Is It Time to Turn Your Side Gig Into a Home-Based Business?
An increasing number of Americans have chosen to supplement their income from a full-time job by working a side gig. Many gig workers have turned a side hustle into a home-based business that they operate on a part-time basis, and some have even been able to quit their traditional jobs to devote themselves to their new enterprise. If you are looking for your first side gig, or you feel that it is time to make your current gig your full-time job, here is some advice to help guide you along your journey.
Finding a New Side Gig
If you do not currently have a side gig, you may be wondering what opportunities are out there. The good news is that the gig economy is growing. Lockdowns have helped fuel its growth; many businesses have furloughed employees, closed their doors permanently, or downsized. Furthermore, a lot of remote workers have discovered that, even after lockdowns end, they would rather not return to working from an employer’s location. If you are considering a side gig, but you have not zeroed in on a specific type, here are some tips for finding the best side hustle for you.
- Start by considering your experience, talents, education, and skills. For example, you may be highly experienced in the creation of websites, or you may be a talented jewelry maker. If you have a degree in accounting, you could use your education to offer bookkeeping services.
- Look for gigs that could easily be turned into a full-time business without investing a lot of money. If you have to purchase expensive software programs or equipment, travel extensively, or rent a location to manufacture your products, you need to be sure that you are not going into debt with no guarantee that you will even be able to recoup your investment.
- Choose a side hustle that allows you to do something that you truly enjoy. For example, if you enjoy working with children, you could become an online tutor, or you become a dogwalker or groomer if you enjoy working with pets.
- Do your research to determine whether there is sufficient demand for the services or products that you want to offer, especially if your gig could be negatively impacted by COVID-19 restrictions. With the pandemic still in full swing in many countries, for example, this might not be the best time to become a virtual travel agent or wedding planner.
- If possible, look for a gig that does not require you perform all your work during specific hours. Delivering food from restaurants, selecting and delivering groceries, and taking inventories in stores are all possible side gigs, but you will need to perform your tasks while the restaurant or store is open.
- Determine how much time you can realistically devote to a side gig. If you already have a full-time job, for example, it is not realistic to plan to devote 60 hours a week to your side hustle. Working 100 hours a week can leave you burned out, stressed, and physically ill.
Deciding When to Turn Your Gig Into a Full-Fledged Business
The decision to launch a home-based business can fill you with trepidation, or you could be so filled with enthusiasm that you fail to evaluate all potential repercussions. Before you make a final decision, make sure that you have thought everything through in a logical, thorough manner.
- Determine how much money you need to earn from your new business. Depending on your personal situation, you may need to earn enough to cover just your business expenses, or you may need sufficient earnings to pay your household expenses as well. Be realistic about your expectations. It is usually best to underestimate potential revenue and overestimate expenses.
- If you plan to quit your full-time job, consider the possible ramifications. Can you replace the medical insurance that your employer provides? Will giving up your employer’s contributions to your 401(k) leave you financially insecure when you retire? Do you need to prove a consistent earnings history to secure a mortgage, finance a car, or refinance your mortgage?
- Research potential roadblocks to operating a home-based business. Your state or local codes could place limitations on the types of home-based businesses you can operate, your HOA might also have restrictions, or your lease might bar or limit home-based commercial endeavors.
- Determine how you will market your business. There are a variety of ways to promote your business that will not break your budget, but keep in mind that free or extremely low-cost options typically require more time and effort on your part.
- Create a business plan. Business plans, also known as action plans, force you to focus on details that you might have overlooked. Since business plans are roadmaps or guides, you may need to make alterations as you go. Suggested sections for your business plan include a description of what your company offers, your long-term and short-term business goals, and an explanation of your pricing structure, target customers, and market need. You can download blank templates, or you can contact the Small Business Administration, SCORE, or local chamber of commerce for assistance.
- Sign up for a virtual business address to protect your personal privacy, enhance your professional image, and avail yourself of the other services that your provider offers. Unlike post office boxes, virtual business addresses can be used as your company’s physical address on the various filings that your company will need to submit.
- If possible, start small. Offer one or two products or services, then promote them until you have saved enough money to expand your business, quit your full-time job, or increase your advertising efforts. Do not get in too much of a hurry to hire employees. Recruiting and training employees will take time that you may not be able to afford. Furthermore, hiring employees that you must terminate within a few months because you lack the funds to pay their wages is not fair to the people you hired.
- Create a timeline that includes multiple milestones. Milestones are excellent ways to evaluate your progress so that you can make any necessary adjustments in a timely manner. Be specific about your milestones. For example, one milestone might be to increase revenue by 10% every six months, while another milestone might be to expand your product line annually.
- Do not give up too quickly, but do not keep sinking money into an endeavor that shows obvious signs of failure. Before you close your business, however, you should evaluate whether you can overcome your challenges. Perhaps you can revamp your product line, for example, or become more creative about marketing your services. Sometimes, the key to success is perseverance.
- Never stop learning. Stay current on trends, research and develop new products, educate yourself on proper accounting practices, learn more about federal and state labor laws, or research potential tax breaks. The knowledge you accumulate can help guide you when you start hiring employees, file your tax returns, or want to expand your business.
Transforming a side gig into a viable business will not be without its challenges, and quitting a day job should never be a spontaneous decision. Evaluate, research, and plan carefully, then proceed when the time is right for you.