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With inflation on the rise, more people are looking into how to earn some extra money to help soften the blow. A side hustle could be the answer you’re looking for — especially if you have a sought-after skill that you can monetize simply by sacrificing some of your spare time. If you’re wondering how to start a side hustle, the information in this article, including expert tips and recommendations, can help you get going.
Found is banking built for the self-employed
Found is banking built for the self-employed
5 Tips from the Experts on How to Start a Side Hustle
Starting a side business can be a scary prospect, but luckily many experts have been through this process themselves and can offer advice on how to get started. The following five tips will give you a good idea of how to get started with your new business idea.
1. Choose a side hustle that matches your skills and interests.
Before you begin putting any energy into a side hustle, you need to think carefully about what exactly you’re going to do. If you want to succeed, your side hustle should involve your skills and interests. If you’re good at writing but don’t enjoy it, trying to make money as a freelance writer likely isn’t the right path to take.
Make a list of what you enjoy and are good at. Are there any overlaps between the two? If you’re skilled at using photo editing software and enjoy graphic design, your perfect side hustle might be as a freelance designer. Do you like walking and love dogs? Perhaps you could try being a dog walker. Alternatively, if you enjoy driving, you might look into becoming a rideshare driver for Uber or Lyft or even a DoorDash Driver or Instacart shopper.
Once you have a few ideas for side hustles, it’s time to figure out how to get started.
2. Determine your time commitment.
If you already have a full-time job, you’ll need to consider how much of your free time you’re willing to commit. Committing too much time right off the bat can lead to burnout, which means your side hustle is less likely to succeed. But if you don’t dedicate enough time, you might not make as much money as you would like.
Keep track of your schedule for a few weeks and look for patterns. Do you find yourself scrolling social media in front of the TV for a couple of hours every night? That time could be spent on your side hustle instead.
3. Make a strong business plan.
Once you know how you want to make extra cash, you’ll need to create a business plan. Your business plan should focus on what you will need to make your side hustle successful. This may change over time as you start making extra money, so be flexible with your ideas.
Starting with an executive summary can help you figure out a few crucial items: an outline of what your business will do and what types of problems you’re solving. Do you have a lot of friends who struggle to find pet care when they are out of town? A pet-sitting business could help ease their burden while making you some extra cash.
Next, identify the type of customer you’re targeting and how you will find those customers and build your business. Word of mouth is huge, but you may also need to allocate time and money toward a marketing plan to attract more customers. Social media can be a tremendous asset here: it’s free to make a business page, and you can start inviting your friends to support your business and help you spread the word.
In addition, you’ll want to make sure you’re familiar with your competition. If you’re considering starting an online business doing marketing for small companies, look into similar businesses to see who they target and what they charge. If there’s a need for a specialized marketer for a specific type of business, consider going in that direction to help you stand out from the competition.
Finally, you will need to determine how much, if any, money you’ll need to set up your business. If you’re planning to freelance as a writer, designer, or marketer, you likely have all the tools you need already at your disposal. But if you’re considering starting a meal prep business, you may need to invest in some professional kitchen equipment first.
4. Figure out your earning goals.
When you begin your side hustle, you might not have a clear idea of how much money you’d like to make. After all, any extra cash is positive, right? That’s true, but if you’re only making $20 per week, you might think it’s not worth the spare time you’re sacrificing. You also don’t want to begin with unrealistic expectations. If you’re just getting started as a freelance writer or designer, it’s unlikely you’ll make thousands of dollars every month or earn interest on your savings accounts in any notable way.
Determining why you’re starting a side hustle is a good idea. If you want to pay down credit card debt, make a budget and determine how much extra money you need to achieve your goal. If you want to add to your online savings account to help pay for a dream vacation or to save a down payment to buy a house, figure out how much you need to put aside each week or month and go from there.
Next, research the average amount of money you could make from your chosen side hustle — for example, if you want to moonlight as a rideshare driver, look into the average earnings you can expect to make and compare that against the time you’re willing to commit. From there, you can set a realistic earning goal. Don’t worry about potentially undershooting or overshooting the mark. Your earning goal can always be modified at a later date.
5. Familiarize yourself with the law.
If you’re walking a few dogs in your spare time and only making a few hundred dollars a year, you may not need to worry about things like business entities and taxes. But if you expect to make a decent amount of money with your side gig, you may want to consider which of the following options will be best for you.
- Sole proprietorship: You are the sole owner and responsible for all liabilities. This will likely be the best choice if you’re starting out and aren’t sure where your side hustle will take you.
- Partnership: You share the business and its liabilities with one or more partners. This allows you to go into business with a friend if your side hustle takes off and you need a partner.
- Limited Liability Company (LLC): You are not personally responsible for liabilities such as business debts and claims, meaning your personal assets are protected. This may be a good option if your business becomes popular and you’re making a lot of money. You can arm yourself with online legal services providers such as LegalZoom, to assist with the formation and maintenance of your LLC, providing peace of mind and legal protection.
- Corporation: The business is solely responsible for all liabilities. Unless your side hustle turns into a full-time, thriving business, you likely won’t want to register it as a corporation.
- Consider insurance for added protection: As you familiarize yourself with the legal structure of your side gig, it's also important to think about insurance to protect yourself and your business from potential risks. For example, Next Insurance offers tailored coverage specifically for small businesses, providing an additional layer of security as your side hustle grows. This can help you focus on your work with peace of mind, knowing that you're safeguarded from unexpected liabilities.
Your tax situation will depend on how much you make and which of the above options you choose. It’s wise to consult a financial advisor or be prepared for tax season with a tool like Found that helps freelancers and independent contractors manage their taxes by automatically setting aside a percentage of their income for taxes.
Key considerations for starting a side hustle
Before you get the ball rolling with your side hustle, there are several things you’ll need to consider. Starting with the following can help make your business a success.
- Research your competition. If your area is saturated with Uber drivers, you will have difficulty making money and might want to consider a different path forward.
- Set your prices. Many people undersell themselves by not asking for what they are worth. Look into what your competitors charge and compare it to your experience level. If you’re just starting out as a freelance social media marketer, you’ll likely charge less than you would if you had a decade of experience.
- Rework your schedule. Dedicating 10 hours to your side hustle one week and 30 minutes the next will make it harder to get started. Set aside time each week to work on your business. And be realistic so you can stick to your plan.
- Make a goal. What do you want to achieve with your side hustle? This could be an amount of money you want to try and make each month, an amount of time you want to spend on your business each week, or a less tangible goal related to success.
Before starting a side hustle, you may have several questions about how to get started and how much you can expect to make. The following are frequently asked questions that can help you determine what’s realistic so you can begin making extra cash.
How do you start a side hustle with no money?
There are several ways. If you want to join the gig economy and drive for Uber, Lyft, or DoorDash, you won’t need to front any money to get started, assuming you already have a car. Similarly, if you want to make money writing articles, you can easily create a blog with Squarespace (use TIME10 promo code and get 10% off) or register with a platform like Medium to build your portfolio and show potential clients what you can do. The best side hustles can help you make money with very little initial investment.
How can I make $1,000 a month from a side hustle?
It’s difficult to gauge the exact amount of money you can make from a side hustle. If you only have an hour a week to commit, you’re unlikely to make $1,000 per month. It also might take some time to get to that earning level since you’ll need to get established. But if you have the time and the drive, you can easily make $1,000 each month from a side hustle.
What is the most profitable side hustle?
There is no one most profitable side hustle. You can earn decent money doing a range of things, including moonlighting as a tutor, an assistant, a rideshare driver, a freelancer, or a photographer.
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