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When To Make Your Side Hustle A Full-Time Gig

February 1, 2022

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Working a side hustle is becoming more common these days. In fact, 1 in 3 Americans reported having a side job in 2020. Another 24% of people surveyed said they planned to start a side gig in 2021. And my best bet is that you have one, too!

I’m also going to assume your side hustle is already thriving. Or, you just enjoy doing your side job more than your actual job. Either way, you’re probably at the point where you want to take your side hustle full time. 

And if that’s the case, you’re not alone! There were more new business applications in 2020 than in the last 15 years combined. But that doesn’t mean you should quit your day job just yet. 

You need to be sure you’re ready to go full time with your side business before you leave a steady paycheck. And once you’ve achieved a few key milestones and laid the groundwork for your (soon-to-be) business, then you can turn your part-time money into a full-time living.

So, what exactly is a side hustle? Should you quit your day job to do it full time? And if so, when is the right time to do it?

Let’s dive in and find out:

What is a side hustle?

First, let’s talk about the side hustle and what it’s all about. A side hustle, side job, or side gig is anything you do part-time (in addition to your actual job) to make money. Whether you bake cupcakes, design websites, or run an online store. 

If you’re like most side hustlers, you started the side gig to earn more money. So you could use the extra cash to pay down debt, save money, or invest it for the future. 

Or, maybe you were affected financially by the pandemic. And you had no choice but to start a side hustle to help make ends meet. Either way, you took a risk and created something new on the side. And now, you’ve realized you might want to take it full time.

Should you quit your full-time job to do it?

There’s an opportunity to make a lot of money by investing in a side gig. But the reality is, your full-time job helps make the side hustle happen — at first. Because if you don’t have a way to support yourself financially, you definitely won’t have the resources to invest in your side gig.

In other words, choosing to leave your full-time job is not a light decision. And you need to be sure that you’re ready to be self-employed when you decide to quit. Because once you leave a steady job, there are new responsibilities that come with being a business owner. 

Plus, if you’re hesitant at all about quitting, you can still make full-time money doing a part-time gig. For example, this 25-year-old marketing coordinator earns $7K a month tattooing eyebrows on the side. And this 31-year-old startup founder makes $120K a year recording TikToks part time.

But that doesn’t mean you shouldn’t go full time! You just need to make sure your side hustle is profitable first. Then, you have to stay disciplined with your time and produce your very best work. And if you can commit to doing that, you can grow your side hustle into a full-time gig.

5 Signs You’re Ready to Take Your Side Hustle Full Time

Now that you’ve got the basics down, let’s cover the milestones and groundwork for going full-time with your side job. Achieving each step is pivotal to setting you up for success. And this process ensures your side hustle is ready (or at least as prepared as possible) to be a fully profitable business.

1. When you love your side hustle more than your job

Long before you decide to go full time with your side gig, you want to be sure you actually love what you do on the side. When you enjoy what you do, income naturally follows. 

In other words, if you aren’t passionate about doing the work it takes to go full time, you might struggle to make your dream into reality. After all, once you’re self-employed, the results are totally up to you. AKA, if you don’t show up every day, you can’t run a successful business. 

For example, maybe someone provides research as their side hustle. But they quickly realize researching for clients is not their cup of tea. As a result, the quality of their research suffers. And the once booming interest in their service might also dwindle.

On the other hand, let’s consider a freelance photographer who loves their side job. Because they’re happy doing what they’re doing, they put out great work. They are excited to serve their clients. And they are constantly looking for ways to learn and improve. And, as a result, their work improves —and their client base expands. 

Here’s what it comes down to: If you love your side hustle, you’re more willing to work hard doing it. Which means you’re more prepared to go full time. Because when you consistently show up for your business and your customers, you have a better chance at turning your side hustle into an actual business.

2. When your side hustle can cover all major expenses

Once you’ve confirmed your passion for your side hustle, you need to make sure the job can cover the bills. Going full time without figuring out your financials is an enormous gamble. And not having enough capital is why most small businesses fail

So, you need to be sure you have a profitable side hustle before you go full time. First, map out your monthly expenses. Then, project what your side hustle can cover for the next 12 months. And finally, add in the costs it will take to start and run your side hustle. You can easily do this in Google Sheets or use a free budget tool like Mint.

If and when you can at least cover your major expenses (shelter, groceries, utilities, transportation, insurance, etc.), you can consider going full time. And that might mean you have to eliminate some unnecessary expenses to make it work. 

If you really want to turn your side hustle into a business, you’re going to eventually have to make some sacrifices. Whether it’s eating at home to save money or skipping the daily Starbucks drink, there will be compromises you have to make along the way.

3. When you’ve saved enough money to cushion challenges

Even if your side hustle is paying well (and you can more than cover your expenses), you still need plenty of cash saved up before going full time. The chances are good that you will need a little cushioning for challenges along the way. 

For example, you might not have work for days or even weeks at a time. Or, you might get sick and need time off to recover. Or, the market might change and your service or product becomes obsolete. The point is that you need money in your savings for when things go south.

So, before you quit your full-time job, you need to save enough money to cover 12 months of your basic expenses. That way, you can prepare for the difficulties of starting a business and feel sure that you always have enough when challenges come your way.

For example, if you need $2K a month, you’ll need $24K in savings. But that doesn’t include the money in your emergency fund (which should cover 6 months of basic expenses). Meaning, at $2K per month, you’ll want to add another $12K to your nest egg before you go full time.

Saving up this amount of money can be  difficult. And it’s not something you can achieve in a short amount of time. But don’t get too intimidated by the amount of money you need to save. Instead, just focus on saving a little every day (or week or month). And slowly, but surely, you’ll get there.

4. When you feel confident managing your taxes, health, and retirement

Once you go full time with your side hustle, you’ll have to start paying your own business taxes, paying for health coverage, and managing your retirement. So, you want to be prepared to take those tasks on before you quit your job. 

First, predict how much you’ll owe on taxes with a self-employment tax calculator. Then, incorporate that amount into your business costs or basic expenses. And when it’s time to do your taxes, you can either file them yourself, hire an accountant, or upgrade your free tax software to the self-employed version.

As for health insurance, make sure you can afford a year’s worth of coverage before going full time with your side job. You can see what options are available in the Healthcare Marketplace. And you can find out (based on a projected income) how much it will cost per month to enroll.

Finally, you’ll need to figure out how to roll over your 401K once you leave your job. And if you don’t already have a personal retirement account, you’ll need to set one up. Whether it’s a traditional or Roth IRA, Solo 401K, or something else entirely, you’ll need to decide what retirement plan is best for you

That way, you can continue to contribute to your retirement and determine how much money you need to set aside (each week, month, or quarter) to reach your goals.

5. When you have a plan for making the side hustle a business

You want to have a solid business plan in place before going full time. It's important to lay out a clear path for success and make sure that your side hustle is actually a sustainable and profitable business. 

A business plan should describe your business, its offerings, and how you plan to make money. It should predict your operating costs, how often you’ll get customers, and what those customers will produce in revenue. In essence, it should show your company’s profitability.

At first, the business plan will be just for your eyes. That way, you can understand the profitable path toward full-time income. Use it to guide your business decisions. But eventually, you might also need it for a loan or investor in the future.

Don’t spend too much time trying to make your business plan perfect. As you learn more about your business, it will evolve and change over time. And, as a result, your business plan will change right along with it. 

Plus, if you want to make your side hustle into a self-sustaining business, you’ll also want some kind of documentation for delegating work. We call it writing your business playbook. And it keeps all your top plays documented in one place. So anyone can play any position (and run your business without you successfully).

Listen, we get it — taking a side hustle full time is a risky move. But that doesn’t mean you can’t set yourself up for success. As long as you prepare and put in good old-fashioned hard work, you can get out there and make your side hustle a successful business!

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Article

When To Make Your Side Hustle A Full-Time Gig

February 1, 2022

Jump to a section
Share it!
Sign up for our newsletter
You're all signed up! Look out for the next edition of The Manual Weekly coming Wednesday am!
Oops! Something went wrong while submitting the form.

Working a side hustle is becoming more common these days. In fact, 1 in 3 Americans reported having a side job in 2020. Another 24% of people surveyed said they planned to start a side gig in 2021. And my best bet is that you have one, too!

I’m also going to assume your side hustle is already thriving. Or, you just enjoy doing your side job more than your actual job. Either way, you’re probably at the point where you want to take your side hustle full time. 

And if that’s the case, you’re not alone! There were more new business applications in 2020 than in the last 15 years combined. But that doesn’t mean you should quit your day job just yet. 

You need to be sure you’re ready to go full time with your side business before you leave a steady paycheck. And once you’ve achieved a few key milestones and laid the groundwork for your (soon-to-be) business, then you can turn your part-time money into a full-time living.

So, what exactly is a side hustle? Should you quit your day job to do it full time? And if so, when is the right time to do it?

Let’s dive in and find out:

What is a side hustle?

First, let’s talk about the side hustle and what it’s all about. A side hustle, side job, or side gig is anything you do part-time (in addition to your actual job) to make money. Whether you bake cupcakes, design websites, or run an online store. 

If you’re like most side hustlers, you started the side gig to earn more money. So you could use the extra cash to pay down debt, save money, or invest it for the future. 

Or, maybe you were affected financially by the pandemic. And you had no choice but to start a side hustle to help make ends meet. Either way, you took a risk and created something new on the side. And now, you’ve realized you might want to take it full time.

Should you quit your full-time job to do it?

There’s an opportunity to make a lot of money by investing in a side gig. But the reality is, your full-time job helps make the side hustle happen — at first. Because if you don’t have a way to support yourself financially, you definitely won’t have the resources to invest in your side gig.

In other words, choosing to leave your full-time job is not a light decision. And you need to be sure that you’re ready to be self-employed when you decide to quit. Because once you leave a steady job, there are new responsibilities that come with being a business owner. 

Plus, if you’re hesitant at all about quitting, you can still make full-time money doing a part-time gig. For example, this 25-year-old marketing coordinator earns $7K a month tattooing eyebrows on the side. And this 31-year-old startup founder makes $120K a year recording TikToks part time.

But that doesn’t mean you shouldn’t go full time! You just need to make sure your side hustle is profitable first. Then, you have to stay disciplined with your time and produce your very best work. And if you can commit to doing that, you can grow your side hustle into a full-time gig.

5 Signs You’re Ready to Take Your Side Hustle Full Time

Now that you’ve got the basics down, let’s cover the milestones and groundwork for going full-time with your side job. Achieving each step is pivotal to setting you up for success. And this process ensures your side hustle is ready (or at least as prepared as possible) to be a fully profitable business.

1. When you love your side hustle more than your job

Long before you decide to go full time with your side gig, you want to be sure you actually love what you do on the side. When you enjoy what you do, income naturally follows. 

In other words, if you aren’t passionate about doing the work it takes to go full time, you might struggle to make your dream into reality. After all, once you’re self-employed, the results are totally up to you. AKA, if you don’t show up every day, you can’t run a successful business. 

For example, maybe someone provides research as their side hustle. But they quickly realize researching for clients is not their cup of tea. As a result, the quality of their research suffers. And the once booming interest in their service might also dwindle.

On the other hand, let’s consider a freelance photographer who loves their side job. Because they’re happy doing what they’re doing, they put out great work. They are excited to serve their clients. And they are constantly looking for ways to learn and improve. And, as a result, their work improves —and their client base expands. 

Here’s what it comes down to: If you love your side hustle, you’re more willing to work hard doing it. Which means you’re more prepared to go full time. Because when you consistently show up for your business and your customers, you have a better chance at turning your side hustle into an actual business.

2. When your side hustle can cover all major expenses

Once you’ve confirmed your passion for your side hustle, you need to make sure the job can cover the bills. Going full time without figuring out your financials is an enormous gamble. And not having enough capital is why most small businesses fail

So, you need to be sure you have a profitable side hustle before you go full time. First, map out your monthly expenses. Then, project what your side hustle can cover for the next 12 months. And finally, add in the costs it will take to start and run your side hustle. You can easily do this in Google Sheets or use a free budget tool like Mint.

If and when you can at least cover your major expenses (shelter, groceries, utilities, transportation, insurance, etc.), you can consider going full time. And that might mean you have to eliminate some unnecessary expenses to make it work. 

If you really want to turn your side hustle into a business, you’re going to eventually have to make some sacrifices. Whether it’s eating at home to save money or skipping the daily Starbucks drink, there will be compromises you have to make along the way.

3. When you’ve saved enough money to cushion challenges

Even if your side hustle is paying well (and you can more than cover your expenses), you still need plenty of cash saved up before going full time. The chances are good that you will need a little cushioning for challenges along the way. 

For example, you might not have work for days or even weeks at a time. Or, you might get sick and need time off to recover. Or, the market might change and your service or product becomes obsolete. The point is that you need money in your savings for when things go south.

So, before you quit your full-time job, you need to save enough money to cover 12 months of your basic expenses. That way, you can prepare for the difficulties of starting a business and feel sure that you always have enough when challenges come your way.

For example, if you need $2K a month, you’ll need $24K in savings. But that doesn’t include the money in your emergency fund (which should cover 6 months of basic expenses). Meaning, at $2K per month, you’ll want to add another $12K to your nest egg before you go full time.

Saving up this amount of money can be  difficult. And it’s not something you can achieve in a short amount of time. But don’t get too intimidated by the amount of money you need to save. Instead, just focus on saving a little every day (or week or month). And slowly, but surely, you’ll get there.

4. When you feel confident managing your taxes, health, and retirement

Once you go full time with your side hustle, you’ll have to start paying your own business taxes, paying for health coverage, and managing your retirement. So, you want to be prepared to take those tasks on before you quit your job. 

First, predict how much you’ll owe on taxes with a self-employment tax calculator. Then, incorporate that amount into your business costs or basic expenses. And when it’s time to do your taxes, you can either file them yourself, hire an accountant, or upgrade your free tax software to the self-employed version.

As for health insurance, make sure you can afford a year’s worth of coverage before going full time with your side job. You can see what options are available in the Healthcare Marketplace. And you can find out (based on a projected income) how much it will cost per month to enroll.

Finally, you’ll need to figure out how to roll over your 401K once you leave your job. And if you don’t already have a personal retirement account, you’ll need to set one up. Whether it’s a traditional or Roth IRA, Solo 401K, or something else entirely, you’ll need to decide what retirement plan is best for you

That way, you can continue to contribute to your retirement and determine how much money you need to set aside (each week, month, or quarter) to reach your goals.

5. When you have a plan for making the side hustle a business

You want to have a solid business plan in place before going full time. It's important to lay out a clear path for success and make sure that your side hustle is actually a sustainable and profitable business. 

A business plan should describe your business, its offerings, and how you plan to make money. It should predict your operating costs, how often you’ll get customers, and what those customers will produce in revenue. In essence, it should show your company’s profitability.

At first, the business plan will be just for your eyes. That way, you can understand the profitable path toward full-time income. Use it to guide your business decisions. But eventually, you might also need it for a loan or investor in the future.

Don’t spend too much time trying to make your business plan perfect. As you learn more about your business, it will evolve and change over time. And, as a result, your business plan will change right along with it. 

Plus, if you want to make your side hustle into a self-sustaining business, you’ll also want some kind of documentation for delegating work. We call it writing your business playbook. And it keeps all your top plays documented in one place. So anyone can play any position (and run your business without you successfully).

Listen, we get it — taking a side hustle full time is a risky move. But that doesn’t mean you can’t set yourself up for success. As long as you prepare and put in good old-fashioned hard work, you can get out there and make your side hustle a successful business!

Article

When To Make Your Side Hustle A Full-Time Gig

February 1, 2022

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