So you’ve decided to start a side business. You’re motivated to do something different with your work life, and you have an idea of what you want to do to make some extra cash.
But you just don’t know how or where to start.
Well, you’re not alone. Many of us tend to get complacent with our current lives despite having grander visions of what could be. How can you set yourself apart from the daydreamers by making your side business a reality?
Let’s break it down. We’ll show you how to actually get your feet off the ground and begin building your very own venture – fast.
Doing things right the first time will save you money and time by avoiding having to redo costly steps. It will also help you get up and running more quickly, which of course means a quicker return on investment for your side business!
The Basics: Pre-Launch
Before making any other moves, you need to have a few things established. You must have first recognized a business opportunity for a side business. Consider how much time you can realistically dedicate to another operation, and look for inspiration from others.
You may instead have your own unique, new offer but just haven’t yet figured out how to get it out there the right way. This simple guide will help you do just that.
Business Plan
Once you’ve recognized a business opportunity, it’s time to create a plan. A business plan can be simple or extremely complex, but they should all have the same basic concepts:
- Business Opportunity: What problem is your business going to solve? This is a great place for your “elevator pitch,” or a short, catchy overview of why people should purchase whatever you’re selling.
- Industry Analysis: Who are your key competitors? What other factors can impact your industry (positively or negatively)?
- Target Market: Who and where are your customers? Creating a mind map can help you visualize your ideal customer. Think about outlying buyer segments, as well.
- Timeline: What do you want the next few months and years to look like? This should be a realistic progression of goals, so don’t make them unattainable but do keep them ambitious and challenging. Especially with a side business, it can be difficult to stay motivated and focused on the target. Occasionally returning to this timeline can help you stay on track and meet your goals.
- Marketing Plan: How will you acquire new customers? Keep reading for more details about formulating your marketing strategy.
- Financial Summary: What are your fixed and variable costs? How are you going to make money and create revenue streams?
- Funding Required*: How much money do you need to start? If seeking funds from outside investors, you’ll need to detail how their money will be used.
*If your side business requires significant startup costs, this guide is assuming you’ve already raised the funds you need. Take a look at some great venture capital strategies to learn how to fund your startup. Then return here to see the next steps to getting your side business up and running in no time!
Legal Requirements
I know, I know. Legal requirements – how exciting!
But these necessary elements are going to lay the framework for your side business and help avoid noncompliance and litigation once you’re in full operation.
- Select a Business Name: This one is important for obvious reasons. Choose something that is descriptive enough of your business but still short enough to be catchy and easily remembered.
- Select a Form of Ownership: Your form of ownership (or legal entity) must be provided when obtaining any licenses or permits, as well as when you apply for a Federal Employee Identification Number.
There are four forms of business ownership: sole proprietorship, partnership, corporation, and limited liability company (LLC). Learn more about these types of ownership here. Most individually-run side businesses are sole proprietorships, which means you’ll report income and expenses on your individual tax return.
- Register for Licenses and Permits: Some types of businesses require a federal license and/or permit, such as drug manufacturers and ground transportation companies. Be sure to research whether your offer includes federally-regulated products or services.
On the state level, there are four categories of licenses and permits that you will need to acquire before launching. These categories include professional licenses/permits, occupational licenses/permits, sales tax permits, and business registration.
Last but not least are your local regulations. These are going to vary greatly depending on your location, whether you’re in a remote town or a large city. If you’re going to operate out of a physical location besides your home, you might need to acquire permits for building, health, signage, and zoning.
- Create Your Contracts: It’s a good bet that you will have at least a few contracts within your business dealings, so it’s important to get these in place before you kick off. You don’t want to find holes in your contracts once they’re already signed! Some agreements which might require contracts are those involving suppliers, lenders, service providers, employees, and others.
- Obtain Insurance: This doesn’t apply to every side business, but there are five types of insurance which you might need to acquire. These include property, business interruption, liability, workers’ compensation, and health insurances.
Setting Up: Pre-Launch
You’re almost ready to get started! I know you’re probably raring to go by now, but there are just a few more steps to complete before jumping in. You don’t want these things to fall through the cracks – making sure your location, business systems, and marketing strategies are in place before the big Day One will help you stay on top of things once you’re up and running.
Location
Of course, you’ll need to decide where you’ll be doing business.
If you’re working from home, consider whether you’ll have to meet with clients or partners and find a professional meet-up place. Today there are more options than ever for short-term meeting and office spaces.
Alternatively, you might want to start your side business from a permanent office or storefront. After establishing a clear budget for your location, it’s time to start shopping!
Commercial business space is available in nearly every size and price you can imagine, so consider what fits your plans. If you’re selling products in a traditional retail setting, your proximity to the public is very important. If you’re running a software support business that serves its customers remotely, you may opt for a lower-cost “back-of-house” office.
Business Systems
Your side business can’t be successful if you aren’t organized. Creating and maintaining your business systems before launching will ensure that you have best practices for each task at hand.
You might want to create your business systems in the form of a simple flowchart or numbered list at first, then you can detail and modify your plans as business progresses. Just a few examples of tasks that you can (and should!) systemize include:
- Processing orders
- Paying taxes
- Paying employees and suppliers
- Invoicing customers
- Following up with new leads and existing customers
- Managing inventory
Maintaining accurate financial records is another huge component of your side business, no matter how small. This means keeping track of all of your expenses, revenues, and other costs correctly from day one. Online tools like QuickBooks can help you manage bookkeeping all on your own.
For more large-scale or complex operations you might want to outsource this work to someone with an accounting background – freelance bookkeeping has been on the rise in recent years, and having the help of someone who really knows what they’re doing might save you from some big headaches down the road.
Even if you’re operating a one-person business from home, you should set up a separate bank account for the management of your side business. If you’re going to be accepting payment from credit cards you’ll need to set up a merchant account. This will allow the credit networks to send money to your business account, and is available at most traditional banks.
Establishing Your Image
You’ve heard the old adage, “it’s what’s on the inside that counts.” But for businesses today, that couldn’t be further from the truth. Your image is critically important to the success of your side business – so don’t skimp on your marketing planning.
Examine your market competition and establish the points of differentiation that will set you apart from the others. Use these points in your marketing content to peak customer’s interest and draw them in.
Setting your prices is a careful task that should also consider competitor’s numbers. You might strategize by aiming to offer lower prices than your competition, or perhaps you’re providing a luxury item with a premium price.
So how do you get people in the door (real or metaphorical) when you’re just starting and not yet well known? Promotions for new or returning customers can help increase business traffic and give your side business a successful kick-off!
Marketing content will vary depending on your business, but you’ll probably want to have at minimum a logo and tagline. These should be incorporated into your print materials, website, business cards, signage, etc.
Last but certainly not least to consider when creating your marketing plan is the establishment of your online presence.
Today nearly every company – no matter what kind of business – has a website and social media account(s). You should too, and here’s why. The use of online search engines and social media in our daily lives is more prominent than ever before, so it’s important for your business to have at least a homepage that provides some basic information to curious potential customers.
Of course, if your side business is based online you should really invest in your business website and social media. You can create your own website with tools like Wix and Squarespace, or pay a professional to make one for you.
Once your marketing strategies are in place and all of the other components above have been addressed, you’re ready to go. It’s time to officially kick off your side business!
The First Days: Post-Launch
Once your operation has begun, it’s important to keep careful measurements during the first few days and weeks.
You’re only human, and humans make mistakes.
Identifying and correcting these mistakes as you encounter them will help you maintain customers and increase ROI.
Closely monitor your expenses and revenue during the first period of business, and look for ways to improve your bottom line. Successful entrepreneurs are never complacent – they are constantly adapting and evolving to provide better offers and increase profits.
Keep a close eye on major operations like purchasing inputs, inventory management, distribution, and customer service. These will all greatly impact your side business’ overall success!
Challenges: What’s In-Store
Nobody said this was going to be easy. Starting a side business, especially if you’re already busy with a full-time job and a family, comes with its fair share of challenges. But with an expectation of the trials to follow and a motivated spirit, the payoff can be well worth it.
Money management is obviously an important part of your success, so expect to be regularly dealing with things like paying bills, sending invoices, collecting from customers, managing cash flow, and paying taxes.
On a more personal level, managing a side business can be mentally and physically draining. Juggling multiple roles at work and home can be difficult, but there are many great ways to cope with this and become a thriving entrepreneur.
In addition to your business goals, setting some targets for your home life can help you maintain a good work-life balance. You might start keeping a daily agenda and setting apart dedicated family time.
Find out what works for you and the people around you so you don’t end up overwhelmed by all of your new responsibilities.
Now that you have the basics of quick-starting a side business, there’s just one question left.
Are you going to keep trudging along with your day job while dreaming about something more, or will you soon be counting yourself among other successful side business owners?