Starting what’s known as a ‘side hustle’ can be a great way to test a business idea and boost your income without investing the same kind of time and money you might need to run a full-time business.
Some people start a side hustle while working another job. They might even grow their side hustle to the point where they can run it as a full-time business to replace their job.
Here are seven steps to follow if you would like to start a side hustle.
Start with your side hustle idea
Whether you’re passionate about designing jewellery, walking dogs or developing software, your skills and interests could be turned into a side hustle. It’s important to know that:
- A hobby relates to doing something you love.
- A business relates to solving a problem for people who will be prepared to pay for your goods or services.
Not all hobbies will make successful or profitable side hustles.
Give some thought to how, where and when you could run your side hustle. It’s worth starting with a plan on how you’ll find the extra time and energy to cope with these extra demands. How could this impact your home, health, including your mental health and personal life? What will be the impact on your ‘main gig’ – is it in competition with your current employment or will it be hard to keep your side hustle separate while you are at work? What plans could you put in place if you start feeling overwhelmed?
Consider how flexible you can be with your side hustle idea. The products or services you first thought customers would like could be different to what generates the most income. You might need to be open to pivoting from your original idea to meet your customers’ needs.
For the best start, look for an idea which is low risk, is easier to start (for example, you don’t need extra qualifications to get started) and has low start-up costs.
Tip: Make sure you understand the difference between a hobby and a business for tax, insurance and legal purposes. Read Is it a hobby or a business? to find out more.
Work out your 'why'
Think about the reasons you want to start a side hustle. In the world of business, this is often known as your “why”.
Answer these questions to help work out your own definition of success:
- Do you want to generate a second income or passive revenue stream?
- Are you trying out a new business idea before taking a bigger leap?
- Are you starting your side hustle to expand your skills and experience, which could lead to a job promotion or more career opportunities, at which point you would then stop your side hustle?
- Are you setting up your side hustle to help transition into retirement or boost your income while you’re looking after a family at home?
You might like the idea of a side-hustle to generate extra income – so think about why you want that extra income. Are you facing financial challenges at your current level of income, saving for a holiday, trying to change careers or wanting to explore the world of business and your passions?
Knowing your “why” can help to shape what you choose to do and how much time, money and effort you’re willing to invest.
Tip: If you’re thinking of starting a side hustle as a short-term financial measure, it could be worth exploring a gig economy job – such as offering your services through a freelancing network – instead of starting a business.
Do your research
Once you have decided on an idea and know your reasons for starting a side hustle, you can dive into learning more about your industry and potential customers. You might like to:
- Explore the latest research related to trends and demand for your products or services.
- Connect with others working in this field to learn more about the industry, including current challenges and opportunities.
- Consider the competition in the market for your products or services, which could be local or online businesses who offer something similar.
The more you can learn about your industry and target customers, the easier it could be to develop the kind of products and services they’ll want to buy through your side hustle.
Action to take: Explore our free market research data and industry insights to learn more about your industry.
Test your side hustle idea
It’s important to explore the viability of your idea so you can work out if it could become a successful side hustle to match your ideas of success.
Download and complete our one page business plan template to:
- Test your thinking and assess the viability of your idea.
- Consider how you will promote your side hustle, for example through paid social media ads, community advertisements or through your own networks.
- Work out your finances including the costs involved in setting up, promoting your offerings and then delivering your products and services.
Investing some time into planning your side hustle could make a big difference to its success.
Tip: Think about your ideal customer and how they would find, buy and use your products and services. As an example, your ideal customer might find a social media post about your products with a link to your own website or a retail platform where your products are for sale. From there, they might order and pay online before receiving their item by post.
Once you think about your customer’s journey, you’ll discover what’s required of you at each step.
Apply for the licences and registrations you need
Always consider the legal and tax implications of your side hustle before you get started. You might need to:
- Choose and register a business name.
- Register for an ABN and other tax considerations.
- Apply for licences and permits particularly if you’re planning to run your side hustle from home.
- Consider your business structure as this can determine tax liability, potential personal liability and asset protection.
While completing these steps might feel like extra work when you’re keen to just get started, it’s worth investing the time now to avoid any headaches – or even penalties – later.
Weigh up the risks
Risk versus return is something that every business owner needs to consider. The amount of risk involved depends on the nature of your business. Here are some scenarios you might need to think about:
- If you have expensive equipment or will be working in various locations (such as a wedding photographer), make sure you explore your options for insurance.
- If you’re running a side hustle from home, your home and contents insurance may not cover business activities.
- If you’re renting your home or side-hustle space, you might need your landlord’s permission to run a business on the premises.
- If you need to buy a lot of supplies to make your product, you could be at risk of not getting that money back through sales or something might happen to cause damage to your supplies.
Weigh up any risks to yourself and other people, your property and other people’s property (including products, equipment and premises) to make sure you have the right protections in place for your side hustle.
Tip: If you’re planning a home-based side hustle, read home insurance and your business for more details.
Start your side hustle and monitor your progress
Running a side hustle involves an ongoing investment of your time, energy and sometimes funds. Once you’re up and running, check back on your one-page business plan to monitor your progress and success.
If you come across some issues, want ideas to grow your side hustle or would like to expand your skills to support your business, our team at the SBDC can help. You might like to:
- Book into one of our low-cost workshops designed to help you learn new skills in a range of areas from marketing to finance.
- Join our Facebook group to connect with other WA businesses.
- Explore our blog for industry news and business tips.
As your side hustle grows, you may decide to take the next step and turn it into a full-time business. When you are ready to make this move, creating a full business plan and marketing strategy will serve as your roadmap, outlining key objectives, target markets, financial projections, and growth strategies. Additionally, you can leverage the plan to secure funding, partnerships, and other resources essential for transitioning your side hustle into a sustainable and profitable full-time business.
Action to take
If you need help developing your side hustle, or transitioning your side hustle into a full time business, contact our business advisory service for free, practical and confidential advice to help you start well in business.
