At this point, you most likely know what you’d like your side hustle to be. You’ve narrowed down your niche, looked into the feasibility of it, set expectations with your loved ones and defined what systems need to be created. Now it’s time to look at the money.
Making money is thrilling when you start a side hustle. Generating a dollar out of thin air, instead of going into a job is exciting, and not always so easy. Here are a few things you will want to keep in mind when it comes to making money in your side hustle.
Define What You’re Selling
The first thing you need to do is define what you’re selling. Because you’ve already narrowed down your niche, you know who you will be serving – so now it’s time to really dig in to what you’ll be selling them. If you’ve decided that you are going to sell website design packages, what exactly are in those packages? Detail out what you’re selling so you can put it into a proper proposal.
If you are having trouble defining this, just set a timer for 20 min and brainstorm all the things you could sell your target customer. You don’t have to offer it all, but if you can get it all out on paper you should be able to create a compelling package. Just remember not to overload yourself in the beginning – you want to make sure you can deliver.
Make It Recurring
If you can create a way to bring in recurring revenue, you’ve hit side hustle gold. Recurring revenue is great for a lot of reasons, but the main one is that you sell once and get paid over and over again. That doesn’t mean you can slack off on customer service, or actually getting the work done, but the amount of time you have to spend selling is decreased.
Having recurring revenue helps you to project out your earnings as well as your time. Even if you have a seasonal business like lawn mowing where you do the work from May to September, you can sign your clients up for a year contract and amortize their payments over a year.
Having that steady income will do wonders for your nerves as you start up your business. Worrying about money coming in hinders you from getting creative, taking risks and you don’t sleep very well. Do what you can to try and sell something with recurring revenue.
Now that you know what you are going to sell, and to whom, it’s time to get out there. Sales is the lifeblood of your business and should always be a main priority. In part 4, we discussed automation – and sales is one of the areas you should really try and automate. 80% of sales are made when a prospect is followed up with six or more times.Setting up your CRM to do this for you is how you’ll be able to get this done and see the most from your sales efforts.
Define how you plan on reaching out to prospective new clients, and what the follow up sequence will look like. Set it up in your CRM and add new prospects into your sales pipeline. The key is to never let your pipeline dry up – that’s like letting your car run out of gas. The hassle of finding a gas can, walking to the station, filling it up, walking back to the car, getting it started again and getting back on the freeway takes a lot of time and effort. A lot more than if you just filled up the tank before it was empty. The same applies to your sales.
If you are going to have a recurring charge for your customers, it’s helpful to find an accounting software that will allow for that. Quickbooks, Xero, Freshbooks, WaveApps, all allow you to regularly capture your client’s payment monthly. They each have their own fees for doing so, so do your research on what works best for you. Using an accounting software will allow you to get payment quickly and on-time. Again, it saves hours of your time and is easy for your clients too.
Manage What You Do Bring In
When you have a side hustle, you’ll need to set aside money for your estimated taxes. Estimated taxes are divided up by quarter and then paid in four times for your calendar year: April 15th, June 15th, September 15th, January 15th. Depending on your income bracket, you’ll be paying in differing amounts, so it’s important that you work with a CPA to determine what needs to be sent in to the IRS.
One of my favorite books to help navigate this is “Profit First” by Mike Michalowicz. This book lays out a very simple plan to save for your taxes and keep your finances in check. If managing your businesses finances makes you feel a bit woozy, this book will be a lifesaver.
Avoid Scope Creep
When you are starting up a side hustle, the desire to please your client can be overwhelming. Sometimes, in doing so, a small request here, a change there, can really start to add up. This is what is called “Scope Creep” meaning the work is now starting to extend out beyond the boundaries of the original agreement. You might find that what was a simple website refresh has turned into a total overhaul and they needed to you design a new logo too.
Scope creep can seem innocent at first, but if left unattended, can turn into a major time suck pulling your margins down. Inevitably, it turns into you working for free. It’s important to be very clear on the boundaries of the agreed upon work, and to also be diligent in charging for additional un-agreed upon tasks that are needed. Scope creep can take a business down, fast.
Keep a tight handle on the money you are bringing and the time you are putting out. If you find that you are spending an enormous amount of time on something for very little money – it’s not a good side hustle for you. Find something that you can easily replicate and charge for over and over again.
The Ultimate Guide To Starting A Side Hustle – 7 Part Series:
Part 1: Passion Is Not The Way
Part 2: Narrow Your Niche
Part 3: Managing Your Time
Part 4: Automation and Systems
Part 5: Making Money
Part 6: Marketing
Part 7: Recommended Reading