A recent survey showed 44% of Americans had a side hustle to get some additional cash. If this is you, could you scale your side hustle into more than just extra money? And if so, what’s it going to take?
Before you commit to growing a side hustle into full on self employment, these are eight questions you should ask yourself.
8 questions before scaling your side hustle
What do your numbers tell you?
Your financial reporting holds the answers to many questions self-employed individuals ask themselves. Before you decide to expand your side hustle, it’s worth reviewing the numbers behind your business to learn its ins and outs.
When selling goods, you need to know your gross profit margin, average order value, and fixed operating costs. Gross profit margin is the percentage of a sale that the business keeps after covering direct costs.
Multiply your average order value by your gross profit margin and you get the average amount of money you pocket on a sale. Divide your fixed costs by this average and you get how many orders you need to cover your costs.
From here, you can start experimenting by asking yourself questions about if your costs change or what a feasible marketing budget could be.
If you’re a freelancer, your costs can be a lot more predictable. But it’s still worth looking into how much you make per project and how many hours these projects take. Estimating your hourly rate helps you understand how scalable your side hustle is without overcommitting to too much work to reach your earnings goal.
What are the costs of expanding?
Sizing up your operations means an increased workload. You need to get critical about whether your current setup is going to be sufficient to tackle the extra volume.
For freelancers, going from a handful of projects to a full portfolio means more communication and work to stay on top of. You might benefit from upgrading your tech stack. Look into work management, communication, and other software for efficiencies.
If you’re selling goods, what will it take to deal with extra orders? Do you need to invest in new tools for expanded demand? How will you stay on top of your bookkeeping?
Put together a list of ‘must haves’ and ‘nice to haves’ to get an estimate of how much to budget for. It could be worth holding off your expansion plans until these solutions are in place.
How are you going to expand your revenue?
To scale your side hustle, you either need to get more customers or upsell to the customers you have.
There are many strategies to get more customers. Offering referral codes or discounts to referred customers is a great way to acquire high quality clients with similar values. Otherwise, you could opt for cold calls, advertising, or local promotion.
Upselling to clients usually means introducing new goods or services. Think of a product that goes well with what you’re already offering. A ceramics company could start selling saucers that pair with their mugs, or a web developer could offer SEO audits.
What is a reasonable workload?
Many self-employed individuals worry about not having enough work to pay the bills. But what happens when you have too much work?
When you make your side hustle your full-time gig, it’s easy to fall into the pitfall of saying yes to too many things. You’re trying to establish yourself, build relationships, and create new revenue opportunities.
Defining a reasonable workload ahead of time helps you understand when you’re reaching your limit. This means it’s time to start asking what it will take to start meeting your demand, potentially even hiring an employee.
Remember, looking after your mental health is important. It’s what keeps you working at your best and delivering the highest quality work and product to your customers.
What’s your timeline for expanding your side hustle?
Deciding to take your side hustle to the next level can happen at any stage of the journey. While there’s no criteria for how long it will take for you to reach your first milestone, it’s helpful to have a timeline in mind.
Having a timeline has two big benefits. Your timeline will keep you accountable on your goals, but also gives you perspective if you ever feel overwhelmed.
Say you set a goal of a certain amount of recurring revenue in eight months. This can save you from getting flustered by month two if you haven’t hit your goal yet. But it also helps you choose what initiatives you want to take on to reach that goal, whatever it may be.
What is your long-term goal for your side hustle?
The hedonic treadmill theory reveals how humans tend to revert to their baseline level of happiness, regardless of life’s highs and lows. This phenomenon is especially evident among self-employed individuals, who constantly crave more success even after significant achievements. However, setting long-term goals is the key to breaking free from this cycle. Ambitious objectives act as a safeguard against the perpetual pursuit of “more.”
Moreover, long-term goals provide substantial benefits in terms of prioritization and decision-making. They serve as a guiding compass, offering a clear direction for your actions. With well-defined goals, it becomes easier to justify taking time off, knowing that progress has been made towards your objectives. Similarly, any idle time can be used productively by engaging in tasks that contribute to the achievement of long-term goals.
When moving to being self employed, you get to determine what success is. Use that to your advantage.
Who are people with similar experience you can consult?
Taking the plunge into the full-time self-employed lifestyle comes with its unique challenges. Even though you’re equipped to take them head on, having some support helps.
Check out Facebook groups, LinkedIn connections, and local small business organizations for people you can connect with. They’ve faced similar challenges in their past. Don’t hesitate to reach out if you want a helping hand or even just an understanding ear to listen to your experiences.
Will you still enjoy your side hustle when it’s no longer on the side?
For some, their side hustle is their passion project. Scaling that up means it’s not just a passion project anymore. Will you be okay if that relationship changes?
Having your side hustle become your full time gig has you spending much more time doing and thinking about the work. There will be associated stresses like are you doing enough of it and potential imposter syndrome.
Remember that as a self-employed person, you have a say in how you want to balance your life. Scale up in a way that works for you. There’s no hard and fast rules for how you structure your self employed lifestyle so experiment to find what works for you and don’t forget to enjoy the ride!
3 side hustles to start right now
Side hustles with no startup costs
- Freelance creative work: If you’ve got a knack for a creative skill like writing, photography, or graphic design, consider entering the freelancing market. Sites like Upwork and Fiverr make it easy to get started.
- Affiliate marketing: If you already have a blog or website with a following, affiliate marketing is a great way to turn it into an income stream. Look into some of the top affiliate marketing programs to see what might be a good fit.
- Selling digital templates: Not everyone is blessed with Excel wizardry or have the noggin for Notion. If you have templates for anything personal or professional, you can sell it online on shops like Etsy.
Side hustles for stay-at-home parents
- Online tutoring: As a parent, you’ve likely helped out with homework a couple of times. Platforms like Tutor.com and Wyzant can connect you with students who need assistance on certain subjects. Or look into VIPKid for English tutoring opportunities.
- Virtual assistance: Virtual assistants are hired online for remote help with admin work like emails and billing. For those who are obsessively organized, this is for you.
- Online reselling: Sites like Poshmark and eBay are constantly used for flipping vintage clothing and other goods. You can turn household items you no longer use or other vintage finds into money in your pocket.
Side hustles for established business owners
- Consulting: Many business owners going through the experience for the first time would love the insight of someone who has been there before. Consulting services or audit packages let you earn money off your know-how.
- Entrepreneurship classes: With an online class, you can take a more hands off approach. Create a curriculum, videos, and interactive resources and charge a flat rate for access to everything.
- Online coaching: For a more personal touch, online coaching gives you an opportunity to mentor someone one-on-one. You can even tailor your coaching to the specific needs of who hires you.
Starting—and growing—a side hustle confidently
After putting so much effort into learning how to start a side hustle and getting yourself established, don’t let common mistakes stop you on your journey. With these eight questions, you’ll be equipped to tackle the biggest challenges entrepreneurs face when scaling their side hustle to a full-time commitment. Taking the time to grow sustainably protects your time and helps keep your head above water as you continue on your new adventure.