Welcome To World Best Suggestion: How to Start a Side Hustle: Your Guide to Making Extra Income

The post How to Start a Side Hustle: Your Guide to Making Extra Income appeared first on Millennial Money.

These days, everyone will tell you that if you want financial freedom, you need to start a side hustle—this blog included!

That’s all well and good, but what exactly does that entail? And how can you start a side hustle while working your current job and not totally lose your mind?

It sounds tricky, but let me tell you, it can be done. All it requires is a plan, prioritization, patience, and some . . . well . . . hustle on your part.

In this guide on how to start a side hustle, I’ll take you through the steps to finding the perfect second job and earning extra money, all while holding down a full time job.

Let’s get started!

What Exactly Is a Side Hustle?
- Side Hustle vs. Moonlighting
How to Start a Great Side Hustle While Keeping Your Day Job
Frequently Asked Questions (FAQs)
- How Can You Take Advantage of Free Resources When Starting a Side Hustle?
- How Much Money Should I Invest in a Side Hustle?
The Bottom Line

What Exactly Is a Side Hustle?

The term “side hustle” might be trendy right now, but the concept is nothing new. As long as people have had jobs, they’ve worked on side projects to make extra money or to eventually become their own boss.

That’s exactly what a side hustle is: an enterprise or small business that you run in addition to your day job.

There are tons of reasons to start a side hustle. For many folks, it’s because their full time work doesn’t cover all of their expenses. For others, it’s to get a head start on a new career.

And for some folks, it’s because they just don’t find their day job personally rewarding. Think: graphic designers who sell artwork on the weekends to fulfill the creative urges that their desk job just doesn’t satisfy.

Working a successful side hustle can also help you hit some short-term money targets, too. By making extra income, you can do stuff like pay off your credit cards or student loans faster.

Side Hustle vs. Moonlighting

You might have heard the term “moonlighting.” This concept is similar to a side hustle, with a big exception: Moonlighting tends to involve working for someone else on the side.

With a side hustle, you’re the business owner. This is a key mindset change you need to make.

Even if your side hustle involves freelance writing or becoming a virtual assistant, you have to think of yourself as an entrepreneur who is working with clients.

We’ll get into this more in just a minute. But for now, trust me—this mindset shift will make a huge difference to your success as a side hustler.

How to Start a Great Side Hustle While Keeping Your Day Job

The best side hustles are treated like businesses. That’s because that’s exactly what they are.

When you have a side hustle, you’re an entrepreneur. Whether you’re a freelance writer, a social media manager, or selling tie-dye shirts out of a van (don’t knock it), you are a small business owner.

And because you shouldn’t just plunge willy-nilly into a business venture, it pays to be methodical when starting a side hustle.

Here are the steps I recommend to get you started.

1. Decide What You Want to Do . . . And Why

First, spend some time being honest with yourself about why you want to start a side gig. This will help you determine what type of side hustle to start. Below are a series of questions you should to ask yourself.

Do You Just Need Quick Extra Cash?

If making a few bucks to cover an upcoming expense or to pay off your credit card debt is your “why,” consider an easy source of additional income with no startup costs. For example, starting a dog-walking business through Rover or delivering groceries with Postmates.

Do You Need Extra Income?

If your main “why” for starting a side hustle is because you’re not making enough money at your day job to make ends meet, you may want to consider asking for a raise, finding a different full time job, or doing some serious budgeting before starting a business.

That said, if you need the additional income, find a side gig that won’t cost you anything to start up—like driving for Uber or Lyft on weekends.

Do You Want to Be Your Own Boss?

If your reason for starting a side hustle is to eventually quit your full time job and work for yourself, you’ll want to find a sustainable side hustle that will eventually provide you with a full time income.

Maybe you already have an idea in mind, like opening a bakery or becoming a motorcycle mechanic. If you have a dream of what you want your next career to be, that’s awesome.

If you don’t, consider freelance writing or building a website to make money through affiliate marketing. Believe it or not, there’s a lot of earning potential here.

Do You Want to Satisfy Your Creative Needs?

Some of us want to start a hustle purely for the love of what we do. If you have an artistic passion or even a hobby you can turn into extra cash while finding personal fulfillment, go for it. Etsy is a great place to get started selling your artwork or handmade items online. And I know a lot of people who sell music on Bandcamp.

If you’re really interested in a particular topic, consider starting a podcast. I have a friend who makes decent coin talking about Bigfoot once a week.

Do You Hate Working?

That sounds kind of funny, but there are plenty of people who want to start a passive income stream so they can enjoy financial freedom. With these side gigs, you might have to do some investing or hard work upfront, but then just sit back and collect the checks.

In this light, investing in dividend stocks is a perfectly legit side hustle. Creating and selling an online course, uploading designs to a print-on-demand service like Redbubble, and renting out extra space in your garage on Neighbor are also great examples of passive income streams.

If you don’t know what kind of side gig you want to embark upon, spend some time researching the best side hustles.

2. Make Sure You Can Start Your Side Hustle

I hate to be a wet blanket, but before you move on to the next step, you need to be absolutely certain that starting your second job won’t land you in any hot water.

First off, make sure it won’t cause you to lose your full time job. Your company might have made you sign a non-compete agreement. If so, you might be prohibited from starting a business in the same field.

It’s also a good idea to make sure your spouse or life partner is OK with your idea. Not only can having a side hustle take up a lot of your after-work time, but you’ll also be much more successful if you have emotional support!

3. Make a Business Plan

I know what you’re thinking: bor-ing. Why would you need a business plan if you’re just going to deliver fast-food through DoorDash?

Hear me out.

Your business plan doesn’t need to be anything fancy or formal. Heck, it can be something you scribble on a cocktail napkin (very appropriate if your side hustle idea is to start a vintage clothing biz!).

Know that your business plan isn’t set in stone. It will likely change over time as you explore entrepreneurship and find out what works and what doesn’t.

Here are the most crucial parts to any business plan:

Executive summary: This is a short and snappy overview of your plan. Exactly what do you want to do?
Business description: Get into the nitty gritty. What business structure will you use (sole proprietorship, limited liability company, etc.)? Do you have any business partners? Do you need suppliers or distributors? Who are your intended customers or clients?
Description of goods or services: What exactly do you intend to offer? Be as specific as possible. Consider what prices or rates you’ll charge.
Competitive analysis: This doesn’t have to be elaborate at first. But think about who the other guys are, what they’re doing, and how you can do it better.
Start-up costs and operating expenses: What will you need to spend to get started? Will you need to get a small business loan? Tip: I believe in spending as little money as possible, at least at first. You may always find out you don’t like your chosen side hustle after all.

4. Get Legit

Before you make a single dollar with your side hustle, decide what business structure you want to use, and set it up correctly.

Here are the main types of business entities that the IRS recognizes:

Sole proprietorship: You are the only person running the business, use your Social Security number for tax purposes, and are completely personally responsible for liabilities. (You don’t need to file anything formal to become a sole proprietor.)
Partnership: You run the business with at least one other partner. All of you are personally responsible for business-related debts and liabilities.
Limited liability company (LLC): You use a federal tax idea (EIN) and have no personal liability for debts incurred by the business.
S or C corporation: Your business is its own separate, legal entity, and you’re a shareholder. S and C corporations are similar, with the main difference being how each entity is taxed.

From personal experience, I can’t stress this enough: Have a chat with a tax advisor about the best business entity for you. They’ll also help you create a plan for paying taxes.

Self-employment taxes can seem very unfair and can be devastating if you’re not prepared. Get help ahead of time!

5. Market Yourself

This is the “hustle” part of side hustle. Nobody will know about your business if you don’t tell them about it.

Now, if you’re using any of the popular side hustle apps like Uber, Instacart, etc., that line you up with jobs, that’s great. However, keep in mind that you can still promote yourself by consistently earning great customer reviews.

Everybody else, decide how you want clients and customers to find you.

If you’re a freelancer, consider setting up a profile on Fiverr or Upwork and start looking for gigs. These sites take a percentage of the money you’ll make, but they’re a great way to market yourself to potential clients, as well as to actively find work.

It’s also worth setting up profiles on social media platforms. This can be a great, free way to share your work with the world. I know a lot of artists who have gained fans and paying customers around the world thanks solely to social media posts on Facebook, Instagram, and even TikTok.

When you’re first starting out, I recommend spending as little money on your side hustle as possible. So there’s no need to start buying billboard space just yet.

However, odds are you might need to set up a website to promote your business. If you’re not handy with WordPress or any other of the main website hosts, consider paying a friend or freelancer to set up a professional-looking site.

6. Get Your First Paying Customer

This is my favorite step.

Once you receive your first payment for a product or service, you will feel so good. It will motivate you to keep hustling!

Be sure to solicit feedback from your first client. If they loved you, ask if you can use a testimonial for marketing. If they didn’t love you, find out how you can make the next time better. Feedback is critical.

7. Don’t Quit Your Day Job (Just Yet)!

Once you’ve started up a successful side hustle, it will be oh-so-tempting to quit that 9-to-5!

However, I advise against doing that until you’ve proven your side hustle income is enough to support yourself or your family. Although you can have high earning potential from a lucrative side hustle, it doesn’t happen overnight.

My rule of thumb is to make sure your side hustle can sustainably account for at least 80% of your income before marching into your boss’s office.

After all, when you quit your full time job, you’ll be losing benefits such as health insurance, paid time off, and your 401(k). Make sure you’re really ready before taking the leap.

Frequently Asked Questions (FAQs)

How Can You Take Advantage of Free Resources When Starting a Side Hustle?

There are plenty of free resources you can leverage when starting a side hustle or any small business. The U.S. Small Business Administration (SBA) website is a great place to start. Also, check your own state’s SBA site, as well. These agencies can provide everything from free legal help to grants for new small businesses.

How Much Money Should I Invest in a Side Hustle?

Don’t invest more than you can comfortably afford before starting a side hustle. You may need to pay some money upfront for things like website building or buying supplies.

If you need to buy expensive equipment to start your side hustle, you can consider taking out a loan. But as a new business owner, it’s not likely you’ll be able to receive a large line of credit. Consider renting or borrowing someone else’s equipment when getting started.

I strongly recommend against using a personal credit card to start a side hustle.

Here’s some straight talk about mid-level marketing (MLM) schemes: I like soft leggings as much as anyone else, but MLMs are really risky businesses.

I know a few people who have done quite well buying and selling someone else’s products this way. But I know many more who have gone into serious credit card debt because of these schemes.

The Bottom Line

Starting the right side hustle can be a great way to earn extra income, build your own business, or just scratch that creative itch. However, you must take it seriously.

Once you have a business idea that makes sense for you, run with it! Just don’t forget to still give 110% at your day job until you’re ready to quit.