Ah, the art of the side hustle. Very likely one of the most used buzz words/phrases in the ‘professional’ landscape in recent months, after Zoom meetings and the associated fatigue. Miranda Dlamini, a finance graduate, personal finance enthusiast and content creator lent us her expertise on the topic and helped us bring you this complete guide to starting a successful side hustle.
Later in this guide, she discusses 5 key finance concerns relating to funding and running an income generating side hustle. But first, we’ll take a look at 5 tips to starting a side hustle that actually pays and give you 3 places to draw side hustle ideas from (answering the question of ‘which business should I start’) to help you figure your own hustle out.
SKIP TO: 5 key finance concerns relating to funding and running an income generating side hustle by Miranda Dlamini
Different people go into side hustling for different reasons. Side hustler A might do it to pad their income, side hustler B might do it to support or create career-changing opportunities (by building experience), while side hustler C may do it with the sole aim of one day becoming their own boss. If you’re only doing it to put yourself through school for instance, the elements discussed in this section might mean less (or more) to you compared to someone who hopes to one day be an entrepreneur on a full time basis.
Place your passion in the right place
The laws* of passion are not complicated. About 80%* of us fall into one of two categories. One, you do what you’re passionate about (for the lucky few who can afford to) or two, you are passionate about WHY you’re doing what you do (also referred to as life or the things we do for money). The other 20% is just winging it and passion is not even a real chat. All three of which are okay.
Realistically speaking, your side hustle, like your job won’t always be something you love or are passionate about. It’ll be something that brings in money period. Don’t waste away spending months and years trying to figure out what you’re passionate about in order to start a side hustle. Find something that works and place your passion on your WHY.
Prioritize without shame
Working an average of 8 hours every weekday is already tiring. With a new business on the side, you’re going to start losing many hours and maybe even weekends every other week to your new business. Suddenly you’ll no longer be able to fit in a catch-up episode of your favourite show, sneak in a date night on a Thursday, have a lazy lunch with friends or drive down to see your family during what has become a 2 hour weekend. The solution is to be clear about your priorities and nail your communication. The last thing you want is to find yourself out of a job, without a support structure or a business.
At work – Make sure you don’t blur any lines between work and side hustle. Don’t use the water cooler as a marketing tool at lunch or use work resources or company time to push your hustle. Honour your employment contract and get the job done first, always. If your work is school, then keep the same energy. Get your studying and assignments done, then work on extra cash. Last minute bargaining with God because you were too busy shipping orders won’t always work.
With loved ones – Now is a good time to keep those that really matter close. Share news of your new venture with your friends, partner or and/or family. Also let them know that your availability isn’t the same anymore so you might not always be socially available.
Your wellbeing – The little activities (that you won’t monetise) that really make you happy are what’s going to save you plenty of times. If your head starts overheating, take a break and do something that’ll take your mind of things.
A realistic side hustle approach
Being realistic is basic entrepreneur 101 even for people who are building a business that’s not starting out as a side hustle. You have to be able to explain things like your actual product/service, how it’s going to be used/add value, who is going to use it/pay for it and how you’ll get it to them/provide it. If ambition paid the bills, many of us wouldn’t even be looking the way of side hustles or ‘starting somewhere’. But it doesn’t. The less complicated and more practical a side hustle is, the better for you and your already strained schedule.
Make your idea practical by doing your research about the market, delivery, pricing, etc. Very important: If you’re solving a problem with your service or product, make sure the problem actually exists. It’s a math thing. You need to able to identify someone (general) who is going to buy your product or pay for your service in order to generate income. If the problem is non-existent and it’s just you, then the solution is likely useless and there can’t possibly be a target market for it.
Don’t quit before you get paid
Unfortunately, not all that glitters is gold coins and not all bags are money bags. Becoming your own boss might sound very attractive when you’re stressed at work, dealing with an impossible boss or swamped with a current project. More often than not, it’s not a good idea to quit because well, you simply can’t afford it with the 2 customers (your sister Kim and aunt Jermina) that you have.
If you are considering it though, the only time you should consider leaving your job for your side hustle is, at the very least, when it starts generating enough income to replace your salary or is making consistent income (with a high potential for growth) that you feel you can survive on. You’re going to have to be very careful with the decision you make here. Ask yourself: How realistic is it that my business is going to do much better when I can work 8+ hours on it every weekday? Do I have enough evidence to support my revenue projections?
And when you do move on, don’t burn any bridges, be graceful when you resign and again, honour your contract.
Draw boundaries everywhere
Don’t bank on drawing boundaries ‘as you go’. Sometimes we don’t even know we’ve gotten to the bridge until we start feeling the water under our feet. Define your boundaries right at the beginning. Below are some examples of boundary considerations with particular reference to time management and pricing:
- Am I undercharging or setting prices for my friends?
- Am I overcharging or selling to the wrong audience?
- What qualifies as a legitimate discount?
- Is it a ‘pick your brain’, favour, freebie or chargeable activity?
- How many hours am I committing to my business everyday?
- What must I make time for?
- Am I going out of my way to provide great service or adding on for free what my client/customer should be paying extra for?
Where to draw side hustle ideas from
Find a solution to a common problem
This might sound simple and that’s because it is. Many businesses were born as solutions to otherwise ordinary problems. Why not create an online mall because people just don’t have the time to be driving to the mall anymore? Or create software that replaces the graphic designer in small startups? Or, since everyone is wearing a mask, make a fashion forward one? Yes, you should be thinking about actual businesses that went on to make money from the above questions. Like them, your next side hustle may very well lie in the problems you experience day-to-day.
Analyze at your skills arsenal
You’ve spent years acquiring hard skills and now you could potentially make money from them. Think about the things you do really well that people would pay for.
Respond to an opportunity
Whether it’s an opportunity to create and sell or supply something because of a sudden event like the panorama or to acquire a new skill that you can profit from – give it a shot, some opportunities never come back around.
5 key finance concerns relating to funding and running an income generating side hustle by Miranda Dlamini
1) Where do I need to be mentally if I’m considering using my 9-5 salary to fund a side hustle?
“I think it’s important to determine your why before we go any further. Knowing why you’re doing something adds context and value to the action. [Once] you’ve determined your why it gives you motivation and creates the necessary steps in achieving [your] desired goal.
Next you’ll need to [draw up] a realistic budget that will assist you in allocating money from your 9-5 to fund your side hustle.
Having a budget is really important for achieving personal financial goals because it gives you control over how your money is spent and it optimises what you have [in order to] achieve your desired results.”
2) How should I approach funding for my side hustle if it needs a capital injection?
“Step one would be determining how much capital injection the side hustle needs. Once you know the amount, go back to your personal budget and redirect money to start saving for it. Ensure that your savings goal is SMART – Specific, Measurable, Attainable, Relevant and Timely.
I would highly advise against getting into debt to start a business, especially if you can save for it. However, if the side hustle is capital intensive and saving will [take] years, I would suggest getting an angel investor or government funding. An angel investor is an individual who provides capital for a business start-up, usually in exchange for convertible debt or owners’ equity.
There is a variety of small business development government funding available across different sectors. You can find out more information here [site currently down] or search the internet.”
3) When my side hustle starts generating income, should I reinvest it into the side hustle or pay myself immediately?
“This goes back to whether you’re starting the side hustle for extra income or to be a full-time business one day.
If you’re someone who’s looking to build a full-time business investing back into the side hustle is the best thing to do.
But what does reinvesting mean? It could mean different things for [different] side hustles.
Some may require more capital to grow so [you would be] reinvesting the profit to expand product offering or meet customer demand. Some may require human capital whilst others new upgraded equipment to produce better quality etc. It really all depends on the side hustle and what it needs to go from side hustle to full-time business.
How long should you reinvest? I’d say until the side hustle is consistently making an income that can afford to pay you a salary and make a profit. It’s not advisable to go from side hustle to full-time business when the business doesn’t make consistent income.”
4) How do I manage my finances when I have side hustle and 9-5 income?
“The first step would be to separate your personal income from your side hustle income. The easiest way to do this is to have separate bank accounts so there is no overlapping of cash flow. The second step would be having separate budgets where you can plan and manage the transactions of your side hustle separately from your personal expenses.
A side hustle budget is to hold you accountable for what you’ve spent vs how you planned to spend the income. If you’re looking to convert the side hustle into a full-time business you’ll need to do things differently compared to someone who has the side hustle for extra income purposes. That’s why I keep emphasising the importance of having a budget and sticking to one. ‘When you fail to plan, you plan to fail’.”
5) What are the things I should avoid when managing my side hustle income?
“Avoid not having a plan on how to spend that income, aka not having a budget (yes I take budgeting very seriously). When you have a side hustle, that implies that you’re sacrificing your time [to run the side hustle instead of doing something else]. So don’t [waste] your time by spending recklessly.
[Also,] avoid not being intentional about what you want to achieve from the side hustle. If you’re wanting to earn extra income that income must do something [useful]. If [you start a side hustle with the goal of one day converting it into] a full-time business, then your actions with the income should match that intention.”
Finally. There is no blueprint to side hustles. And as you go on, you might even run into a few individuals who succeeded skipping on the opposite side of all the ‘red business flags’ presented in this guide. Everybody‘ s journey is different somehow, so take everything in with a fifth of a grain of salt and customise it to your unique set of circumstances.
Follow Miranda for more cool personal finance content!
*Laws? Yes, type4girl laws. These estimations (80% vs 20%) are not a true reflection of actual statistics, it’s banter. Loosen up.