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  • Writer's pictureKevin - Financial Tutor

Top 5 Things to Know When Starting A Side Hustle

So you're looking to start a side hustle. Congratulations. But before you quit your job to devote yourself full-time, you must ensure you know what you're doing.

Some people often quit their primary hustle once their side hustle gets large enough to support them, while others never even make enough to pay their internet bill. Ideas are a dime a dozen. Just because you have a game-changing idea does not guarantee you a viable business. Managing a side hustle is ruthless and requires immense self-discipline and sacrifices. Prepare yourself mentally to be scrappy and critical.

Starting a new venture is a phenomenal experience. Every day is a new challenge. It keeps your life exciting, not to mention the money is life-changing if you succeed. Side hustles might change the trajectory of your life and career completely for the better. It may help you expand your network, learn new skills, and even land new jobs.

Side hustles are also a gateway into the world of startups and entrepreneurism. With every passing day and every new customer you serve, you can build your side business into a full-fledged money-making machine.

Here are the 5 steps we suggest you should follow to maximize the chances of your success:

1) Remember to Pen Down Your Idea

So the first step is to figure out what you want to do. Who is your customer? How are you going to reach them? Write it down on paper or somewhere on your computer. You may know it right now, but you might forget it when the times are rough.

Ideally, your side hustle should be online and in the same field as your job. This is because you're expected to be proficient in this role, and the learning curve will be much less steep. The chances of success are much higher because you already know everything about your job. The online mode is preferred because it is cheaper than setting up a physical store, and it allows you to connect with customers worldwide and not just locally.

  • For example, if you're an accountant as per your job description, your side hustle could be accounting online for small businesses and startups.

  • If you're a wrestler, your side hustle could be selling your digital workout course, diet plan and videos.

  • If you're a cheesemaker, your side hustle could be making cheese from your kitchen and then shipping it fresh to customers.

2) Keep your job till you get a predictable stream of income

As enticing as quitting your job seem, you must hold your horses. Suppose you decide to become a freelance marketer. After working 50 hours at your job every week, you are left with 30 hours you can devote to your side hustle every week.

Once you get enough customers to fill in all 30 hours, start reducing your hours at work. Steal time from your day job and put it into your side hustle, but do not quit your job till your customers pay you more than your job or you get fired for not completing your hours.

3) Price Leadership/ Product Differentiation

Modern businesses have only two ways to survive and make money. Either charge a lower price or deliver a better product.

Lower price means keeping your costs and profits low but relying on the volume to make profits, while product differentiation means specializing in a niche field and charging a high amount to a few customers.

Both strategies have their pros and cons and are suitable for different types of businesses.

For example, a lawyer can choose to specialize in a single niche field, like bankruptcy or corporate insolvency and charge a high price for specialized service from limited customers, or offer a wide range of the services to a larger pool of customers, at a price cheaper than the competition.

For a service-based online business, like accounting, graphic designing, or writing, a low-cost strategy is advisable in the beginning. As you build a client base, increase your price and try to specialize in a specific industry.

You can use the following chart to decide which strategy to follow:

4) Collect Reviews - Kaizen Costing

Have you heard of Kaizen Costing? It means making small but constant improvements. Every month you are better than you were before. Toyota is a prime example.

All large companies follow it to reduce their cost and increase their efficiency.

How can you implement it? Ask your customers. Collect as much feedback and data as possible from your customers to find out your strengths and weakness. Improve your strengths and cut loose your weakness. Follow it regularly for weeks and months and the results will speak for themselves.

5) Keep learning new skills - Get online courses to stay relevant

Remember, businesses are unpredictable. They can disappear overnight. You need to adapt to survive. The law of the jungle is survival of the fittest. Not survival of the strongest. You need to be flexible and reduce dependency on single factors.

For example, if you rely on Facebook ads for your customers and Facebook bans you tomorrow, or Facebook changes its algorithm and your ads stop performing, your business fails overnight. You need to diversify to stop this from happening.

To learn new skills, you must remain a student throughout your life. Enroll yourself in online/ offline MBA programs or Master's programs. There are two reasons for this.

First, you can't learn in isolation. YouTube is a great platform and hosts all the information in the world for free, but it cannot provide you with the critical thinking skills that come from discussions. Moreover, the certificates from completion of these courses also make you more employable should your venture fail.

Secondly, the courses are curated systematically. Unlike YouTube, where you learn based on curiosity and suggested videos, predefined courses teach you holistically.

Don't do these courses to stack up your LinkedIn profile or resume. Do it to learn essential concepts and skills that you will need in your venture. Remember, 95% of all successful founders are graduates, and you are 9 times more likely to meet a founder with a PhD, than a college dropout founder [1]

Most online courses are free or pocket-friendly and allow you to learn at your own pace. EdX hosts some courses that might interest you.

I need to tell you a lot more, and I hope you enjoyed reading. See you another time.

For those of you who stuck till the end, ice cream is on me.

Resources: [1]

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