8 tips for successfully running a side hustle
By ATB Financial 12 August 2020 4 min read
Running a small side business from home has become more popular recently, with many Albertans trying to give their finances a boost or finding new hobbies during the COVID-19 pandemic.
But where do you begin to start a side hustle? Whether you’re making and selling masks, infusing olive oil or shoveling snow, here are our top tips to help you turn your hobby, passion or idea into a side business.
1. Do your market research.
Do you see a gap in the market that you can fill? This is the seed of a great business idea. But building a side hustle solely on a hunch can be risky. That’s why it’s important to do some market research.
Your research doesn’t have to be exhaustive to be useful. It could be as simple as a few Internet searches or running a quick online survey for your network. You could also test out your concept on your friends and family. Anything that helps you figure out whether people will spend money on your idea is useful.
Do you see a lot of competition online or on social media, promoting the same thing you would like to start to sell? Just because there is competition doesn’t mean you shouldn’t go for it. But you should learn all you can about the challenge and think of ways you can stand out. That might mean having a small budget for advertising or thinking of ways to make your product or service different from the rest.
2. Define your goals.
Just like making any plan, you need to know your goals first.
Why do you want to start a side hustle? Is it to fulfill a passion, fill your spare time, connect with others, make extra money, or a combination of those things? Once you can define why you want to do it, you can start creating a plan to build your small business to reach that goal.
3. Understand the time commitment.
If you’re employed, working on your side business will have to happen in your own free time—time that could be spent with family or friends.
Are you willing to sacrifice that time? Be honest with yourself when you think about this. If your side hustle is something you enjoy doing and are passionate about, that time investment could be worth it. Otherwise, you might be putting more work on your plate than you want.
4. Make sure there are no restrictions from your current employment.
If you are currently employed, you must ensure your side hustle won’t interfere with your day job. Does your idea compete in any way with your current employer? Is there a conflict of interest?
There might be clauses in your employment agreement around these considerations. Confirm the details of your employment contract before you begin.
5. Be aware of the legal requirements.
When you charge money for a product or service, you must comply with the legal regulations of your specific area. Educate yourself about your industry and what the requirements are. You will need to:
- Understand any licenses and permits that your specific business would require. Every municipality has a unique set of rules. For some types of businesses, you might also need a federal business license. Learn about licenses and permits and find tools to help understand them at BizPal.
- If you decide to name your business, you’ll need to verify that the name is available, and register it. Learn about registering your business.
6. Understand the cost of doing business.
Consider what it will cost to start your side hustle—including permits, licensing and materials. If you want to go bigger, you should also consider things like building a website, a social media presence and paid advertising.
For some industries, like food and cosmetics, specific regulations must be followed that could require extra funds. Have you done your due diligence to determine these regulations and their costs?
Do the math on these startup costs and think about where you could find money to pay them. Will the revenue from your new little business cover them? Otherwise, do you have the cash to pay for them up front?
7. Keep accurate records of the financials.
You might be passionate and an expert at your craft, but running a business also means keeping accurate books. You need to have an understanding of the money going out and the money coming in. If you don’t record it, you won’t know if you’re making it or losing it.
A side hustle shouldn’t cost you a lot of money to start and is generally not a risky investment, but if you don’t track it, you’ll be in the dark. Keeping accurate financial records will show if you’re making money and how much.
Plus, tracking your income, expenses and overall cash flow will help with your income tax/business tax reporting at the end of the year. If you want to keep a separate bank account for your side hustle, look at options for start-ups or entrepreneurs. For example, ATB has a free business account for new businesses.
8. Ask for help if you need it.
There is lots of information, training and support for small businesses and entrepreneurs in Alberta. If you’re just starting and have bigger dreams for your side hustle, extra help might be just what you need. Don’t be afraid to connect with an expert if you have questions.
ATB Financial has many resources and programs for start-ups, entrepreneurs, small businesses and side hustles! You can check out our Entrepreneurs Guide to Starting a Business, or reach out to an ATB Entrepreneur Strategist for advice.