Entrepreneur Chris South shares the key lessons he has learnt on how to progress a side-hustle into a fully-fledged and sustainable business.
Running a side-hustle alongside a full-time job has become increasingly popular over the past ten years. This has been driven by the changing attitudes of employers to support (or at least permit) such a setup, and better technology that has considerably lowered the barriers to entry of starting a business.
However, a major challenge for many side-hustlers remains: Knowing when and how to take the next leap to transform their side hustle into a viable full-time business.
If you already have your own side-hustle or are thinking about starting one, here are the key lessons I have learnt on how to progress it to become a fully-fledged and sustainable business:
This is one of the most important considerations. For most people, the transition is far easier if the side-hustle is generating enough money to immediately compensate most of your previous earnings. Whilst this advice is common, the reality is that it is very hard to get a business to this level when you’re only able to focus on it during the evenings and at weekends.
Of course, you could also consider finance and even taking advantage of some of the proposed government initiated support schemes. If you are seriously considering any of these options, it is essential to be sure that your business model is viable, especially if you are putting your future retirement funds on the line!
My advice is to set a revenue target and then DO NOT immediately quit your day job when you hit it. Instead, only consider quitting once you have repeated or exceeded it for several months in a row.
My favourite option, and one that is more readily available now, is to approach your current employer about the possibility of transitioning to part-time, freeing up more time to spend on your side-hustle. Whilst this has always been a possibility, the current economy means employers may be more inclined to reduce their staffing costs and open to alternative ways of engaging employees.
The best place to start is to have an informal conversation with your employer; you would be surprised at how many of them will support a move to part-time. One of my old team is pursuing this exact journey, and in just over a year has already built up a strong client base for their side-hustle.
If you are looking to create a business as a new permanent source of income, the idea must have scope. By this, I mean the potential to grow bigger, something that generates a few hundred dollars at the weekend could be very hard to progress to a business that can sustain you and your family.
A personal example of this was a good friend of mine who set up a business selling custom-baked dog treats. The business was a huge success at the weekend markets, but it didn’t progress far beyond this. One of the main limitations was a lack of scope, it is very hard to find another marketing avenue outside of markets, which, by their very nature, only occurred on one or two days a week.
This point ties directly into the one above. I suspect another reason her business did not progress was that her passion for the idea began to wear out. This is actually one of the key advantages of a side-hustle – since it isn’t your sole source of income, you can afford to fail. So, whilst you may be sick of your day job and desperately yearn for the freedom of running your own business, it is critical to keep up your side-hustle for a good period of time (3-6 months) before taking the plunge. This way, you can be more assured of success and, perhaps even more importantly, enjoyment!
4) Price point
When I launched my second business, I was happy to have clients and therefore did not pay a huge amount of attention to what I was charging. It was not until I brought in a business partner that I realised we were significantly undercharging compared with similar services in the market. I’ve since noticed that this is a common mistake for many side-hustlers, who are generally happy enough just to have paying customers.
If you are to really build a strong business, it is essential to ensure that your products or services are priced correctly. Once you have proof of concept, there is no reason that your pricing should be significantly below others on the market. This may not mean charging as much some of your larger competitors initially, but you should at least set the price point so it generates enough to pay yourself a fair market wage.
Lastly, do not even consider quitting your day job unless you are sure you have a sound business framework in place. As a bare minimum, this should include accounting software (and an accountant), a website (WIX and other solutions are perfectly acceptable), all the required technology and any contracts or insurance that may be required. I learned this one the hard way – trying to set up your framework later whilst also focusing on the core business is a major distraction. Far better to delay a month or two to ensure you have all your ducks in a row.
When taking your side-hustle to the next level consider the common challenges of dollars, scope, longevity, price point and put a solid framework in place. Then leap. Speaking from experience, running your own business is one of the most rewarding and fulfilling things you can do - and I haven’t once looked back!
So, if you have an idea then now is a fantastic time to bring it to life!
This article was originally featured on NZ Business