A side hustle is work done in addition to one's full-time job. It is generally done on a freelance basis to provide additional income. Side hustles usually start out as a passion or as the first phase of starting a company while you're still employed and don't have a ton of working capital.
If you want to grow your side hustle with a minimum amount of capital investment, it needs to be profitable quickly. Luckily, there are a few tactics that can help increase profitability.
1. Determine what it really costs you.
To make sure you have the cash flow you need to grow your side hustle, you need to determine its basic profitability. This means knowing the total costs of running your side business.
For example, outside of your time, what are the other costs it takes to provide the service? Subtract that from the revenue you get paid for the service. Then divide this “profit" by the number of hours you worked to provide the service.
This calculation is a serious accounting of your time, and can be done on a spreadsheet, in a notebook or using a project management app like Zoho or Trello. It can also help you decide if you need more working capital to eventually have a positive cash flow in your side hustle.
2. Find customers who are not your family or friends.
In order to build any side hustle that actually makes money, you need to find customers who you are not related to or you don't know as friends. While these people are a good place to start your side hustle, most entrepreneurs don't want to build a sustained business just from the people they know. (They also don't want to charge them the real value of the service they are providing.)
As with any other company, you need to find the people that have the pain that your side hustle solves for and who can pay for the solution. Start by reaching out to your broader social media network and get involved in online conversations that are relevant to your side hustle. Ask friends, family and current clients for referrals.
3. Bill customers on time and collect their payments.
One of the biggest problems for entrepreneurs who run a side hustle is that they have no experience getting paid by clients. They typically shy away from asking for payment for the service they provided.
Mary Carol Fitzgerald, a professional photographer in Florida, had difficulty tracking clients that owed her money (or had already paid).
Project revenue from your business over the next six months against your projected expenses. If this number is negative, you may need to borrow more working capital.
"They would get lost in my inbox," Fitzgerald says. "I never learned how to use Excel, so I could never get organized. I felt alone and didn't know which clients to follow up with to collect my money."
To avoid this situation, clients should be billed and asked to pay in advance if possible (or at least a deposit). If this is not done, clients need to be billed immediately following providing the service or delivering the product. If they don't pay in a short period of time, you need to have a system to follow up. There are many apps that can help such as PocketSuite and Rosy.
The more cash flow you can get from paying customers, the less working capital you will need to add to your side hustle to grow it.
4. Schedule appointments online.
Another issue that can hold back a side hustle from growing into a profitable business is actually getting the clients scheduled. There can be a lot of back and forth through phone calls, emails or texting since you are not always available to respond.
A lot of online scheduling systems can be utilized like Thryv or Calendly. These services make it easier for clients to get on your calendar—and they can book 24/7.
5. Learn how to convert clients to repeat customers.
If you are going to grow your side hustle, then you must retain clients. It is much more expensive to continually find new clients than to retain existing ones.
Chinwe Onyeagoro is the CEO of PocketSuite, which "empower[s] small businesses and professionals to run their business all over text."
Onyeagoro says the best way to grow your income is by keeping the clients you already have and getting them to spread the word.
"[You need to] deliver amazing service and, before you complete the appointment, set up their next booking," she says. "Give them a discount if they bring a friend with them on the next visit."
If they do not book an appointment right away, then follow up with them at least monthly to offer your help again. This shouldn't be done in the form of “Are you ready to buy from me again?" Instead consider using a content marketing strategy that shows you as an expert in the field with answers to their problems. Repeat customers will require less of a marketing investment and lower the amount of working capital that is needed.
6. Determine if you need a small business loan.
To support a side hustle, the entrepreneur may need more working capital to boost their cash flow. You may want to look into business cards or small business loans for short-term solutions to growing your side business. Project revenue from your business over the next six months against your projected expenses. If this number is negative, you may need to borrow more working capital.
Every side hustle in the long run has to be profitable if it's to grow. If it isn't, it's a passionate hobby isn't really a business.
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