
- Consider using a CRM system to track your leads, clients, goals, and important documents. There are many options out there, but our favorite is Airtable. It’s the primary tool we rely on to manage our own business and includes a generous free tier.
- Arrange appropriate insurance like liability and errors & omissions. You’ll want to review our guide to limiting liability for small business owners for more tips on limiting liability related to your business.
- Develop marketing materials. This includes a logo, branding, advertising, content, etc. Consider reading books like The 1-Page Marketing Plan by Alan Dib, or Building a Story Brand by Donald Miller to help with your marketing efforts.
- Set up a website. Nothing says “I’m not serious about my business” like failing to set up a website that contains basic information about your business and how to contact you. If you plan on setting this up yourself and just want something simple, consider using a basic website builder like Cardd or Wix to get you started. You can always upgrade in the future.
- Create a business e-mail address. If your business e-mail ends with @gmail.com, @outlook.com or worse yet @yahoo.com, you’ll lose credibility with certain customers. Why would they trust someone who runs their own business using personal accounts?
- Decide on your business location. Consider the type of clients are you looking for and where they will expect to find you. If you can’t afford your own space, co-working spaces are a good place to start, unless you need a storefront.
- Set up a phone number. Consider using an online option like OpenPhone or Ring Central. They’re relatively inexpensive, easy to set up and support multiple phone numbers.
- Find a co-founder if it suits you. Some people work better alone and that’s fine, but you’ll be able to build the business faster if you can find someone to share the workload.
- Consider getting an accountability partner, especially if you’re starting the business on your own, without co-owners. This can be a friend that’s also an entrepreneur, or a paid coach. The important thing is having someone that you can bounce ideas off and keep you accountable for taking action.
- Hire a lawyer to help you get started, even if it’s just for an initial consultation. Getting your business set up with the help of a lawyer doesn’t need to be expensive, and it will be critical to your future success.
Take the time to do things properly from the start – it will pay dividends in the long run as your business grows.
Making the leap from a hobby to your own full-time business isn’t for the faint of heart. It takes courage, planning, and persistence, but can also be one of life’s most rewarding experiences.
If you’ve asked the hard questions, crunched the numbers, and feel that now is the time, then trust your instincts. Tune out the doubts, tune into your vision, and go build your own business! We’ll be ready to help whenever you need it.