How to Make Your Side Hustle Profitable

So far, in 2021, an astounding number of Americans have created a side hustle—one in three people, or 34%. An additional 24% are still planning on launching side hustles before the year’s end.

Why are so many people drawn to these side gigs?

According to the data, answers run the gamut, with many citing a need to have fun (38%), while others just want to learn new skills (28%). Sixteen percent want to test out a business idea without the financial implications of going full throttle. The main motivator, though, comes down to one compelling thing—passive income, of which almost half agree.

Side hustles are great in theory, but not so much if they don’t flourish. How can you make sure yours is profitable?

Figuring out the Logistics: When and Where Will You Operate?

At this point, we’ll assume you’ve decided on your side hustle of choice—whether it’s product- or service-oriented, whether online or in-person, etc.

If not, pause, figure that part out, and meet us back here.

Okay, let’s continue.

The type of business you want to do informs the answer to these two questions: when you’ll find the time to “hustle,” especially if you have a day job, and where you’ll conduct business. You might work from home as you sell vintage items on Etsy; you may be in the field, photographing weddings; or, you might need to rent a brick-and-mortar to sell clothing items.

Whatever the case may be, answering these two questions is the important first step to ensuring your side hustle gets the attention it deserves. It also looks better to potential investors when you’ve considered these aspects. Start researching your options—and time block your calendar to hold yourself accountable for following through.

Consider Your Budget (And Then Consider It Again)

Again, your budget depends very much so on the answers to the questions above.

Are you financing a franchise? Ordering a bulk shipment of wholesale items for resale? Offering yoga classes in the park?

As you can see, small business budgets vary drastically depending on the nature of the side hustle. In general, though, you’ll need to work out some numbers, accounting for things such as:

• Any start-up funds, such as labor or materials
• The total start-up costs
• How much revenue you’ll need to support your business
• Staffing, if necessary
• Equipment, whether buying or leasing
• Expected profits

Does the thought of fixed vs. variable costs hurt your brain? Are you completely at a loss for how to estimate profit (for future reference, it’s sales – total cost = profit)?

If so, never hesitate to outsource certain parts of your business. If you’re a money person, great! You can likely build a budget plan in no time. If not, use the tools at your fingertips to craft a more well-rounded business plan.

Speaking of which—

Tools Are at Your Disposal; Use Them

Tools are exactly what their name suggests, and not many an entrepreneur gets far without them. The point of tools is to allow you to work smarter—not harder. Depending on the tool, you can stay more organized, have a more optimized payroll process, become better with scheduling, have improved communications with clients, etc.

There’s a tool for everything.

Some of the best money-making tools out there today include the likes of:

• Feather—a content creator perfect for visual side hustles, like fitness instructors
• Patreon—an excellent way to allow your most passionate fans to donate to your side hustle, helping to fund it
• Anchor—an all-in-one platform designed to make podcasting easy, perfect for content creators
• Kajabi—a software program that allows you to create courses (no experience necessary)

These are a few of the many, many tools available for you right now.

But don’t forget that resources are everywhere—not just in the form of an epic software program. Your best tools might be someone like your parents, who’ve owned their own businesses, or a colleague you look up to that writes their own ebooks. Even your tax attorney is an excellent tool for learning about finances.

Read up on Small Business Taxes

Speaking of taxes—you didn’t think we’d forget about those, did you?

Spoiler alert: it costs money to work for yourself. In fact, most entrepreneurs (and tax experts) suggest you save anywhere from 25% to 30% of your income every year for tax purposes.

Some tax tips for small business owners include:

• Keep records of everything, such as receipts
• Match income received with the income reported to the IRS
• Keep your business and personal expenses separated (and, your side hustle from your day job separated)
• Use an accountant for business advice, retirement help, monitoring of gross and net profits, etc.

Working with an accountant about your taxes can help you determine other things, too, such as whether you should take a bonus this year or wait until next; whether you should rent or buy a space; and how to grow your business in general.

From Side Hustle to Entrepreneur Expert: You’ve Got This

Are you ready to quit the 9-to-5 so you can work 24/7 doing something you love?

Whether you’re looking for active income, passive income, or just a way to diversify your portfolio, there’s no better way to do so than by launching a side hustle.

There’s a reason so many people are doing it—because it could change your life. Are you willing to put in the effort now to make your side hustle profitable later?

Follow the tips above to get started. Keep coming back for more business advice as you need it. And good luck!