Tips for New Entrepreneurs Starting a Side Hustle
By Red Akrim
Whether it’s the economy, your mounting household bills, or the desire to eventually become a full-time entrepreneur, there are various reasons people consider starting a side hustle and launch a part-time business while still holding on to their day jobs.
It’s not a walk in the park. Starting a side business can include sleepless nights, working on weekends, less time with family, and stress, stress, and more stress. But it’s doable, and a lot of people have already done it. If you’re thinking of starting a side hustle, here are 15 things to consider beforehand.
Tips for new entrepreneurs starting a side hustle
1. Determine if your side hustle is a hobby or a moneymaking opportunity
To start a business, the first question you need to ask yourself is, What can I offer? For some, the answer is obvious; for others, it's not so obvious. Think of something you’re willing to do for long periods of time. Do you see yourself wanting to learn more about a particular product or service?
To distinguish a hobby from a moneymaking venture, the next question to ask yourself is, Will anyone benefit from what I'm offering, so much so that they’ll be willing to pay for it?
2. Identify a specific niche market to target
Spreading yourself too thin by failing to focus on a specific target market is not a sound business plan. That’s not saying this approach doesn’t work, but focusing on a small, niche market is often the best path forward when you’re just starting out.
It helps if you’re an enthusiast of the niche market yourself, as you can more intuitively understand its unmet needs. But if you can't find a good niche, create a new niche. Study the market and interview potential customers. To give you some ideas on how to capitalize on a niche, take a look at the following situations and how entrepreneurs turned them into opportunities:
- For frequent travelers, knowing which roads to take to avoid heavy traffic saves time, energy, and even a person's sanity. Waze, a community-based traffic and navigation app, takes care of that.
- For budget-conscious shoppers, alerts for hot deals in their area are a big help. That’s exactly what HotUKDeals and YP Shopwise are doing.
- For beauty aficionados, reading and watching beauty product reviews are a popular passtime. These people would probably even be interested in subscription boxes to try out various samples, an area Birchbox specializes in.
- Sports fans love personalized or signed shirts and memorabilia from their idols, and those with money to spare go to auction houses to get them.
- Delivering nutritious packaged meals to care institutions is how Mom’s Deals makes money.
Keep an idea book handy. No idea is too preposterous. The business world is full of successful ideas that people originally dismissed but that ended up making millions.
Noted venture capitalist and Y Combinator co-founder Paul Graham wrote, “The way to get startup ideas is not to try to think of startup ideas. It's to look for problems, preferably problems you have yourself.”
3. Differentiate your offering from other businesses
If you think there are others in the market with similar products or services, remember that a “unique selling proposition” is a way to dominate a saturated market; figure out how to differentiate your offering. You can be more affordable, more reliable, faster, or more personalized in your approach. Or you can let your brand revolve around a customer service philosophy that’s hard to beat, like Zappos.
Take the example of Facebook. Concept wise, it isn’t unique—cases in point: Friendster and MySpace. But what makes Facebook the premier social network it is today? Three things come to mind: design, scalability, and innovation.
4. Before starting a side hustle, determine your risk tolerance
Assess the amount of risk you’re willing to go through. Be ready for potential financial and personal sacrifices. Also, be aware that you’re risking your reputation, and if you have an ego, there are periods when you’re doomed to really suffer. Ask yourself questions such as:
- What if I don’t see any profits for a long time?
- What if I fail? Will the time and effort be worth it? Will I be willing to try again?
- Can I risk rejection and rise up from it?
If you’re willing to accept the potential downsides and are equipped with worst-case scenario strategies after a thorough self-assessment, proceed to the next phases.
5. Test the waters before going all in on your side hustle
Starting a side hustle is about getting your feet wet in the world of entrepreneurship without fully diving in yet. You could start by freelancing for another company that's similar to the one you'd like to build. Test your ideas. Launch your side business at the scale and pace you can handle while still working full-time, and grow your business slowly as you gain more confidence and traction.
6. Learn how to network effectively
Businesses are about people, so you need to go out and network with other entrepreneurs and business owners. There is a lot you can learn from others who are already running their own small businesses—both the things they got right, and often, the things they got wrong.
Take the time to attend networking events, workshops, seminars, or forums to meet potential mentors, collaborators, and fellow enthusiasts. Build your professional network as well as a strong support group. As an old adage goes, “It’s not what you know, but who you know.”
7. Build your personal brand
What differentiates the more expensive GoPro action camera from the relatively cheaper Xiaomi brand? Why do Apple buyers spend more for an Apple product when Samsung offers gadgets with similar or better specs at more reasonable prices? The difference lies in branding. Branding is what allows you to set premium prices, instead of competing against aggressive, lowball pricing tactics.
More articles from AllBusiness.com:
- How to Turn Your Side Hustle Idea Into a Real Business
- 7 Time-Management Tips for Part-Time Entrepreneurs
- 5 Great Part-Time Business Ideas for Animal Lovers
- 3 Areas Where Every Small Business Should Automate
- Test the Entrepreneurial Waters by Starting a Side Business
Gary Vaynerchuk writes that to establish yourself as a quality brand, you have to be a true expert: “You have to earn the privilege of building a ‘personal brand,’ and the only way to do that is to actually execute.” GoPro used personalized videos tugging at people’s heartstrings as part of its branding strategy. Apple focused on style, aesthetics, and exclusivity.
8. Establish a digital presence for your side hustle
For your target customers to come to you, you first need to be found. These days, the first thing people do to find out more about anything is by Googling it. Once you’ve determined what your product or service is going to be, how to present your brand, and who your target market is, it’s time to establish your digital presence and market yourself intensely:
- Set up your business website. There are a variety of website and blogging platforms available online, such as Weebly, Wix, Squarespace, and WordPress. Free and paid templates are also available, and you can easily link your website to social media via marketing automation apps like Buffer and Hootsuite.
- Share your expertise. Create content and infographics. Organize workshops, seminars, tours, and talks. Launch podcasts, webinars, free ebooks, and other materials that are relevant to your niche. LinkedIn and Quora are great places to share your expertise.
9. Scale with the right technology tools
Today's technology helps remove some of the common barriers to entry for new entrepreneurs, opening a new era for digital startups and entrepreneurs. Just the ubiquity of the internet alone has given small business owners and solo entrepreneurs access to a global market that in the old days was only accessible to large businesses.
Whether it's for accounting, meetings, digital marketing, or more, there are lots of great digital tools available today that can help you run your small businesses efficiently and effectively.
10. Learn how to manage your time and be productive
Create task blocks on a daily basis. This is critical because you’re now juggling two jobs, and even more critical if you have a family to consider.
While it’s important to be intentional with your time, as it’s easy to squander it on activities that don’t provide value in any way, make “working hard” synonymous not with the number of hours worked. Instead, keep a clear goal in mind whenever you show up for work. Author James Clear call this “deliberate practice,” an exercise that top performers such as Kobe Bryant, Mozart, and Picasso all excelled at.
Jody Porowski, who launched her startup Avelist while working full-time, feels it’s important that you find your rhythm and do what you can to stay healthy and balanced: “Create a lifestyle that works for you. Stress and lack of sleep can do a number on your immune system.”
Set metrics on a daily, weekly, monthly, quarterly, and annual basis, so that you’re not only running the daily grind but working towards achieving milestones for the long term.
11. Set up a working budget for your side hustle
Establish your monthly operational expenses such as employee compensation, office rent, Internet, electricity, transportation, and so on. This way, you can calculate how much the business needs to make to turn a profit. For a good overview of small business financials, check out our comprehensive Guide to Bookkeeping and Accounting.
12. Don't forget proper licenses and other legal issues
This is one aspect some side hustlers neglect because it seems too expensive and a bit of a hassle. But legal issues such as business permits, licenses, non-disclosure agreements, and contracts must also be taken into consideration. Eventually finding yourself in a legal quagmire by making common legal mistakes made by startups isn’t worth any short-term convenience.
13. Stop thinking about it and start doing it
Lofty plans alone won’t make you a successful businessperson—you need to execute on your business ideas. Once you’ve written your business plan, it's time to get to work. Don’t lose your focus. As Albert Einstein once said, “Genius is 1% talent and 99% hard work.”
14. Obtain business funding in order to grow
Money is one bare necessity you can’t ignore. If you find yourself itching to quit your job to focus on your business full-time, it’s wise to keep at least six months’ worth of expenses in emergency savings. Keep the money in a separate bank account, so you’re not tempted to dip into it whenever the opportunity (that’s not an emergency) presents itself.
If you can’t afford to bootstrap your business yourself, there are several ways to raise funds:
- Secure a small business loan.
- Ask friends or family to loan you funds.
- Set up a fundraising page on sites like GoFundMe or Kickstarter.
- Consider trying to find an angel investor.
15. Don't neglect your day job
Last but not least, your employer has performance expectations of you, so don't get so distracted by your new business venture that your day job work suffers. Be careful about using time allotted for your day job to work on your side business. Know your company’s rules regarding employees working multiple jobs. You don’t want to risk getting fired, especially before your side hustle takes off.
Ready to start a side hustle?
Running a business while keeping your day job is no easy feat, but if you’re willing to make the necessary adjustments and sacrifices, billionaire Richard Branson has this to say: “Screw it, just get on and do it.”
