Bringing a start-up business to life is fun. You’re almost immediately rewarded for your hard work and will find fulfillment in the first few weeks and months.
As your sales volume starts to rise, your side hustle can become a viable full-time venture, too. This is extremely satisfying if you’re making money doing something you love like knitting, graphic design, or writing!
However, going full-time does require strategic planning. You need to be certain that you’ve got enough capital coming in to support yourself and should be aware of any extra costs like tax, office rent, and shipping fees.
12 Essential Steps in Choosing and Building a Side Hustle
Estimating Costs
Around 25% of all small businesses go bust in their first year of operating and only a quarter of newcomers last more than 15 years. This drives home the reality that many entrepreneurs underestimate their operating costs and fail to account for extra fees when transitioning from a side hustle to a full-time venture.
Estimating your start-up costs can be tricky. Fortunately, you can use data collected while running your business as a side hustle to help you make estimations. At a minimum, you should account for costs like:
- Cost of Sales: Inventory, raw materials, and manufacturing equipment
- Start-Up Fees: Fees for registering as an LLC or sole proprietorship as well as costs for trademarks and non-disclosure agreements.
- Technology Costs: Computer software and hardware required for processing sales and organizing your staff.
- Wages and Benefits: Onboarding fees, firing fees, wages, perks, benefits, and bonuses.
Clearly, your costs add up quickly when you transition to a full-time venture. However, you can use technology to reduce your costs today. Start by investing in project management tools that help you stay up to date with the latest developments in your firm. Some tools, like Asana Trello, even offer free “personal” versions to get you started.
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Consider investing in an AI-drive customer service bot if you notice a significant uptick in sales volume. In time, you’ll need a full customer service department to handle queries and complaints. But, for now, a bot can handle any FAQs and inquiries that you can’t see to yourself.
You can also use accounting software to help you understand your taxes and keep track of your invoicing. Programs like QuickBooks and Freshbooks are perfect for small firms and will ensure that you don’t spend your entire workday trying to put together financial reports manually. Most accounting programs have tiered payment plans, too. This means you don’t have to drop thousands of dollars on a single program and can scale up as your firm grows.
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Legal Requirements
Transitioning from a start-up to a full-fledged venture takes time, effort, and some serious capital. You’ll need to cover fees related to registering your business and choose a business type that works for you. Give yourself time to research the legal requirements for starting your own business and take care of key details like:
- Structure: Will you run as a sole proprietor or an LLC? Each has its own benefits, including limited liability or increased flexibility.
- Registering Your Name: Your brand needs an identifiable business name if you want to build a loyal customer base. Find a name that sticks and register your brand name as a DBA.
- Trademarks and Logos: Protecting your new brand is vital. Doing so will ensure competitors don’t steal your ideas or produce a similar product. You’ll need to get in touch with the U.S. Patent and Trademark Office which can take more time than expected.
- Compliance: Every industry has compliance regulations that you need to be aware of. Failing to abide by laws will result in fines that turn your freelancing dream into a nightmare.
- Insurance: Obtaining business insurance can protect your profits and cover costs related to accidental damage, errors, libel, and slander.
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Taking care of these basics takes time. Give yourself a few weeks to get everything in order before you start to operate full-time. Do not rush through this transitional phase, as you don’t want to make a clerical error when setting up your new business.
Mental Health
Starting a side hustle is fun. You’re probably getting paid to do something you love and don’t have to worry about managing employees or paying for office rent. However, when you transition to a full-time venture, everything becomes that much more difficult.
Get used to delegating tasks once you’ve hired new employees. Most new hires will be keen to support your fledgling business and want to get stuck in with their work. Rather than hovering over them all day, trust your hiring process and give new staff a genuine chance to exceed expectations. This can take pressure off you and help you focus on leading the new firm to a period of sustained growth.
Remember to take a break when you can. If you’ve hired a few employees, let them know that you’re planning to take some holiday a few months after they’ve been onboarded. This will renew your passion for your business and help you relax and recover after a draining transitional period. Taking time away can help you recharge your battery and help to avoid burnout.
Leading a Team
As your business grows, you’ll probably need to bring on folks to help you run the ship. Get everyone on board by creating a strategic communication plan. A communication plan ensures that everyone understands your vision, minimizes the risk of confusion, and helps everyone pull in the same direction. A great communication plan includes:
- A clear mission statement
- A “why” that informs your choices
- Celebrations of success
- Visuals to clarify your message
When hiring staff, survey them and find out what kinds of benefits and packages they’d benefit from the most. This can help folks better negotiate the stress they may feel when working for a startup and creates an immediate sense of loyalty and buy-in amongst your team.
Conclusion
Transitioning your start-up into a full-time gig is both exciting and scary. Give yourself ample time to file the necessary paperwork and create a strategic communication plan to clarify your vision. This will serve you well in the months and years to come when you’ll need to convince stakeholders like banks to invest in your firm as you grow.
