The science of a successful side hustle

Salaries that aren’t keeping pace with rising costs are resulting in many South African consumers having to tighten their belts or look at ways of supplementing their income.

Starting a side hustle is one way of doing this. It’s something that gained traction during the COVID-19 lockdowns, when people stuck at home had time on their hands to think about ways of making more money. This coalesced with new ways of working and the adoption of technologies that made it easier and more viable to run a business from home.

If you are thinking about doing something in addition to your existing job to make ends meet or achieve some of your life goals, what do you need to consider?

Neven Narayanasamy from specialist loan provider DirectAxis canvassed some of his expert colleagues to find out. Here are their top tips:

Use your skill set and interests to meet a need

A good idea doesn’t automatically become a good business. You need the skills and enthusiasm to make it happen. If you’re an outdoors person who loves animals, a dog-walking business could be the perfect way to make some extra money – but not so if you prefer being at home behind a computer.

On the other hand, if there’s an established, thriving bakery down the road, it may be hard to establish a cupcake business, no matter how much you love icing and sprinkles.

Side hustles tend to be successful when there’s an overlap between passion and skills, and the need for a product or service. For example, if you love taking pictures and nobody’s photographing school matches or other sports tournaments, there may be an opportunity to set up as a freelance photographer.

Have a business plan

Start with a summary outlining what your business will do and the problem it will solve or the need it will meet. If you have a lot of friends with pets and you’re good with animals, then a pet-sitting business may earn you some additional income.

Next, consider whom you’re targeting and how best to reach them. Your marketing plan could be as simple as a poster at the local shopping centre, or a social media campaign in which you invite friends and family to support and start spreading the word.

Depending on the business, there may be startup and other costs you need to consider for it to be successful. You may need to buy equipment, stationery, supplies or cover the costs of more airtime or a faster, uncapped Internet connection. You may also need some professional advice.

Narayanasamy says starting a side hustle is one of the reasons people apply for personal loans because the process is straightforward and quick, and once the loan is approved, the money is transferred directly into your account.

Make sure you’re compliant

It’s generally a good idea to start small and scale up. This will allow you to assess the market and decide if, and how quickly, you want to grow your business.

Even though you may be running a very small business, earning a few rand here and there, there may be regulations and legislation with which you will need to comply.

If you’re walking dogs in your spare time and earning just a few hundred rand a month, you may think there’s no need to worry about any of that. But what would happen if one of the dogs in your care gets away and bites someone or attacks another dog? Similarly, are you indemnified or insured if one of the animals you’re pet-sitting gets ill and dies?

You will also need to find out if you require a licence. Flying a toy drone as a hobbyist is one thing, but commercial operators are required to register their drones and obtain a remote pilot licence.

Even if you’re starting small, it’s worth thinking about these possibilities from the outset. Do some online research – and if you’re still in doubt, get an expert opinion. Making the time and taking the effort to do your homework could save you a lot of trouble and money in the long run. It will also help establish you as knowledgeable and professional.

Finally, think of the tax implications. Your side hustle could give you that bit of extra income you need to take the pressure off each month, but if it earns enough to put you into the next tax bracket, you could be working just to pay the taxman.

“There are pros and cons to a side hustle, and before committing or borrowing money to get started, it’s worth thinking these through. If you do, your chances of success will be incrementally better,” concludes Narayanasamy.

Image credit: stinne24/Pixabay

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