Start Functioning Like a Real Business
In the previous article, From Side Hustle to Real Business Pt 1, I discussed the growing phenomena that 37% of Americans have side hustles to supplement their incomes. For millennials, this phenomena is even more prevalent.
In Pt 2, we’ll look at the steps needed to make the transition from “Side Hustle” to “Real Business”.
The first step on the journey from side hustle to real business is to begin functioning like a business. You already have customers and you are generating revenue. Now you want to build a structure around that income generating activity that provides it the ability to compete in the marketplace, increase your revenue, and allow you to live the lifestyle you desire. Here’s what you do to start functioning as a real business.
Do Your Research
Successful businesses rely on knowledge of their industry and market to achieve success. Working your side hustle as provided you with some valuable insight on your products/services advantages, the customer wants/needs, etc. In your move from side hustle to real business, you want to arm yourself with information about the business beyond that which comes from your own perceptions. Become acquainted with the industry by becoming knowledgeable about issues such as:
- Financial & operational benchmarks
- Industry participants
- Future outlook
In addition, become acquainted with the market about issues such as:
- Market size
- Customer profiles
The research will help you define opportunities; develop strategies to compete; and establish benchmarks to monitor your business’s performance.
3 Fundamentals of Business Structure
There are three (3) fundamentals of operating a business: Sales & Marketing; Operations; Financial Management. The next thing to do is to begin to align the various activities in your side hustle into their respective categories. For example, let’s say you are vending caps and sunglasses on weekends. Here is how to categorize your activities.
|Sales & Marketing||Operations||Financial|
|Products||People who help you||Tracking money in/out|
|Customers||Booth Setup||Cash Flow|
|Selling||Buying Inventory||Profit and Loss|
|The message used to get people to buy||Record Keeping||Tracking what side hustle|
|Advertising (Social Media, PPC, etc.)||Payment Process (PayPal)||Owns/Owes|
|Collecting email addresses|
From Side Hustle to Full-Time Business in 3 Steps
Develop your activities in these categories.
Step 1: Sales & Marketing
- Define sales & marketing goals/objectives
- What makes your product/service different (Use in your advertising messaging, word of mouth, social media conversations.)
- Who is the customer (collect info about customers)
- Explore other opportunities to generate sales
- Develop other means for them to access product/services (e.g. home parties, a friend that sells for you, etc.)
- Develop mini-digital marketing (website, social media, email)
- Test pricing
Step 2: Operations
- Define functional areas of the hustle (i.e. production, purchasing, record keeping, inventory, etc.)
- Define the tasks in each area
- Define who’s responsible
- Define resource needs to move to next level, make you more efficient (equipment, apps, storage, etc.)
Step 3: Financial Management
- Test pricing
- Define the cost of goods/service
- Calculate gross profit (price – the cost of goods = gross profit)
- Calculate gross profit margin/% (gross profit ÷ price = gross profit margin/%)
- Define operating expenses
- Define breakeven
- Develop cash flow (money coming in vs. money going out)
Transitioning from side hustle to a full-time business is doable. Remember, the fact that your side hustle has customers places you ahead in the game. The person with the side hustle has an advantage. Research of your market or niche and organizing your side hustle tasks and activities in categories fundamental to the business operation are the first steps.
In the next article, I will show you how to implement the business fundamentals as you move from side hustle to full-time business owner.
Featured Image: www.arrianeserafico.com