Thinking about starting a side hustle? Perhaps you imagine quitting your job one day to take your business full time? Wondering what you should be focusing on upfront? There are several foundational things you need to have in place to establish a successful side hustle which we will discuss below.
What Is A Side Hustle?
A side hustle is a business you do in addition to your day job or in the spare hours of your day. Starting a business on the side can increase the amount of cash inflow in your life. An extra R500 a month could mean your kiddo gets new school shoes. An extra R2,000 a month could mean rent is paid. An extra R4,000 a month could mean you can go down to part time at your 9-5 job. An extra R6,000 a month could mean you can say sayonara to your day job altogether!
However, building a side hustle to profitability with a limited amount of time outside of your day job is never easy. It takes ruthless prioritization, a psychological shift in how you view what is most important in your life and the willingness to get highly creative daily.
What do I need to know to set up my side hustle?
If you’re in the process of starting a side hustle and do not have a business plan, you need to create one now! A business plan is essentially your roadmap for your side hustle. I’m not speaking of a 100 page document. All you need to do is have a detailed plan for how your business will operate which must include the following elements:
Executive summary: Your executive summary basically outlines what your business is about, and what problem you are solving with the product or service you’re offering.
Your target audience and avatar: When it comes to starting your side hustle, you need to know who you'll be selling to. Here, you’ll define who your target audience is. Be as detailed as possible. I cannot stress how important this section is.
Your operating model: Your operating model should define exactly HOW exactly you intend to deliver value with your products and services. It will also help with determining the type of experience you plan to provide your ideal customer.
Start by asking yourself: Are my products packaged in a way that aligns with the experience I want my customers to have? Is my website in line with my brand?
Your competition: No business plan is complete without some rough ideas about your competition. The most important question to ask yourself here is how you can differentiate yourself from your competition.
Start-up costs and financing: Here, you will outline your initial start-up costs, registration fees, branding costs, website development costs, etc. Then, consider your potential sources of funding and whether you’ll need investors.
Cash Flow and budget: Also called your working capital, your cash flow is how much you need to keep your side hustle running day-to-day. These costs need to be laid out as part of your operating expenses. They will give you a baseline of how much you'll need at a minimum each month to keep your business going.
Choose a Business Structure
Before you start providing any services or earning any money with your side hustle, you need to ensure it is set up correctly both legally and tax-wise. This is where the structure of your business comes into play.
There are different types of business structures to choose from that are recognized by the SARS. They include Sole Proprietorship, Partnership or Private Company (Pty) Ltd. Be sure to talk to your accountant about the financial and legal implications of each of these entities.
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