How much income do you need to turn your side hustle into a small business?
The 2019 Hiscox Side Hustle to Small Business™ Study posed that question to 400 entrepreneurs who started their business as a side hustle while still working a full-time job. The average was $43,862.
The most challenging part about having a side hustle can be knowing when you’ve established yourself enough to quit your day job. That tipping point is different for everybody, and it’s a rare person who makes the decision without a lot of worrying and wondering.
There’s no magic number that’s right for everyone, and no one knows that better than Maureen Monte, author of “Destination Unstoppable” and a specialist in helping teams maximize their potential. Monte was an engineer at a Fortune 500 company before she left to start her leadership consulting business.
Be financially prepared
“Keep your day job until you’ve proven, beyond a shadow of a doubt, to yourself, to your family, to your clients, that what you have is valuable and you can make it on your own. Or that you’re close enough to say, ‘I’m willing to take the risk to make it on my own,’” said Monte. “But do that with the knowledge of, 'here’s what it’s going to cost me with health care.’ Don’t go short. Don’t think, ‘well, we’ll get by.’”
Once an entrepreneur took their passion from a side hustle to a small business, it took them an average of three years to begin to earn an annual income equal to what they had been earning at their last full-time job. In their first year of operation, 42% of the entrepreneurs we surveyed paid themselves less than $25,000. So planning is critical.
Plan for the worst case scenario
“When you start planning – and you should plan – plan for worst case scenarios. How much money will I need, worst case scenario? And operate from that position as you head in that direction,” added Monte. “If your spouse is employed and you have healthcare, that’s going to help a lot. If you’re twenty-two and you can be on your parents’ healthcare, that’s going to help a lot. But some day you might not be there. So you have to be prepared for that stuff.”
Maureen has more advice for those who have a side hustle they want to turn into a small business, and much of it is born from her work as a leadership and team consultant. “Be a sharp shooter. Don’t be a generalist,” she said. “What are you great at? Where does your real value proposition come in? Hone what you’re really, really good at. And then go take on the world.”
Here the full story
Hear Maureen’s story on the Hiscox Side Hustle to Small Business™ podcast, and learn more about turning a side hustle into a small business. Download the study, subscribe to the podcast, and get behind-the-scenes looks at entrepreneurs who’ve done it.