If you are like me, you started your side hustle to make more money to pay those bills, and then you realized that you could turn this into a full-time income.
Today, I will share the five steps to turn your side hustle into a full-time business.
5 Steps to Turn Your Side Hustle into a Full-Time Business
Step 1: Separate your business finances from personal finances
For me, this is the huge first step I took; if you still have a job and make money from the side hustle, it is very easy to mix and match your finances.
You need to have a debit card ( or credit card) that is only for your side hustle. If you need to buy something, use that; if you receive payment, deposit it.
This will help you track how much you make, how much you spend, and your net profit. It will help you know if your side hustle brings enough income to sustain your lifestyle.
Step 2: Start bookkeeping
This is when things start to get serious, and you need to track your income, expenses, and profit.
This will help you with taxes ( talk about this later) and know how you are doing financially.
If you are not making many sales, you can just write it down on a booklet or a piece of paper, then take it to the next level by putting it in Excel or using software like Quickbooks to track your money.
If your business is getting big, I would advise hiring an accountant. You need to have someone who knows what they are doing regarding bookkeeping.
Step 3: Formalize your business plan
You need to have a plan around your business. First, you need to know how much money you need, including your total expenses and the savings you want to make, from finding out how many customers you need to reach that amount.
For example, if your total expenses are $10,000, and your products sell at $100, you need just 100 customers, so you plan to get at least 100 monthly customers.
In most countries, businesses pay taxes. If so, you must set aside some money for taxes. Find out what percentage of your income you need to pay for tax, and set that apart.
For example, I live in Mexico, and the income tax is up to 35%, so what I do is that every time I get paid, I set aside 30% of that income for tax. (the percentage varies depending on how much you make per month; that is in my income range).
Neglecting tax can put you in a hot spot, do it. I have seen business owners get into real problems for not paying taxes.
Of course, you can speak with your accountant( that is why I recommend hiring one when your income increases) and they can give you tips about how to legally lower your income, Rich people pay less tax than poor people, and you can do it too.
Step 4: Prepare your finances
Before jumping to a full-time entrepreneur, you need to prepare your finances. By personal finances, I mean that you save some emergency funds ( in case something goes wrong, you need to have some cash you can use until you get back to your feet), and you need to pay your debt if you have one.
When you have a job, most companies will provide you with health insurance, now if you leave your job you will lose that too. You need to start shopping and finding out what insurance they offer in your area.
Step 5: Jump in
In the first four steps, I explained what you need to do to turn your side hustle into a full-time business. Probably, you will not get the conditions in the right order.
I recommend jumping in, quitting that job, and going full-time. Please do not do this to impress someone or because you feel it is cool to own a business ( it is, but you know what I mean). When your intuition tells you to jump in, do not wait for it to be perfect.
Final words
That is it, and those are the five steps to turn your side hustle into a full-time business. In which steps are you currently? Let me know in the comment section below.
Thank you for reading.