Eighty-one percent of Americans who currently have a side gig are interested in taking it full time, according to a recent SunTrust survey. More than half of Americans (54 percent) reported having or pursuing a side hustle at some point to make extra money to live their #bestlife.
People who reported a side hustle generated $8,794 per year on average, with millennials (age 23-38) making almost 20 percent more than Gen Xers (age 39-54) and 46 percent more than Boomers (age 55-73). The top reason for pursuing a side hustle among millennials is to generate additional income for saving purposes, while Gen Xers and Boomers cited making money for leisure activities.
“There’s a reason the gig economy is so hot – it can be fun and financially fruitful,” said Brian Ford, financial well-being executive at SunTrust. “For some, a side hustle is a creative outlet outside of the daily grind. For many others, it’s a means to achieving the financial confidence and freedom to live life on their own terms. Whether the goal is to earn extra cash or take a side gig full-time, there are tools and services to help people propel their side hustle forward.”
So, what gets in the way of taking a fringe earning situation full time?
The overwhelming majority of those looking to make their side hustle their main gig face obstacles from not having enough time to dedicate to it (36 percent) to not having enough financial capital (30 percent).
Here are some tips to help would-be full time entrepreneurs make the grade in the school of side hustle:
Time the Tipping Point
Determine when it is best to take a side hustle full time by weighing the trade-off of investing more time on your side gig versus your primary income source. Be mindful of the opportunity cost of sacrificing the stability of your total compensation package for unpredictable earnings potential.
Focus on the Fund-amentals
Make sure to develop an initial business plan, goals and competitive strategy, and decide how to fund your business and pay yourself. You’ll also want to include business cash projections and their reliability along with other funding sources.
Study the Setup
Determine the best legal structure for your business in conjunction with business advisors, such as an attorney and CPA. You’ll also want to understand regulatory issues in your industry, file appropriate permits and licenses and register your business and domain name.
Build a Budget
Develop a budget and use it to regularly track your progress against planned revenues and expenditures. A budget will also allow you to view financial priorities and targets and measure actual business performance against projections. These types of guardrails are critical when you are busy, and cash-on-hand can’t absorb cost overruns.
Track Your Finances
Separate personal and business finances with a business checking account. Set up online and mobile bank account access to monitor your daily cash position, pay bills and make easy transfers.
Bank on Bookkeeping
Set up financial software to establish good bookkeeping habits and automate recordkeeping. Considering linking your checking account and your financial software so you can easily record income and expenses, track receivables, pay bills and manage inventory.
Work the Perks
Use credit or purchasing cards for expenses. Business credit cards offer tools to easily identify costs and manage employee spending limits and track usage. Online account access provides greater visibility into daily spending, and some cards even offer reward points or cash back on certain transactions.
Set Up for Sales
Ramp up revenue faster than costs and expenses by focusing on actions that have the greatest impact on sales and building a customer base during the crucial early days.
“As someone who took my photography side hustle into a full-time career, I knew that confidence in myself, my craft and my finances would be pivotal in this big decision to start my own business,” said Evan Ranft, a professional photographer based in Atlanta. “I’ve taken a closer look at smarter ways to budget so that I can live my best life on my own terms, whether I’m saving up for a new camera lens or crossing a new destination off of my travel bucket list.”