Disclaimer: I will differentiate between a side hustle and secondary employment (i.e., working for another company). I will define this side hustle as your own venture in some sort of fashion. Typical examples include creating and selling goods, freelance writing, tutoring, etc.
I will be yet another person who stresses the importance of clear communications. So many issues can be mitigated by communicating as much as you can with your customer or clients. Whether it is about changes in the deliverable timeline or payment schedules and availability, it never hurts to communicate with them or ask for extra communication on their parts.
If it is too good to be true…it probably is. Trust your gut instinct because once you’ve parted with your hard-earned money it’s very difficult, if not almost impossible to get it back. You should always protect yourself first and often that means through contracts, research, and starting at a small scale. See our page on Protecting Your Assets to learn more about how to protect your money once you’ve started to save a nest egg.
We have all seen how money can make people go crazy. So always make sure you have a signed and written contract – before services begin. Never trust a verbal offer or someone claiming “you should trust me.” That is how you can end up screwed without payment or even worse…sued. There are many cheap and free services online and examples to choose from (check out PandaDoc, or this great example contract by Jyssica Schwartz). There are a host of other articles you should read through (including Nolo’s and Jotform’s) to help you figure out what you want to include in your contract and the right wording for it. My last contract tip is to always be clear with your client that you are willing to uphold every letter of the contract. This ensures that they are aware of the boundaries, that your contract properly encompasses all of the work you are required to do to, and protects you from scope creep – when a project’s requirements and your workload increases with no additional payments. You want to always protect yourself when you head into the world of entrepreneurship, which can sometimes be quite tricky to navigate.
Especially when you are working with a new client. Having someone prepay when you sign a contract ensures that no matter what, you will have made some money for your services/time. If this is a route you want to take, establish it as a boundary and refuse to begin until you have received said payment. Typically, I stick to 30-40% for a brand-new client and up to nothing for a regular client. Especially as you’re starting out, it might help to think through what money you’ll need on-hand as you start or work on your product. Do you need to purchase supplies? Are you or someone you’re working with dependent on payment for time spent on the project? Prepayment can help not only to ensure you’ll get paid for your work, but also to fund necessary steps that must occur before the final product is delivered.
Creating a brand is a lot easier said than done but the messaging of being known for something has a powerful effect. Trying to find that brand is probably one of the hardest things that occurs on your side during your hustle journey. Building a brand means establishing yourself and being known for something. For those who are just getting started, one way many people go about it is by building a portfolio – many times this means non-paid engagements. A great way to build that portfolio is by volunteering your time, especially for a good cause. This establishes 3 things: helping your community, creating a portfolio, and feeling confidence and trust in your skillsets – even though you should trust yourself from the beginning! As a bonus, consider asking those with whom you worked on a volunteer basis to write a review or testimonial to your work ethic and amazing product – you can include these with your portfolio and use them as a marketing tool to sign on new customers.
As they say, two hands are better than one. Collaboration increases your reach and can make an event, product, or service even better. Always be on the lookout for brands, people and events that could service or reach your target demographic. Also, if you don’t immediately see any opportunities to collaborate, consider reaching out to these businesses and pitch something as well. As we mentioned in Part I, do not be afraid to put yourself out there and shoot your shot.
Pay your taxes and pay them on time. You do not want to get on the bad side of Uncle Sam. Trust me, I have seen cases drag on for years when things go wayward – granted it was for a 7-figure amount. Do not be afraid though, because there are so many resources at your disposal including tax prep services and accountants. Make sure you also check out the IRS website for any questions you may have. They have a repository of information for most questions. Fun fact: you can also call them too.
By setting yourself up I mean how you will structure your new venture. Each type of company (e.g., Limited Liability, Sole Proprietorship, etc.) has their own benefits and risk. Take the time to think through the pros and cons for each because the last thing you want to do is go into a side hustle and end up personally owing others due to business expenses.
Hopefully these 14 tips will give you new insights as you create your side hustle and avoid the many pitfalls that exist in entrepreneurship. Happy Hustling!
This post was authored by High Water Women Volunteer, Young Women’s Council Member and Financial-YOU Blog Contributor Therese Nkeng. Therese’s passion for personal finance began during her first financial literacy program in 5th grade. Ever since, she has honed in her skillsets with a bachelors degree in finance from the University of Maryland, self study, research, and volunteering with nonprofit organizations that focus on mentorship and financial literacy for children. Her mantra is to focus on the individual because all of our journeys are unique which requires nuanced advise. She teaches good habits that elicit mindset changes that gives richness to your personal finances and other aspects of your life.