The XYZed has scoured the internet for the most popular questions asked by self-starters – and now we’re answering them. We spoke with Dr Richard Laferriere, Lecturer of Entrepreneurship and Innovation at Swinburne University of Technology to work out what happens when your side hustle starts to take on a life of its own.
If you’ve got an additional income stream outside of your current career, you might be looking to build it into something bigger. But how do you know when it’s time to transition? What are the rules for dropping your full-time job and turning a side project into a small business?
Knowing when the time is right
“It is great that you have uncovered or discovered a revenue stream for something you enjoy doing, but it may not be a feasible business just yet,” says Dr Laferriere.
You need to put the work in to find out. He encourages those keen to expand their side hustle to – at a minimum – engage in some research and begin by completing a business model canvas. This can help you understand if your business, product or idea is feasible, has a sustainable competitive advantage and a large enough potential customer base to succeed.
“There are many ups and downs when running a side hustle while still working full time. The biggest downside is losing something that I think is one of our most valuable resources – time,” says Dr Laferriere.
Making sure you’re not stretching yourself too thin is an important consideration. Doing too much at once can lead to burn out, especially if the side hustle starts feeling like a burden. It’s also important to not let it become a cost to others, including your current employer.
Keeping others in the loop
“As a side hustle grows it can very easily creep into your work hours. Answering emails, taking calls, using office supplies and equipment – any of these little things is actually using your paid time or your employer’s resources for your own gain, and that is wrong,” says Dr Laferriere.
According to Dr Laferriere, it comes back to what is right and respectful to do – and anyone engaged in a side business needs to consider what you are allowed to do and not allowed to do based on your employment contract, and what you feel is correct.
“In business as in life, we all should be acting ethically and with integrity. You do not want to breach your contract and you do not want to disrespect your employer and your co-workers by using them for your gain,” he says.
Being open and honest with your boss is important, especially if your side hustle is starting to take up more of your time. The talk with your employer can be hard, but it also can be very supportive, especially if they are an entrepreneur as well.
Setting yourself up for success
Running a side hustle may make you a little extra revenue in your free time, but running a business requires more time, more resources, more planning and a lot of hard work. When you make the leap, you’ll also be losing the regular income stream your current career provides.
The key here is making sure you are prepared and positioned to be able to go a long time without receiving a regular paycheck. When you are able to pay yourself again, it could very well be much lower than what you were earning before, so again you need to have a significant amount of savings.
“Before deciding to finish employment and take that pay cut for the freedom that comes with it, I would encourage you to look at your finances and savings over a period of time. This should be one month at absolute minimum, but ideally at least three,” says Dr Laferriere.
“See where you spend, what you save and where you can make some cuts, to get a sense of how much you need to maintain the lifestyle that you and your family need to maintain. And consider how you would be placed to deal with emergency home and family expenses if they occur.”
Once you know this is will be a lot easier to look at your level of savings and see if you have enough and access to enough money to get through the initial phase of establishing the business.
Securing the finances to help you turn your side hustle into a small business can be daunting, but at RedZed, we help make a huge commitment less complex. Because every individual’s situation is different, our credit decisions aren’t made by computers.
Just like you, our experts are living, breathing and empathetic. Your best interests are always at the front of our minds. To find out more about a RedZed loan you can visit redzed.com or call on 1300 722 462.
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