The fundamentals of setting up a business.

A side hustle refers to any additional work or job that an individual can earn money from, besides their main job.

From tutoring, copywriting, to driving for a ride-sharing company, a side hustle can be any profitable venture.

During the Covid-19 pandemic, the popularity of side hustles skyrocketed in the UK with 19% of adults starting one since March 2020, according to an Aviva study.

Of those who started a side hustle, 39% turned a hobby into income, 30% did so out of necessity, and 61% were a result of Covid-19. 63% of those who started a side hustle are still active today, equating to 6.49 million individuals.

Here’s how to transform your side hustle into your dream job and successful business.

Get your financial situation in check

No matter how profitable you think your side hustle could be in the future, you need to recognise that the most vulnerable time for any new business will be the first few months and years.

Starting a side hustle can be tempting, but it’s important to be aware of the high failure rate in the first few years.

20% of businesses don’t make it past their first year and 60% fold within three years.

Lack of market demand (42% failure rate) is a major factor but running out of cash (29% failure rate) is even more concerning.

Therefore, you need to get your finances in order.

First, make sure you have paid off any major debts; if your personal finances are not under control, you’ll keep finding reasons to turn back to your old job rather than focus on your new business.

Some financial coaches suggest saving at least 6 to 12 months of expenses to help you cope with slower months during the early days.

To prepare, prioritise paying off debts and saving at least 6-12 months of expenses.

Keep personal and business finances separate – otherwise, you risk neglecting your personal finances for the sake of business growth.

However, make sure you don’t use this as an excuse to kick the can down the road. Once you’re financially ready to take the plunge, you should take the dive in rather than wait for the ‘right time’.

It’s natural to be nervous, but remember, you don’t have to go it alone – your financial adviser or accountant would only be happy to help you set up your business.

Develop a Business Plan

For those who take their side hustle seriously and aim to turn it into a full-time job, creating a business plan is crucial. A well-written business plan not only helps you articulate your thoughts and develop a strategy, but it also serves as a crucial tool for investors and lenders to assess the viability of your business.

Therefore, it’s important to ensure that your business plan is thorough and well-structured. Business plans can be complex, so consider seeking the help of a financial advisor to guide you through this process.

Broadly speaking, though, your plan should include:

  • an executive summary that distils the main points of the business plan
  • a description of your business, including your industry, business objectives and business model
  • a market analysis – including an ideal customer profile, competitor research and SWOT analysis
  • an outline of management and organisation
  • a list of products and services, and details
  • a marketing plan
  • a logistics and operations plan (who are your suppliers, how will you produce your product, etc.)
  • a financial plan, especially an income statement, balance sheet and cashflow statement.

Just remember that your business plan isn’t necessarily only going to be read by you, so make sure the tone of voice is consistent and there are no grammatical or spelling errors.

Remember the admin!

When turning your side hustle into a full-time business, don’t overlook the administrative tasks.

Record every business expense to keep track of finances and reduce tax bills.

Stay on top of invoices, run payroll for employees and do regular stock checks for inventory.

Make sure to also file your self-assessment or corporate tax return. Implementing a digital system can greatly streamline these tasks.

Keep on top of your invoices, too. Whether that’s paying your invoices to remain in your suppliers’ good graces, or sending and chasing your own to get paid on time. A digital system will help massively here.

It’s also useful to do a monthly performance review to see how your business has been doing, then create plans and projections for the future too.

Finally, there are your taxes to organise by filling and filing a self-assessment tax return (if you’re a sole trader) or a corporate tax return (if you’re a limited company).

Prioritise your time!

Running your own business will suck up more hours in a day than you might realise. Too many people, unfortunately, sacrifice their personal time and stop meeting friends and family because there’s just so much to do.

We’re not saying you won’t have to work hard. If you didn’t, everyone would become self-employed. But for the success of your business, you need to prioritise your time correctly.

You‘ll quickly become overtired and potentially burned out if you don’t. You might even start making mistakes that threaten the viability of your business.

But things still need to be done – emails responded to, suppliers negotiated with, and taxes filed. You could work into the evening or recognise that you’re only human and surround yourself with people who can help you.

We, for one, would be more than happy to assist you with your accounting, bookkeeping and taxes to take some work off your plate. Depending on your situation, we might even be able to help you with your business plan while providing you with general business advice.

If you would like to find out more information about PRB’s Network Marketing solutions, visit our dedicated website pages or give us a call on 01444 458252.

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