Money, Money, Money

Financial things to consider when starting a side hustle

Money is a big consideration in business and there are several things you should think about before you setup your side hustle, and more importantly, before you walk away from your full-time job and pay cheque. The whole point of the side hustle is to make extra money, so you need to make sure you protect yourself and that money from the outset and set yourself up for success. 

 

Open a Business Bank Account 

 

Bank accounts should have separate pots – I use Starling Bank (UK) – who are very good and the account is free. I am also easily able to create separate pots for different functions without having to get the bank involved. I have the following pots:

  • Profit and Owner’sPay
  • Tax – business and VAT as appropriate
  • Operating expenses e.g. staff costs, outsourcing, insurances,  phone bills, internet, etc
  • Dividends 

Move the money into the pots regularly and do not touch it for other purposes, this will prevent you from having a terrifying tax crisis at the end of the year. 

For more on money pots, check out Profit First by Mike Michaelowicz

 

When it comes to the “type of company” the laws differ country to country, so I’m not going to cover this, but I have included some information here:

Full country list

Australia

Canada

EU

New Zealand

Singapore

South Africa

United Kingdom

United States

 

Setup Affiliate Marketing Accounts

I don’t mean joining Herbalife, I mean setting yourself up as an affiliate partner with the suppliers you already use and endorse, in return they will give you a reward such as a voucher, cash or in some cases, plant a tree in your name.  Affiliate programmes don’t cost you or the people you refer anything extra and can make you some additional income. Amazon have a great affiliate programme if people buy the products you refer to them. 

 

Get Insurance for your Business 

The type of business you own will determine how much insurance you need – for example, working in a bank as a contractor, the public liability insurance requirement is in the millions. Also, if you have direct employees, you will need employer’s liability insurance. Make sure you discuss life insurance, property and equipment insurance and income protection insurance with your broker. Personally, I also have health and travel insurances. 

I use Simply Business Insurance and calling them at renewal time, led to a massive discount this year, which made me very happy. Simply Business specialises in insurance for small businesses and have always been exceptionally helpful and knowledgeable. You need to check what insurance your specific industry requires.  

 

Save Money by Using Free Resources 

Image of cogs illustrating topics covered by financeWhen it comes to setting up a business, it seems these days everything from PowerPoint to Mentorship is on a membership basis and the costs can rack up really quickly, so making use of all free resources is of great benefit to you to start. 

Business Plans: I could create my own templates for Business Plans, but I think The Prince’s Trust have already created excellent resources so here’s the link to their business plan template. Should you be under-30, they also provide some free training, mentorship, and business setup resources. 

Design:  You don’t need to hire a Graphic Designer right off the bat, if you are slightly creative, you can use Canva, for free, to create social posts and various other designs. 

Marketing: I started out using MailChimp to build my email list, but it does not have a great inbox delivery rate, so I now use MailerLite. 

Social Media is free to setup and free to post, but it is important that you do not rely exclusively on the social media platforms to build your business, the algorithms change at a moment’s notice and when there is an international outage, you are left stranded. If you get blocked by the platform, then you will totally lose access to the audience you have built, because you do not own it. 

Speaking of social media, here at Ahead Together Ltd, we say “Stay away from the Boost Button”. It is the most expensive way to market your posts and does not go out to your ideal customer.

Project Management: I use ClickUp for managing my sprints, my projects and my general life. It is free on the basic level and gives you 5 workspaces on this membership level. 

 

Finances 

A man working on a calculator while sitting at a deskHow much do you need to earn in your side hustle to pay for the thing you want or need? If you are setting up your side hustle to pay for sports coaching for your child, how much do you need to earn weekly? If you are doing renovations to your house, how much do you need for each job e.g., a bathroom refurbishment? 

How many products or service hours do you need to sell and at what rate to meet your income target? Have you considered taxes and operating expenses in that figure? Even if you have a sole trader company, you need to declare your income on your annual self-assessment. Do not put yourself at risk of tax fraud. 

Budget: Create a budget for your business and track all your expenses so that you can ensure that you are breaking even. You must make sure you know how much your raw materials cost, how much your labour costs, how much marketing costs and make sure you are covering all these costs. Make sure you are 100% honest about the spending and income. 

If you are planning to walk away from your job in favour of your side hustle, you will have to extend the budget review to your personal life too. How much will you need to turnover, to be able to walk away from a salaried role. 

(Side note: Turnover is the total business income during a set period; profit is the earnings left after all expenses are deducted.)

 

Masterclass

I am hosting a Masterclass on Setting Up Your Side Hustle on 29 November 2021 at 19:00GMT. Register to join me here. 

 

 

 

Affiliate Disclaimer and Codes 

I may earn a small commission from the links in this post if you click on them and make a purchase, this will not cost you anything additional. 

If you want to join my affiliate programme for my coaching programmes, drop me an email and I will send you the details. I offer an excellent commission for all client referrals that sign up to a programme. 

I am an affiliate for:

Canva 

ClickUp

MailerLite

Simply Business– they will give you a £25 voucher for Amazon or M&S

Starling Bank – they will plant us a tree 

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