There are a lot of reasons why people have side hustles. Maybe you use the extra cash to afford trips, or maybe you’ve always dreamed of being a full-time photographer instead of a corporate lawyer, and you’re just waiting to build up enough customers before you give up your stuffy suits for good.
There’s nothing wrong with keeping your day job and maintaining a side hustle indefinitely, but if you are thinking about ditching your 9-to-5, here are questions you should consider before you give your notice.
1. How much income do I need to make to survive?
Survival means different things to different people. To some, it means paying the rent on time and putting food on the table. To others, it means being having the wiggle room to treat yourself now and then.
Figure out how much you’ve made in the last six months from your side hustle alone so that you know how far, or close you are to earning your ‘ideal’ income. Will spending more time working your side hustle make up the difference? If not, can cutting back on expenses allow you to get by until your business takes off?
Just make sure to take into account extra business expenses, lags on client payments, and the fact that you won’t be getting benefits like dental, medical, pension contributions, or disability and life insurance from your employer anymore.
2. Do I have a plan for my business?
Put a flexible business plan together that takes into account growth opportunities, potential setbacks and how you’ll address them. You can use our free Canadian business plan template if you’re not sure where to start.
Think through if you will need to buy new equipment or hire staff to get to the next level. Will you need to borrow money to do that and will you be approved for a business loan? Knowing answers to these kinds of questions up front can be important — especially as it may be more difficult to get approved for a loan after you quit your day job.
3. Do I feel confident running my own business?
You might be talented at designing cool fringe necklaces or beer can belt buckles, but expanding your business and having to deal with marketing and administration might not be your forte.
When it comes to running a business, several Ontario colleges offer courses in small business and entrepreneurship. If self-guided learning is more your speed, check out the free business management courses from MIT, Harvard and Wharton available at edX.
If you don’t have the first clue how to register your business? Read our guide on how to register a business.
4. Do I need coworkers?
The thought of working in your pajamas may interest you, but decide if you need social interaction to produce your best work. How much do you need the feedback of coworkers, partners or mentors? Do you come up with your best ideas when brainstorming with a team?
If you need human interaction or work better in a busy environment, look into co-working spaces like WeWork or Coworking Ontario, or sign up for business community activities via MeetUp in your city to find colleagues to talk to about work projects.
5. What’s my backup plan?
Before leaving a steady full-time job, as a founder and CEO of your side business, it’s important to consider what would happen if things don’t work out. The Scout motto, “Be prepared” are great words to live by for anyone working for themselves. No one likes to think about their dreams failing, but markets and economies change, consumer tastes can be fickle, and suppliers and clients can become unreliable.
If you do decide to take the plunge, create a backup plan beforehand, build an emergency fund to cover your expenses for 6 to 12 months, and stay in touch with your former professional networks, just in case. Your backup plan should include an idea of the number of months you can afford to give your side hustle a go before you may need to consider a new 9 to 5 job.
Ultimately, you may decide to keep your side hustle just that: on the side. Not everyone wants or needs to turn their side hustle into a new career. For some, a side gig can be the perfect thing to keep on the side; side gigs can help keep you motivated at work, give you an outlet to pursue other interests, and can provide you with some additional income.
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.