Thinking of transitioning your side hustle into a full-time career? This article explores eight crucial questions to help you assess your readiness and plan for a successful leap into full-time self-employment.
8 questions to ask before making your side hustle full time (Image credit: Pexels)
A significant number of Americans, about 44% according to a LendingTree survey, are engaged in a side hustle to supplement their income. For many, this is a way to earn extra cash, but for some, it holds the potential to become a primary source of livelihood.
If you find yourself in this position, you might be wondering if your side project could be something more. What would it take to transform your part-time gig into a full-time business?
Before you take that significant step towards full-time self-employment, it’s crucial to assess your situation thoroughly. Answering some key questions can provide the clarity needed to move forward with confidence.
The story of your business's potential is written in its financial data. Before you even consider expanding, a deep dive into your numbers is essential to understand the true health and viability of your side hustle.
If your business involves selling products, you must be intimately familiar with your gross profit margin, average order value, and fixed operating costs. The gross profit margin represents the portion of revenue left after accounting for the direct costs of producing your goods.
By multiplying your average order value by this margin, you can determine the average profit per sale. To figure out your break-even point, simply divide your total fixed costs by this average profit. This calculation reveals the number of sales you need to make just to cover your expenses.
For freelancers, the financial picture might be simpler, but it is no less important. Calculating your effective hourly rate by tracking income per project against the hours spent is vital. This helps you gauge the scalability of your services and whether you can reach your income goals without taking on an unsustainable amount of work.
Expanding your operations inevitably means a heavier workload and, often, increased expenses. You need to critically evaluate if your current infrastructure—your tools, software, and processes—can handle a larger volume of work.
Freelancers transitioning from a few projects to a full client roster will face a significant increase in communication and administrative tasks. This is a good time to evaluate your technology stack. Investing in project management tools or communication software can create efficiencies that are crucial for growth.
For those selling goods, consider what's required to manage a higher number of orders. Will you need new equipment or more space? How will you manage the increased complexity of your bookkeeping? One part of this complexity is managing the influx of receipts and invoices. Automating this can be a lifesaver. Tools like Zenceipt connect to your inbox to automatically find and organize these financial documents, saving you from hours of manual work and ensuring your records are always up-to-date.
Creating a list of "must-haves" versus "nice-to-haves" can help you budget for these expansion costs. It might be wise to delay your leap into full-time self-employment until you have these essential systems in place.
To successfully scale your side hustle, your revenue needs to grow. This growth can come from two primary avenues: acquiring more customers or increasing the value of your existing customer relationships.
There are numerous strategies for attracting new clients. Offering referral discounts is an effective way to bring in high-quality customers who likely share the values of your current clientele. Alternatively, you could explore more direct methods like advertising or local promotions.
Upselling to your current customers involves introducing new products or services that complement your existing offerings. For example, a potter who sells mugs could start offering matching saucers, or a freelance web developer could add SEO audits to their service menu.
A common fear among the self-employed is not having enough work. However, the opposite problem—having too much work—can be just as damaging, leading to burnout and a decline in quality.
When your side hustle becomes your main job, the pressure to say yes to every opportunity can be immense. This is especially true in the beginning when you're focused on building your reputation and establishing client relationships. However, it's a behavior that can quickly become overwhelming.
Defining what constitutes a reasonable workload for you before you're at capacity is a proactive step. It creates a clear boundary that, when reached, signals it's time to re-evaluate. This might mean finding ways to work more efficiently or considering hiring help to meet demand.
Protecting your mental health is not a luxury; it's a necessity for long-term success. It's what allows you to perform at your best and deliver the high-quality work your clients expect.
The decision to go full-time with your side hustle can happen at any point. While there isn't a set formula for success, establishing a timeline for your growth provides structure and focus. A well-considered timeline serves two critical functions: it holds you accountable to your goals and provides much-needed perspective during challenging moments.
For instance, if you set a goal to achieve a certain level of recurring revenue within eight months, you're less likely to feel discouraged if you haven't hit that target by month two. This long-term view allows you to stay focused and make strategic decisions about which initiatives will best help you reach your ultimate objective.
It's easy to get caught on what psychologists call the hedonic treadmill, a state where you constantly return to a baseline level of happiness, no matter your achievements. This is common among entrepreneurs who are always chasing the next milestone, the next level of success.
Setting clear, ambitious, long-term goals is the best way to break this cycle and escape the perpetual curse of "more." These goals act as a compass, providing direction for your daily decisions and priorities.
When you have a clear vision for the future, it becomes easier to justify taking necessary breaks, as you know you are still on track. It also helps you use any downtime productively, focusing on tasks that will bring you closer to your long-term vision. As a self-employed individual, you have the power to define what success looks like. Use it.
Embarking on the journey of full-time self-employment is filled with unique hurdles. While you may be more than capable of handling them, you don't have to do it alone. Building a support network is invaluable.
Seek out communities of people who have been where you are now. Look for relevant Facebook groups, connect with experienced professionals on LinkedIn, or join local small business organizations.
These connections can offer practical advice, share their own experiences with similar challenges, and provide an understanding ear when you need it most. Don't hesitate to reach out for guidance or support.
For many, a side hustle is a passion project, a creative outlet separate from their day job. When you scale it into a full-time career, the nature of that relationship will inevitably change. It's important to ask yourself if you're prepared for that shift.
Making your side hustle your main source of income means you'll be spending significantly more time on it, and not all of that time will be on the parts you love. You'll also face new pressures, like ensuring a steady workflow and dealing with potential imposter syndrome.
Remember that one of the greatest benefits of being self-employed is the autonomy to design a life that works for you. You can scale your business in a way that aligns with your values and desired lifestyle. There are no rigid rules, so experiment, find what brings you fulfillment, and don't forget to enjoy the journey.
For those on a tight budget:
For stay-at-home parents:
For established business owners:
Pavel Novák
Pavel is a content creator with a professional background in small business finance who enjoys diving into the details of financial compliance. His goal is to help readers understand not just the 'how,' but the 'why' behind maintaining accurate financial records in a digital world.
Thinking of transitioning your side hustle into a full-time career? This article explores eight crucial questions to help you assess your readiness and plan for a successful leap into full-time self-employment.