This article is from our friends at LearnVest, a leading site for personal finance.
Are you a crafty genius whose letter-pressed stationery could easily become the next Etsy sensation? Or perhaps you’re a social media whiz with some time to spare.
If you have a professional skill or passion that’s not being used to its full potential, it may be time to consider how you can supplement your salary with a side job.
Stymied by where—and, more important, how—to start? LearnVest spoke with Kimberly Palmer, author of The Economy of You: Discover Your Inner Entrepreneur and Recession-Proof Your Life, for some insider advice on getting a side business off the ground.
Palmer speaks from experience. The financial journalist began writing and selling digital money guides on her own Etsy shop as a way to bring in extra income—a journey that compelled her to interview other successful side-giggers to cull their advice, along with her own, for the book.
Eager to bring in some serious money from your own part-time passion? Start with these seven top Palmer tips.
1. Be Smart About Start-Up Costs
There’s no need to spend much—if anything—when you’re testing out different ideas in the beginning.
“It’s so easy to launch a side gig today,” Palmer says. “If you have an inkling for something you might want to do, just get started.” You can always make adjustments later—what matters is that you take the plunge, and that’s easier to do when you’re not dishing out much money early on. “You can often launch a side business for $100 or less,” she adds. In fact, she recommends avoiding any kind of endeavor that would require a big initial investment—a red flag that you may be headed down a risky path.
Do you need a business plan? “Not really,” Palmer says. “I urge people to skip that formal step and just try launching the business that they have in mind." E-commerce sites like Etsy, Elance and Fiverr can get you set up in a weekend.
In terms of low-cost marketing, Palmer recommends developing your own following, starting with social media, and then building on that by communicating with your followers through a blog and a regular newsletter. “One of the best ways to find new fans and customers is by writing guest posts for other blogs that share your target audience,” Palmer says.
2. Be Bold
No idea is too wacky when you don’t have much to lose. So don’t be afraid to experiment—you just might tap into a big market for your individual skills and passions.
In fact, many successful side-giggers discover their second jobs almost by accident, Palmer says. For example, something as simple as pet sitting for a friend can quickly provide an extra financial cushion.
Palmer’s recommendation if you’re unsure of whether your potentially wild invention or concept has longevity? Start with a test product or service or do a soft launch to see what kind of feedback you get. “The beauty of the online world of entrepreneurship is that it’s easy to test products, so you can get it off the ground quickly and then build from there.”
3. Don’t Hide Your Side Gig
Worried about how your side gig will marry with your nine-to-fiver? While you want to avoid any conflicts of interest with your full-time job, says Palmer, employers often embrace side gigs. That’s because employees can gain valuable experience on their own time (and dime!), and then bring back what they’ve learned to their day job.
Maybe your side gig is allowing you to hone your marketing skills or you’re learning new types of software. “When you bring those skills back to your day job, everybody benefits—it’s a win-win situation,” Palmer says.
4. Master the Concept of Energy Management
Okay, so you’ve gotten your concept off the ground, but how do you find the extra time to make it successful?
For starters, you should experiment with everything from getting up earlier than usual or using lunch breaks to focus on your side venture. And use Google Calendar or Microsoft Outlook—whatever helps you juggle your day—to block off time dedicated for it. To reclaim some of your weekend, you could also consider streamlining certain household tasks, like doing more online grocery shopping and outsourcing bigger tasks to someone on TaskRabbit.
But perhaps more important than time management, Palmer recommends focusing on “energy management.” In other words, if you’re a morning person, get your side work done early in the day, when you’re more focused. If you’re a night owl, perhaps you’re most productive before you wind down for the evening.
As for when to turn your side job into a full-time occupation, Palmer prefers a balance of the two. “It’s like the best of both worlds, with the security and growth of a traditional job, plus the creativity and flexibility of the side business,” she says. “The people I interviewed who left their full-time jobs to focus on their side gigs either did so because they got laid off or their side gig was just so successful that they replaced their primary income and wanted more time to focus on their own business.”
5. Listen to Your Customers
Palmer learned firsthand that your early customers will let you know what you’re doing right and wrong.
When she first launched her Etsy shop, she spent a few hundred dollars printing spiral-bound versions of her financial guides. “But no one bought them, and they are literally still sitting in my closet,” she says. Customers wanted a downloadable version instead, so Palmer expanded her digital line, which is where she found success.
When a customer asked Palmer if she had an annual money calendar, she created one—and it has since become one of her most popular products. “Listening to my customers really shaped the direction of my shop,” she says.
6. Expect Setbacks—and Learn From Them
Don’t let early failure stop your progress, Palmer says. Most established side-giggers have experienced some kind of obstacle early on—and many still experience the occasional failure. “It’s okay if your first idea fails,” she says. “You can just try again.” Bottom line: Since you’re not counting on your side income to pay your mortgage, you’re free to experiment.
And don’t let criticism bring you down. “I feel terrible every time someone leaves a negative review or unsubscribes from my newsletter, but those kinds of disappointments are a necessary part of the entrepreneurial life,” she says. “I try to just accept that, and move on.”
So what if you’re experiencing more failure than success? “As long as your side job is creatively fulfilling and enjoyable, there’s no need to give it up, even if it’s just earning a modest amount of money,” she says, adding that even small amounts of monthly income can add up over time.
7. Be Organized From the Get Go
The most important thing that a new side-gigger can do, says Palmer, is keep their administrative duties under control—especially during tax time.
Now that you have extra income coming in, you have to be careful about tracking what you make and what you spend. Many business-related expenses are eligible for deductions, but you have to check the IRS rules on how to take them. For example, you can’t deduct home-office costs if you also use that space for personal reasons.
Then there’s trying to figure out when you should pay taxes. “In many cases, you’ll want to pay taxes on a quarterly basis to avoid a big bill in April,” Palmer says. “And if you start earning significant amounts of money with your business, you’ll probably want to consult with a tax professional.”
What about incorporating? “That depends entirely on your side gig,” says Palmer. “The good news is that, for many people, you can keep things simple until you start earning more significant amounts of money.” That’s because you’ll have to pay set-up fees to establish your corporation, and you’ll have more paperwork and additional business tax rules to learn—so incorporating is probably better saved for when your business experiences a lot of growth.