Thinking of turning your side gig into a full-time business? Having clients isn't enough to ensure solid cash flow, and funding your career and life with only business credit cards isn't a solid business plan. You want to make sure you have the right mindset.
What do I mean? Well, when you start your own business and become a solopreneur, you almost have to expect the unexpected. Hopefully things will go great, and you'll never have a bad day in your new career. But when you work for yourself—and you're paying your benefits, relying on clients to send you checks on time and finding new clients and customers—uncertainty with your cash flow is almost a given. At least at first, you have to be a little comfortable with being uncomfortable.
These three entrepreneurs know first hand what I'm describing. You may want to take a few cues from them as you start to look for your own side hustle.
1. Keep your side hustle on the side until you're ready.
Christina Moss owns Florissant, Missouri-based MossFinancials, which offers accounting, bookkeeping and tax services.
Until February 2018, MossFinancials was a side gig. Moss was working for a small real estate development company, while preparing taxes and providing business consulting and setup support on the side.
“All while being a single mom and working a full time," Moss adds. "Mingled in there, I managed to complete my bachelor's and graduate degree."
At first, she loved her day job. But when she eventually became disillusioned with the money and management, Moss made the decision to quit and turn her side gig into a full time one.
The good news for Moss is that she started her business with a full understanding of how to do her own taxes and to do things like using business credit cards responsibly and managing her cash flow and working capital.
I would recommend getting to a point in your business where you're at least able to pay off your necessary monthly expenses before quitting your secure job.
—Brianna Brannan, owner, Digital Nomad Designs
"There are good days, and there are terrible days," Moss admits. "I get anxious at times because the income that I once know and could depend on is gone. In college, they show you how to be an accountant. They don't teach you how to run your own business as an accountant."
But she doesn't regretting starting her own business.
"I do love the fact that I can work as hard or not as I want," she says. "Everything I do is in direct relationship on how my business will grow—and no one else's."
2. Find steady clients.
Joshua Lisec has been a full-time professional ghostwriter since February 2013. (His company is The Entrepreneur's Wordsmith.)
Before that, he worked in a cubicle for a telecommunications company, writing manuscripts like standard operating procedures and onboarding manuals and freelanced on the side. Three months before Lisec left his desk job, he landed his first monthly retainer contract. Lisec received $1,500 a month, working for a nonprofit and writing education curriculum.
“That was the game changer for me," he says. “Previously, I'd gotten tiny gigs here and there to supplement my income."
Lisec took the leap and quit his salaried job. His $1,500 a month was able to cover, as he puts it, “the living expenses of a single guy living in a Midwestern city. All new business I brought in—one-off gigs and beyond—went toward my emergency fund, long-term savings and fun money."
Along with the retainer, Lisec also used a business credit card to manage expenses. He advises owners to look into business credit cards that offer cash back rewards.
"Put every single business expense on that sucker, pay the thing off every month, and pocket that sweet cash back to use for a reward, whether it's a getaway or a relaxation massage. Business credit cards are a no-brainer," he says.
During the work week, when he wasn't putting in time for his main client or tackling new projects, he was attending business networking events and telling people about his ghostwriting services.
"In-person events alone accounted for 90 percent of my business in the first few years. By year two in business, I was earning roughly my old W2 salary," Lisec says.
He also used what is sometimes called an OPA strategy.
"OPA stands for 'other people's audiences,'" Lisec says.
At his accountant's office, he brought in free boxed lunch and delivered a PowerPoint presentation offering practical tips on business writing.
There was no catch. Lisec was just hoping to get his name out there, and it worked. He spent about $250 on lunches and brought in $9,400 worth of work.
3. Do your own version of on-the-job training.
Brianna Brannan is the owner of Digital Nomad Designs, a web design agency based out of Van Nuys, California that builds and redesigns websites mainly for e-commerce and podcast brands.
“Before starting my business, I was working at a pretty successful startup," she says.
Brannan was there for almost four years. During the last 12 months, she started thinking about running her own business.
“I figured I would teach myself more in-depth about web design and development," she says. “Whenever I was done with work, I'd go make practice sites while watching YouTube and Skillshare video tutorials. After a couple of months of practicing, I took on my first couple of clients at really low pay."
Eventually, Brannan began working with higher-paying clients.
“I got to a point where I'd leave work, maybe hit the gym, and go straight to working on my own business until 11 or 12 at night. I remember times where I was taking client calls during my lunch break at the startup job."
Brannan quit after her side-gig income began matching what she was making at her full-time job.
“I went a full month matching my income before deciding to put in a one-month notice," she says. "I also got to a point where I didn't have enough time to give my full attention to both my full-time job and my clients, so I had to pick one."
While not everyone with a side gig may feel that they can wait that long before quitting their day job, Brannan suggests trying to get close to that as possible.
“I would recommend getting to a point in your business where you're at least able to pay off your necessary monthly expenses before quitting your secure job," she says.
You also will want to put aside income for each project, for your estimated and year-end taxes, Brannan says.
Making the leap from side gig to an actual business isn't easy, of course, but that's the whole point of starting off with something that goes from part-time to full-time. You're building a business slowly, brick by brick, forming a solid foundation that you can move into seamlessly.
Could you quit your day job and use business credit cards or small business loans to run a company while you look for clients? Sure. But that's a lot of pressure to put on yourself, and it is a risk. What if the clients don't come? You still have to pay off your business credit cards or small business loans, hurting your cash flow.
Start with a side hustle during the evenings or weekends and you'll eventually know if quitting your day job is a calculated risk or a crazy one. Even if it somehow doesn't work out, you'll probably always feel good about taking a calculated risk, which is, after all, based on reasonable expectations of success. Crazy risks are just crazy.
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