Starting a side hustle is a great way to do a test run of operating a business without having to commit fully. Maybe you started your side hustle for fun or to make some extra cash over the holidays or to build up your savings. Perhaps your side hustle is part of a larger business plan and you’re just waiting for the perfect time to start transitioning into a full-time gig. Either way, with some careful planning, your side hustle will be ready to become a full-time reality when you are.
Here are a few insights to help you turn your side hustle into a full-time income.
How to Know When to Turn Your Side Hustle into a Full-Time Business
Deciding to turn your side hustle into your full-time job is a huge decision; it’s important that you take all the factors into account.
Here are a few good signs that it might be a good idea to start a business full time:
Your Personal Finances and Side Hustle Business Finances Are in Good Shape
Do you have enough money saved in an emergency fund to be able to survive during the initial transition phase of your side hustle going full time? Do you have health insurance? Do you have access to personal credit cards or a line of credit in case you need to borrow money for living expenses while getting your business off the ground? Is your side hustle making enough money to potentially support you as you grow the business to full-time level? All of these are important questions to ask yourself before taking the plunge and going full time.
Research shows a direct correlation between the number of hours spent on a side hustle and how much money it earns.
So you might find it pays off to invest more of your time into your hustle if you want to see it hit those smaller slivers of the income pie.
The Side Hustle Is Gaining More Business Than You Can Successfully Handle in Your Spare Time
Is your business growing at a sustainable pace? Do you find yourself thinking, “If only I could spend more time on the business, I could make a lot more money?” Are you continuing to make more business income as you spend more time and energy on your business, or are you seeing diminishing returns?
Can you get impartial advice from a business mentor or trusted friend/family member? Show them your business sales receipts and growth projections and see if they agree that you should launch the business full time. If your mentors are urging you to be cautious, then it might be better to reconsider the pros and cons before launching your business full time. But if you feel confident that demand is there, you have a strong customer base, you have identified a growing market and you’re willing to work as hard as it takes to succeed, then it might be the right decision to start your business full time.
You Have a Detailed Marketing Plan for Your Business’s Future Growth
Can you make a living off of side hustles? Yes, you can. But you need to determine how much more of a market there is for the services or products you're offering. Who are the ideal target markets for your business, who are your ideal clients who are going to pay you for your product or service and are there enough of these potential customers to support a full-time gig? If you have a solid market, then you can make a living off your side hustle if you do things right. Make sure you understand your business’s unique competitive advantages in the market and try to run your business as efficiently as possible.
You’re Ready to Make the Change
Be confident that this business is something you want to do full time for the foreseeable future. Discuss this with your partner or perhaps even your children. Starting a new business is a massive time commitment and you want to be sure your family and friends have your back.
How Do I Turn My Side Hustle into a Business?
Ready to quit your day job and take your side hustle full time? Use this road map to turn your side hustle into an official business:
1. Create a Business Plan
Your business plan will lay the groundwork for your success in business. A good business plan will take you through planning and forecasting to ensure you’ve considered all the aspects of your business. Common elements of a business plan include market/competitor analysis, marketing strategy, operations/logistics, cost and pricing strategy and financial forecasting. Creating a business plan doesn’t have to be complicated; use these free easy tools for writing a business plan.
2. Check Business Name Availability
With your side hustle, you might have been operating the business under your own name as a sole proprietor or with a fictitious business name (a DBA or “Doing Business As”). If you want to form an LLC for your side hustle or other legal business entity, start by doing a quick online business name search to determine if your choice of business name is available to register in your state. You can protect your business name by registering a trademark, particularly if you aren’t quite ready to take the plunge on officially registering your business.
3. Register Your Business
Once you’re getting serious about taking your side hustle full time, then you may want to start looking at registering your business as an LLC (limited liability company). Forming an LLC is quick, easy and convenient and can be done online.
4. Check for Required Permits and Business Licenses
Depending on your type of business and where you are located, there might be federal, state and/or local government permits and licenses required to operate legally before you officially start doing business. Use Incfile’s free business license research service to see what you may need.
5. Protect Yourself
One important piece of growing your business is separating your personal and business assets and reducing your personal liability. An additional step you can take along with forming an LLC is to register for an EIN (Employer Identification Number) with the IRS. This Tax ID for your business will help you get a business bank account and help keep your personal and business finances separate.
Side hustles tend to start small, but they can grow into a big source of income and a full-time business. Think strategically about how to build your business, how to find more customers and how to grow side hustle into a sustainable company that will be a strong foundation for your future.
Ben Gran is a freelance writer from Des Moines, Iowa. Ben has written for Fortune 500 companies, the Governor of Iowa (who now serves as U.S. Secretary of Agriculture), the U.S. Secretary of the Navy, and many corporate clients. He writes about entrepreneurship, technology, food and other areas of great personal interest.