You had an idea. A skill, a product, a passion project—something you believed in enough to start a side business. Your idea is taking off and you’re spending all of your spare time (and maybe even some work time… shhh we won’t tell!) making it successful and profitable. Eventually a choice has to be made.
When will you quit your full time job and make your side hustle your real hustle?
It’s a scary proposition, but we’re here to help. Let’s talk about how to go about making this important decision, everything you need to do, and everything you need to factor into this life changing moment.
We love a checklist.
Before you can even really dive into plans to make such a major change in your life, let’s make sure your solo hustle is ready for prime time.
- Have you developed a business plan?
Outline your goals, target market, and financial projections for your side hustle. - Do you have a customer base?
Focus on acquiring and retaining customers to generate consistent revenue. - Have you been networking and marketing your business?
Use social media, networking events, and other marketing strategies to promote your business and attract new customers. - Are you constantly evaluating how to improve and scale your business?
Look for ways to improve your products or services and to increase your revenue. - Is your cash stash healthy?
Start saving money to invest in your business, so you can continue to grow and expand. - Do you understand the risks?
Assess the potential risks and rewards of making your side hustle your full-time job and make the decision that is best for you. - Are you prepared for the transition?
Carefully plan the transition from your current job to your side hustle. This may include increasing your income, cutting expenses, and finding ways to manage the potential loss of benefits that come with traditional employment. - Are you ready to work hard?
Building a successful business takes hard work and dedication, so be prepared to put in the effort to make it successful.
We love a top ten list.
If going through that checklist made you start to doubt, take a moment to think about the many benefits of being your own boss and starting your own business.
- Financial independence
Starting your own business can provide the opportunity to increase your income and achieve financial independence. - Flexibility
Being your own boss allows you to set your own schedule and have more control over your work-life balance. - Job satisfaction
Starting your own business allows you to pursue your passion and create something you are proud of. - Creativity and innovation
Being an entrepreneur allows you to think outside the box and come up with new and innovative ideas. - Control
Starting your own business gives you control over your career and the direction of your life. - Learning and development
Starting your own business is a great way to learn new skills and gain valuable experience. - Potential for growth
Starting your own business allows you to take advantage of new opportunities and grow your business over time. - Potentially lower taxes
As an entrepreneur, you may be able to take advantage of tax deductions for business expenses. - Building something that can be passed on
Starting your own business can be an opportunity to create something that could be passed to future generations. - Positive impact on the economy
Starting your own business can create jobs and contribute to the local economy.
We love even more checklists.
Planning for retirement as a self-employed individual can be a bit more challenging than if you were working for an employer that offers a retirement plan. Here are a few steps you can take to plan for retirement:
- Establish a budget
Create a budget that includes savings for retirement. This will help you to determine how much you can afford to save each month. - Open a retirement account
Consider opening a retirement account such as a Solo 401(k), SEP-IRA, or a Simple IRA, which are specifically designed for self-employed individuals and small business owners. These accounts allow you to contribute a higher percentage of your income than traditional IRAs and can offer tax benefits. - Consider a Roth IRA
A Roth IRA allows your contributions to grow tax-free and withdrawals in retirement are also tax-free. - Look into self-employed pension plans
Some self-employed pension plan options exist, such as the defined benefit plan, cash balance plan, and profit-sharing plan. - Diversify your investments
Diversifying your investments can help to minimize risk and maximize returns. Consider investing in a mix of stocks, bonds, and other assets. - Consult a financial advisor
A financial advisor can help you to create a comprehensive retirement plan that takes into account your specific needs and goals. - Continuously review and adjust your plan
Review your plan regularly and make adjustments as necessary to ensure that you are on track to reach your retirement goals. - Take into consideration Social Security
While self-employed individuals pay self-employment taxes, they also qualify for social security benefits. Make sure to check how your self-employment income affects your social security benefits and plan accordingly.
Remember, the earlier you start planning for retirement the better, so don’t put it off. Also, start thinking about what to do with existing retirement plans from your past or present full time jobs.
You need a strict budget. Let’s make a list!
To successfully transition to working for yourself, you need a blunt and honest understanding of your expenses and goals so you’ll be clear about how much profit you need to earn. Creating a budget when you work for yourself can be a bit different than if you were working for an employer, but it is still an important step to take to ensure your financial stability. Here are a few steps to help you create a budget:
- Determine your total income
Identify all sources of income, including your business revenue, any rental income, and any other sources of income. - Identify your expenses
Make a list of all of your fixed expenses, such as rent, mortgage, utilities, and insurance. Then, make a list of your variable expenses, such as transportation, food, and entertainment. - Track your spending
Keep track of your spending for at least one month to get a good idea of where your money is going. - Categorize your expenses
Categorize your expenses into fixed and variable expenses, and then further into essential and non-essential expenses. - Set financial goals
Set financial goals for yourself, such as saving for retirement, paying off debt, or building an emergency fund. Make these goals part of your monthly expenses. In other words, make it a requirement to pay yourself. - Create a budget
Once you have a clear picture of your income and expenses, create a budget that allocates your income to cover your essential expenses, savings, and debt repayment. - Stick to the budget
Try to stick to the budget as much as possible, but also be prepared to make adjustments as needed. - Review and adjust
Review your budget regularly, at least once a month, to see how you are doing and make any necessary adjustments. - Be realistic
Be realistic about your spending and income, and don’t set unrealistic goals for yourself. - Get professional help if needed
If you find it difficult to create a budget, or you have complex financial situation, consider hiring a financial advisor or accountant to help you.
Creating a budget can be challenging, but it is essential for long-term financial success. Remember to be consistent and adjust your budget as needed.
So… are you ready to be your own boss? Be sure to check out our other blogs for great advice (and more checklists!) on tax preparation, creating goals, finding the right resources, and more.
