Author: Kim Preheim, Senior Advisor, Community Banking
Your side hustle might be a great way to make extra cash in your spare time, but have you ever thought about turning that part-time gig into a full-time business? You might not know it, but that’s how big businesses like Groupon and Udemy came to be.
However, before you leave your day job, there are some important things to consider.
Side hustles are big business in America. According to a recent poll, 34 percent of working individuals report having an after-hours business to bring in extra income, and 24% of U.S. residents will start a side gig in 2021.
However, the numbers also paint a sobering picture for anyone thinking about turning their part-time hustle into a full-time business. While the average side gig income adds up to just over $1,000 a month, the median income is startlingly lower—just $200 a month.
Since most individuals with a side job contribute only 11-16 hours a week to their second business, you may be thinking that quitting your full-time job is the answer to increasing your earnings. After all, it would give you more time to grow your business, and 85 percent of people who spend at least 20 hours a week on their side gig are earning $5,000 a month.[i]
But owning and operating your own business isn’t always as easy or as profitable as new business owners think it will be. Sixty-six percent of small businesses face financial challenges and that’s after more than 80 percent have worked nights and weekends.
Before you take the leap from part-time solopreneur into full-time business owner, it’s important to consider a few things:
If you’ve considered all of the points above and decide you’re ready to turn your side-hustle into a full-time career, there are some important steps to take before submitting your final notice.
First, prepare financial projections. How much can you expect to bring in and what will your expenditures be?
Next, it’s important to do some competitive research. When operating your business as a side gig, your competitors may be quite different than those you will encounter as you take your business full-time. It’s important to understand the market, who your competitors are, and how you will differentiate your business moving forward.
The projections you prepare, as well as the competitive research, can be used to help you prepare a business plan. A business plan is your road map for your business journey and will help you stay on track.
Last, don’t be afraid to utilize your support network of friends, family and professionals when you need advice. After all, they are rooting for your success and differing perspectives could help you broaden your horizons, improving your odds of creating a profitable business venture.
About the Author
Kim believes that small businesses are the life blood of the local economy, making him a perfect match for his role as a Senior Advisor of Community Banking and Business Banking at FNBO. In his position, he provides deposit and lending products to help fuel individual business growth, but his approach is far more personal. With each and every customer, Kim seeks to build long-term relationships that help him to proactively serve individual needs.
The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.