Lots of people have a side hustle these days (check out Avenue’s recent article The Art of the Side Hustle). When your heart’s in the game and you start to make a few bucks, you may start to wonder: Could this be my day job?
If you find yourself mulling over that question, here are some practicalities to consider before you make the leap:
Come what may, you gotta keep a roof over your head and food in your belly.
Map your current budget (here’s a good article on how to do that). What expenses must you absolutely make every month (rent/mortgage, groceries, car payment, etc)? What can you cut?
Do you have a partner who can help cover your bills?
Determine your bottom bottom line.
What will your operating costs of your business be? Will you need to take on debt?
Will jumping out on your own create additional expenses, like a cell phone bill, computer, or health-related costs?
And speaking of healthcare: Are you able to join a partner’s healthcare plan? Can you live without it or do you need to purchase your own?
Now that you know the expenses you need to cover to to keep your head above water—How are you going to make that money? What’s your hourly rate and how many hours do you need to work to cover your expenses? Would it make more sense to package your services and bill per project or piecemeal?
Remember: You should plan to put at least 30% of your earned dollars aside for taxes and make all of your deadlines so that you don’t get slammed with a giant bill come tax season.
Take a look at your pipeline of work. It’s a good idea to have enough worked lined up to cover your bills for at least three months.
Remember: the hustle never ends when you’re running your own show. Consider the worst case scenario. How far will your savings carry you if you make zero dollars for a while? Are you comfortable with that?
Jumping out on your own isn’t just about the numbers. It’s about creating the life you want.
Are you checked out of your job? Are you working on your side hustle AT your job?
Are you ready to shed the security of your full-time gig—with its guaranteed paycheque, paid vacation, great benefits, ability to read the news while getting paid—and throw yourself into the unknown? Are you ready to set your own goals, be self-motivated, write contracts, invoice and chase people down to pay those invoices? To constantly be out there in the world looking for new work and execute on a robust marketing strategy, rather than having your work just land on your desk?
If your answer is YES, well, buckle your seat belt, my friend. We wish you luck on this wild ride.
Here’s a link to more information about getting your finances set up the right way as you get your business off the ground.
Follow us on Instagram, Facebook, Twitter, and LinkedIn to get ongoing insights and tips on running a business.
Like our clients, we’re a small business too. Our community partners help us thrive, and they’re also pretty cool to work with. We learn a lot from each other. If you want to learn more about what we offer, check out our services page or contact me.
Find more Strategic Advisory topics relevant to you and your small business.
Are you on the hunt for a more proactive small business accountant? That’s us.