If you’re thinking about starting a business, you’re in good company. Entrepreneurship had been declining. After the 2008 recession, new business formation plunged by almost one third. By 2015, more businesses were dying than being born –– which hadn’t happened for decades. The COVID-19 pandemic changed everything.
At the pandemic’s peak, ten of millions lost their jobs or worked from home for the first time. Women left the workforce in droves. The drastic change in circumstances along with some financial support from the government allowed many men and women to transform from dreamers to doers. In fact, according to human resources platform firm Gusto almost half of the people who started businesses in 2020 were female (most years it’s around one out of four). The Wall Street Journal reports that Americans have started new businesses at a faster rate than in the last ten years with half-a-million more applying for employer identification numbers than in 2019. If you’ve thought about starting your own business, you might have stayed on the sidelines because the prospect seems so daunting. Businesses require employees, a physical location, a host of equipment, right? Not necessarily. There are ways you can succeed at running your own business by starting small. Here’s what to do if you’re wondering how to start a side hustle.
Ask Yourself Some Questions
Think about what kind of business you want to run and why. The “why” is vital. You may have an idea of a product you want to sell or a service you want to offer but if you don’t know why you’re doing it you probably won’t succeed. Just wanting to get rich isn’t sufficient –– it won’t get you over the inevitable obstacles you’ll encounter along the way. Do you have a vision for how your product will change lives or your service will make things easier for others? Do you want to share your words, your art, your talent with the larger world?
Ask yourself why because as Glenn Gutek, CEO of Awake Consulting and Coaching told Business News Daily, it can help you “.… differentiate between [whether] the business serves a personal ‘why’ or a marketplace ‘why.’ When your why is focused on meeting a need in the marketplace, the scope of your business will always be larger than a business that is designed to serve a personal need.”
Of course an equally important question is “who” –– as in who will you serve, who will be paying you? Identify potential customers through online research. Check out similar concepts or businesses and see the sort of companies or individuals who hire them. If you’re wondering how to start a side hustle, keep in mind that the more research and data you collect in the beginning the better your likelihood of succeeding.
What Will You Be Called?
Although plenty of side hustles succeed without a business name or a brand, you still will want to consider this. You may be a copywriter hoping to develop a side hustle getting more clients. Having an actual business name that’s different from your own will distinguish you from the pack of hungry professionals. Whether you run your side hustle under your own name or the name of a company you created, you should also think about branding. What is your brand? I named my ghostwriting and copywriting company Cake Publishing because I wanted content to be a piece of cake for my clients. You’ll also want to spend some time developing a business plan.
Keep Costs Contained
The advantage to a side hustle is you don’t need to spend a lot of money. In fact, you could land clients from Craigslist or Upwork which means you didn’t have to spend any money. You can build a lucrative side hustle without an office or expensive equipment. In fact, many businesses have failed because the owners spent too much initially. So maybe wait until you’re generating some healthy revenue before investing in a pricey computer system or an office.
However, I definitely recommend you get your own domain name and website. If you’re a content creator, for example, relying on hosted sites like blogspot or Medium will limit your advertising revenue. Plus, a website provides professional polish from day one. You might be doing this part time but your clients will want to be treated with the focus and care you’d give them if they were your only source of income.
When a side hustle takes off you’ll likely encounter some “uptown problems.” If you’re making three hundred bucks a month writing blogs, you can keep doing it as a sole proprietor. If you’re generating $30,000 a month selling software you may need a different tax entity like an LLC. You will likely self-fund your side hustle. As it grows you might think about getting investors or loans. You can look at taking on a partner or using a crowdfunding site. The bigger you become, the more decisions you’ll need to make. You’ll also want to consult with an accountant or tax attorney as you’ll be facing the challenges of self employment taxes. I also recommend hiring a business coach who among other things can help you avoid rookie errors as you run your start-up. In other words, you can pay a little early on to avoid higher costs later.
With a bit of time and effort you side hustle might even let you leave your “day job.” Just take it slow –– focus on delivering quality and value. Before you know it your side hustle could become your full time career.
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