It’s often the best way to go into self-employment: test the waters by earning money on the side alongside your day job, prove your business’s viability, and then take the steps to doing it full-time. It’s a sensible approach – so, if the time is right, how do you go about it?
What is the difference between a side hustle and a full-time business?
A side hustle is anything that makes money but isn’t your main source of income. This can be anything from delivering pizzas in the evenings, singing in bars on the weekends or selling a product you make via the internet or attending local craft fairs. A full-time business is exactly as it sounds, a full-time career that is your sole (or at least your main) source of income and takes up most of your time.
Understand why you want to make a full-time business
It’s most people’s dream to work solely for themselves. To be able to make your own hours and answer only to yourself, but it’s important to figure out the reasons why.
- Do you think you’ve got a product or service you think will succeed?
- Do you think you could do your current job better if you started your own company?
- Or is it just a bad case of the Mondays and your boss is on the war path?
It’s very important to make sure you’re doing it for the right reasons, and that you put serious time into the planning, so you don’t get caught out. Assess your passion for the business idea and evaluate its potential for long-term success. Consider whether you’re motivated by a desire for autonomy, a belief in your product or service, or career dissatisfaction.
Create a business plan with clearly set goals
Without a clear business plan, it can be difficult to see where you’re headed or if you’re succeeding further down the line. Draw up a plan that contains both your short-term and long-term goals. Make sure you’re reviewing them constantly and adjusting where needed. It can be difficult to get your business plan right at the beginning as it’s all brand new, but it will start to become clearer as time goes on. Start with smaller goals before trying to achieve the big ones and keep striving forward. Here’s a quick guide as to how to structure your business plan:
- Executive summary: Provide a concise overview of your business, outlining its mission, vision, and the problem or need it aims to address.
- Business description: Detail the nature of your business, its products or services, and the unique value proposition you offer to customers.
- Market analysis: Conduct thorough research on your industry, target market, and competitors. Identify market trends, potential challenges, and opportunities.
- Organisational structure: Outline the structure of your business, including key roles and responsibilities. Define the skills and expertise needed for each role.
- Products/services: Provide a comprehensive description of your products or services, highlighting their features, benefits, and any unique selling points.
- Marketing and sales strategy: Detail your plan for promoting and selling your products or services. Include online and offline marketing channels, pricing strategy, and sales tactics.
- Funding requirements: Specify the financial resources needed to start and operate your business. Include initial startup costs, working capital, and potential funding sources.
- Financial projections: Present detailed financial projections, including income statements, balance sheets, and cash flow statements. Project your financial performance over the next 3-5 years.
Understand your market and customer needs
It’s important to do plenty of research before you start your journey. Look at what your competitors are doing and work out if the industry you’re stepping into is crowded or if your product or service is new/innovative. By doing both market and competitor research, you understand the landscape you’re moving into. This allows you to make informed decisions on things such as pricing, workload, marketing strategies, and even branding.
Industry analysis:
- Understand the current market size and growth trends.
- Identify emerging industry trends and technological innovations.
Competitor analysis:
- Identify and analyse key competitors.
- Evaluate competitors’ strengths, weaknesses, and product offerings.
Customer needs and preferences:
- Define target audience characteristics and behaviours.
- Identify customer pain points and expectations for your product or service.
Market positioning:
- Define your Unique Value Proposition (UVP).
- Assess and improve brand perception in the market.
Pricing strategies:
- Analyse competitors’ pricing strategies.
- Consider value-based pricing and assess target audience willingness to pay.
Marketing and branding strategies:
- Identify effective marketing channels for your target audience.
- Develop consistent and compelling brand messaging.
Workload and operational considerations:
- Assess business capacity and plan for scalability.
- Implement operational efficiencies and address potential bottlenecks.
Regulatory and compliance issues:
- Research and comply with legal and regulatory requirements.
- Consider obtaining industry certifications for trust-building.
Feedback mechanisms:
- Establish customer feedback systems for continuous improvement.
- Monitor market trends, competitor activities, and customer sentiments regularly.
Register your business and licenses
This is another reason why market research is so important. Depending on what sector you’re going into will depend on what licenses you will need. Consult with professionals and industry contacts to find out exactly what you need and how to get it. Different locations will often have different laws and regulations that you’ll need to ensure you’re up to date with. You’ll also need to make sure you have things like domain names and social media handles ready to go so people can find you as soon as possible to ensure maximum exposure for your company or brand early on in your journey.
Sector-specific licensing:
- Conduct market research to identify sector-specific licensing requirements.
- Consult with professionals and industry contacts to determine necessary licenses.
Legal compliance:
- Stay informed about local laws and regulations applicable to your business.
- Ensure compliance with licensing requirements to avoid legal issues.
Consultation with professionals:
- Seek guidance from legal professionals familiar with your industry.
- Engage with industry experts to navigate complex licensing procedures.
Locale-specific regulations:
- Understand regional variations in laws and regulations.
- Adapt your licensing strategy to meet the specific requirements of different locales.
Digital presence preparation:
- Secure domain names that align with your business name and brand.
- Reserve social media handles to establish a consistent online presence.
Maximising exposure:
- Launch your online presence promptly to maximize brand exposure.
- Leverage social media platforms for early engagement with potential customers.
How to fund your business
No business can start without money, but there are several ways you can raise money to get started.
First and the most straightforward is to use your own money. Saving money or using existing funds can get you started even if it’s only the basics. Another method is to apply for a government grant. Most grants can be applied for if you’re either a voluntary, community, or social enterprise organisation like a charity or a small to medium-sized enterprise (SMEs). Look at your local government website to find out if you’re eligible and how to apply. A slightly less conventional method is to start a Kickstarter or fundraising campaign. This usually requires a product or service to be offered in advance and only usually works when launching a product.
If you feel like your business has serious financial potential, you could also look at investors. This gives you access to major financial options that you might not have on your own, however, it does mean you lose control of the business as the decision-making process now involves other parties. Whatever you decide to do you have to make sure it works for you and your business.
How to manage your cash flow
Cash flow management can be the most difficult part of being independent. Work out exactly how much money you need for the essentials. You can’t start making a profit until all of your baseline costs are covered. Rent, power, internet, equipment costs, staff etc. All of these must be paid before you can “make” any money otherwise you’ll find yourself in a world of unpaid bills and a fairly hefty amount of stress. Work out what these essentials costs, then how much your salary should be (If you’re able to take one early on), after that, you can start thinking about profits. It may seem strange but many start-ups don’t make a profit until much further down the line. Focus on making sure you’re at least breaking even every month and then worry about growth.
