Side hustle is a newer phrase, but it is essentially defined as work performed for income supplementary to one’s primary job. It can be anything from waiting tables, bartending, dog walking, and retail to starting your own business based on your individual skills. According to a study by Bankrate, 44 million people in the U.S. report having a side hustle. For many, it’s a way to earn extra income, save for future expenses, or boost a resume.
However, for some, a side hustle can be a way to turn ideas into viable projects and products. While the stereotypical entrepreneur may be immediately confident going all in on a new endeavor, a paper published by the Academy of Management Journal reports that hybrid ventures, which are launched while the founder is employed for wages and only later becomes a full-time employee, are one third less likely to fail than those begun as full-time enterprises. The findings suggest that “entrepreneurs are best served by making small initial commitments early on, giving themselves the option to commit fully to their business after they have had a chance to accumulate information and assess its potential and prospects.”
So when is it time to commit fully to your side hustle and take it full time?
- You’ve laid the foundation for future expenses. Before you quit your full-time job and go all in on your side hustle, determine how much income your side hustle needs to be generating in order for you to support yourself, taking into consideration things like insurance, retirement, and an emergency fund. Think about budgeting on a variable income, as it can take a while to build up a steady customer base with recurring payments. Using this financial plan, you’ll be able to save enough money to invest in your business so that it can reach its full potential, even if it means keeping your day job for as long as possible.
- You have a business plan and are in the process of implementing it. Your business plan should cover everything from an executive summary of the company to an industry and market analysis. You’ve thought carefully and strategically about where you want your business to be six months, one year, or even five years down the line, and you have a plan to help you achieve those milestones. Check in on this document regularly, making edits as needed to reflect how your business is coming along. Similarly, you also want to make sure your company is protected before you begin working with customers or making sales, meaning you have the proper contacts in place – such as a lawyer or accountant – if a problem should arise and are preparing to incorporate or form an LLC to keep your personal assets separate from your professional.
- You can handle working more than full time. You’re probably already familiar with working 9:00 to 5:00 only to come home to work additional hours on your side hustle. Turning that into your full-time job means long hours will continue. Startups don’t run on fixed schedules, and they require a lot of time and energy to be invested into the business. Strategize how you plan on working smarter instead of harder. Find what you can automate (like your social media posts or emails), streamline your process (combine similar meetings or schedule nearby meetings for the same day to reduce driving time), or efficiently plan your days using online tools that sync tasks, meetings, and events in one location.
- You know when it’s time to scale. You can’t focus on growth until you have a strong foundation. However, when the time comes, scaling strategically can boost your business. Need assistance with a large project? Consider a freelancer or a temporary hire to see you through to the end. If your workload grows to the point where you consistently need outside help or if it goes beyond your realm of expertise, it may be time to hire your first employee or invest in a virtual assistant. Boost your marketing, especially low-cost content and social media marketing campaigns. And outsource nonessentials to stay lean and not bite off more than you can chew – for example, use Quickbooks for accounting or invoicing or turn to a professional designer for logo/brand strategy.
Turning your side hustle into a full-time business won’t happen overnight, but if you have enough drive to work on your business in your spare time you have a chance of turning it into success long term. Not a MicroVentures investor? Sign up today for more startup tips.