More people are creating side hustles while employed. In America, for instance, according to Bankrate, there are 44 million people who have a second job, also known as a “side hustle.” These numbers are only set to increase as many realize the power of the gig economy.
For many people a side hustle is a mere stepping stone to a more permanent escape from “the cubicle”. They have their sights set on full-time self-employment. If you’re in this boat, it’s even more important to run your side hustle with focus. After all, this is the time when you still have a safety net in place… so make the most of this time to set yourself up for ultimate success.
Here are our top 3 mistakes to avoid when scaling your side hustle:
1. Underselling Your Side Hustle Skills
Many adopt an “It’s all gravy” attitude while running their side gig, and hold back from negotiating the highest possible rates with your clients. It’s easy to fall into this trap. But you’re not doing yourself or your industry any favors. By setting or accepting lower rates, you create the perception that these are the going rates in the industry, making it harder for other professionals.
Besides, if you ever decide to turn that side hustle into a full-time gig, you’re going to have to deal with a “reality bites” rate adjustment to make ends meet!
Realize that even though you’re running a side hustle, you can and should set higher rates. Research what the going rates are in the industry and price accordingly (reach out to other professionals in your field to see what they charge).
If you’re scared of setting higher rates, it may be because you lack confidence, but it may also be because you don’t truly understand the value you’re providing. So, get clear on that value (read the book Breaking the Time Barrier; it’s changed how I view my business).
2. Not Separating Business and Personal Finances
If you’re running a side hustle, it’s understandable to use your personal bank accounts. After all, you may be “testing the waters” and not want the hassle of setting up business accounts. But, if you’re increasingly thinking about turning it into a full-time job, you really want to keep finances separate.
Otherwise, you’ll continuously be sifting through bank statement to determine your earnings and separating business expenses from personal ones. Let’s not forget about the actual impact this has on your business by not knowing where all your money is going.
Spend some time researching the best small business account you can get. Think about the fees associated with transfers to your personal accounts (because for now, that will be your main transaction). But think about how this account can scale with your business too.
As more and more businesses take their transactions online, account fees will also be worth considering.
3. Tracking Income and Sending Invoices the Wrong Way
Tracking your income correctly is just as crucial for determining your profitability as expense tracking is. Your inclination may be to use what’s familiar (for example, Word or Excel). But there are drawbacks: You spend an awfully long time manually reconciling all the data and don’t have a firm grasp on your income situation. Plus, maintaining accuracy can be a huge challenge.
Dare I mention the old proverb coined by Benjamin Franklin in 1748 that says “Time is Money”? I think so. Time really is money! Because it’s such a valuable resource, we should make an effort to use it wisely. And so, while Excel may seem like the cheaper option, it’s really just a time-suck. There is a better way to track income and send invoices.
Invoicing and accounting has come a long way… like so many things there are handy solutions that live on the cloud. A cloud solution prevents any of those little errors from rearing their ugly heads, ever again. It lets you:
Effortlessly create beautiful invoices (calculations are made automatically and dates update without you even lifting a finger)
Get paid faster by accepting online payments – convenient for your client and you! No more waiting for cheques
Set automatic late payment reminders and fees so you don’t have to deal with the dreaded follow-up
Optimizing Your Side Hustle
Optimize your side hustle today for success tomorrow. Then, when you decide to turn it into a full-time job, you’re ready. To do that, prepare for a full-time commitment by:
Setting your price for profitability
Setting some boundaries between personal and professional, starting with finances
Investing in business tools such as cloud accounting software to improve your invoicing and expense tracking
This guest post was written by Nick Darlington of FreshBooks for Fundbox. FreshBooks makes invoicing and accounting painless for millions of small business owners.