How to start a successful side hustle

So you want to start a side hustle. Well, you're not alone. But starting a new venture along with managing your day job can be a major juggling act. As someone who's been there—and who's done a ton of research on how to make it work—I'm here to offer some tips for starting your side hustle and balancing it with the rest of your life.

Why start a side hustle?

Every side hustle has an origin story. Here are a few of the reasons you might decide to take the leap:

You want or need extra money.
You dream of becoming an entrepreneur and ditching your day job.
You have a fun side project that fulfills you creatively outside of work.
You've chosen to make the switch from freelancing or contract work to full-time, but you aren't quite ready to quit the gig work entirely.

I'm a former freelance writer who switched to a full-time writing job, and now I freelance on the side. I also know freelancers who work full-time for the benefits and regular paycheck but make more money freelancing. Their day job is literally their side hustle. Whatever your reason, it's important to recognize why you're doing what you do—because that can become the foundation of a successful side hustle.

With that, here are some things to keep in mind as you dive into your side hustle.

1. Know your end goal

So you know your "why." But do you have a goal for your side hustle? I'm a big fan of the SMART goals framework. It forces you to examine every aspect of your goal and to set parameters you can track and be accountable for.

Specific: What exactly do you want to happen?
Measurable: What would achieving it look like? How will you track your progress?
Achievable: Can you make this happen?
Relevant: Does this fit into your overall life goals? And what are they?
Timebound: When is this going to happen?

My freelance goal is to build a financial buffer equal to three months of operating expenses and income and a thriving personal brand in my ideal field, so I can be a full-time business owner again in a more sustainable way. The timeline for all this is a bit fuzzy at the moment because it's based on external factors like my partner's job, our finances, and my health. So it's not perfect, but it does give me something to work toward.

Once you've done a similar exercise, take this same framework and apply it to your day job. Obviously, you need to keep the lights on and buy groceries, but what's your end goal? Are you focused on a career path? Trying to learn a new set of skills? Hoping to fund your side hustle?

Getting these goals clear in your mind helps you start to see how your side hustle can fit into your existing life and work.

2. Audit your resources

Before you settle fully on a goal, consider the resources you have to work with. What do you have to spend each week? Some examples:

Time: How much time do your day job and personal obligations take up? Once those are met, what's left to spend on your side hustle? You don't need to be exact, but have a general number in mind.
Budget: How much do you need to make to cover your personal and/or joint expenses? Include any operating expenses and inventory costs for your side hustle.
Energy: Work, family life, health and well-being, and hobbies all take up energy. How will you fit a side hustle into this equation? Do you have extra energy for something new, or are you cutting down on something else to fit the side hustle in?

Managing a job and side hustle often requires compromise. I knew when I took a full-time job that I probably wouldn't have much of a social life and would need to take things slowly for health reasons.

Think about the compromises you might need to make. Maybe you take a lower-paying but flexible job, so you can focus on building income streams. Or perhaps your side hustle is more automated because your day job and family take up a lot of time and energy. Or you become more budget-conscious to save more. Whatever the compromise, make sure it ties back to your "why" and your end goal.

Leanna's desk, with two computers on it.

Work on the left, side hustle on the right.

3. Tell your employer (or not)

Should you tell your employer about your side hustle? I personally fall into the "it's not really their business" camp. But realistically, there are some reasons for being upfront about the extra work you're doing:

Conflict of interest. If your side hustle falls into the same industry or niche, there's a chance you could have a clash of interests. Many employers require you to sign a non-compete agreement that could include any work you do on the side. This could also be the case for freelance clients or larger customers. Note: Non-competes are banned or unenforceable in some states, so be sure to check on the legalities of your situation.
Scheduling. This will really depend on what your side hustle is. But if you're, say, a freelance coach or app developer who attends trade shows regularly, you may need to negotiate a flexible schedule or ensure your work schedules don't clash.
Public-facing role. If you're well-known in your field, active in your side hustle space on social media, or run it publicly (e.g., Etsy shop, Instagram takeout orders, coaching clients), you might want to give your work a heads-up before they come across it on their own.

If your side hustle is in a different industry from your job, not public-facing, and won't interfere with your work schedule or responsibilities, you might not need to say anything. Before you decide one way or another, check your employee contract for guidance and maybe reach out to any friends you know in a similar situation for their perspective.

In my case, my employer was a former client of mine. When I took the job, it was with the understanding that I was going to continue freelancing, especially because my work is much more public-facing than it used to be. Because I often write about my work and mental health, I wanted to communicate that from the start.

4. Treat your side hustle like a business

It can be tempting to view your side hustle as a hobby, especially if you aren't making much money yet. But if you plan to become an entrepreneur—or just want a little extra beer money—treating your side hustle like a business helps keep you on track (and in compliance with local laws). It can also help you access tax breaks and other business benefits like self-employed retirement accounts and small business loans.

Here are some ways to make your side hustle a little more professional.

Registration and licensing

In some states (like mine), you don't need to formally register as a business if you're a sole proprietor operating under your own name. But if you want a different name, you'll need to file a DBA (doing business as). Check your local and state business laws to see what you need to do to make sure you're operating legally as a business. You may also need additional licensing depending on your side hustle. Incorporating as an LLC or corporation can also offer additional legal protection and set you up for potential growth.

Banking

Separating your personal and side hustle finances can save you a lot of headaches. Setting up a business bank account also makes it easier to keep track of your side income and expenses for tax purposes. If you need to apply for a loan or grant or pay for business support, that OpEx (operating expenses) account will be there to help you share financials and cover unexpected costs.

Taxes

Remember to set aside a portion of your independent income (a good rule is 20-25% of each payment) for federal and state taxes. This will be paid quarterly in estimated payments.

Operating expenses

As a small business owner, you can write off many business expenses on your taxes. Depending on the business, it could be anything from gas mileage to meals to home office space. Create a spreadsheet for yourself to track expenses, or take advantage of self-employed accounting software like QuickBooks or Wave to track your business spending.

Business planning

Create a long-term business plan that factors in your end goal, income and growth goals, budgets, and your shift towards entrepreneurship or back into the workforce. This will help you put the time, energy, and other resources you've committed into perspective and help you decide if your side hustle is a success or not.

5. Set boundaries for everything

I've had to set a lot of boundaries since I became a full-timer with a freelance side hustle: boundaries with myself, with my job, and with my freelancing.

To me, this is non-negotiable because I'm a disabled professional—a lack of boundaries equals more stress, which then leads to health flare-ups and an inability to work well. But even if you don't have a disability or chronic illness, setting boundaries is a hugely important part of balancing different types of work in your life.

Before I started as a full-time employee, I made several boundaries with myself:

My mental health had to come ahead of both my job and my freelancing. This meant I committed to taking days off or stepping back from freelance work as needed.
I promised myself I'd take at least one day off a week. This hasn't always happened, but my quality of life drops significantly if I don't.
No full-time work on the weekends. I've managed to keep this boundary so far, but it usually means freelancing every weekend instead.

For my full-time job, setting boundaries meant:

Requesting a work accommodation plan for my depression
Advocating for myself when it came to workload and calls
Setting Do Not Disturb/focus time blocks around the breaks I need each day
Not doing anything personal or freelance-related on my work computer

I'm a remote worker working with a great team, so some of this was fairly straightforward. But I also had to learn the process of work accommodation from start to finish, which took some time.

And finally, I set boundaries around my side hustle, freelancing. This ironically ended up being the hardest part, and I received more pushback than I was expecting. These were the boundaries I set for my side hustle:

Limiting the number of clients I work for/projects I work on at any given time
Setting minimum and maximum income goals each month
Extending my required turnaround for project deadlines
Syncing my work calendars, so I can always see my availability

I had to remind clients of my boundaries several times, and in one case, I lost a project with a dream client because I didn't have the capacity they wanted.

How do you start setting boundaries? Think of it this way: what does not setting boundaries look like for you? Think about what causes the most stress in your life and what you do to avoid it. For me, stress means health issues, and giving myself time and space to work on projects or to rest, is crucial. If you want some practice, check out my article on how to set mental health boundaries as a business owner.

6. Put your needs first

A job is a responsibility, but it's not your entire life. A side hustle can be very important to you, too—it's something you've built, after all—but it's also not worth compromising your health or relationships for. Here are a few ways to keep your needs top-of-mind.

Set milestones

Remember your end goal? Think about the steps you need to take to get there, and set mile markers for yourself to measure your progress. My end goal for my side hustle is to save several months of income buffer and operating expenses. To keep myself on track, I've broken that down into five smaller financial goals and will check them off as I go.

Check in with yourself regularly

On top of knowing your milestones, set aside time each month or quarter to review your progress and make a new to-do list. This can be as informal as a pulse check to see if you're doing ok with your workload or part of your ongoing business planning. I like to do both at once.

Watch those priorities

Hopefully, you've already got a sense of the compromises you're making when you set your end goal. But how do you prevent yourself from compromising too much? Priorities. These should be the foundation of any boundaries you set.

I became a full-timer to stabilize my income while I worked on my health and finances. That was my compromise, and my health is my priority. If my mental health gets worse, then I've compromised too far and need to reassess.

Find an accountability partner

Sometimes we need a little help making sure we're on the right track, whether that means a gentle nudge out of our comfort zones or a suggestion that we might be doing too much.

Look for people in your life you feel comfortable sharing your goals and situation with, and ask them to help keep you accountable. If you want to take your side hustle more seriously and plan to make it a fixture in your life, there are plenty of small business accountability groups out there. Maybe you can even start your own.

7. Manage your time carefully—and automate the busywork

You know your time and energy is limited. Good time management comes from knowing how much time you have, how much time you're spending, and what to do when you run out of it.

Time you have: Hopefully you have a general idea of how much time you should be spending from the exercise earlier in this article. You can stick with your estimated number or get more detailed by setting yourself a daily or weekly limit. For example, I try not to spend more than 10-15 hours a week on freelance work.
Time you use: How does the time you have match up with the time you're actually spending? Think back over the past few weeks, and tally up your estimated total, or track time spent on your side hustle for 30 days for a more accurate result. When do you get the most done throughout the day? Better time management could mean working on your side hustle in the early mornings or evenings, depending on when you have more energy.

When you run out of time, it's an opportunity to delegate. That might mean hiring another team member, but you can also delegate to the robots.

Take a close look at your processes and ongoing tasks. Take out the tasks that fulfill you or help you generate income. Now look at what's left: it's probably a lot of repetitive admin tasks or busywork. Those are all things you can automate.

If you're not sure when to automate, start here, and then take a look at these five things you should automate today. Hey, maybe your side hustle itself can be automated. This entrepreneur built their entire side hustle with automation.

And you don't have to limit yourself to automating your work life. If you have more money than time, consider automating and delegating tasks in your personal life, instead. This could mean getting groceries delivered, paying for house cleaning, or delegating anything else that saps your energy.

8. Look ahead (and be realistic)

Whether your side hustle is a stopgap or an investment in your future, it needs to be sustainable. Ask yourself if you can keep up these new habits and routines for several years—or more.

If you do decide to pursue your side hustle full-time, you'll have the confidence knowing that you've already built experience—and a foundation—for your next step as an entrepreneur. If not, you can still take the skills you've learned and apply them to your next life goal.

And I'll end this with a reality check: if you find that you're struggling with burnout or still aren't able to generate enough income with essentially two jobs, reevaluate. The stress of juggling multiple types of work can take a huge toll on your performance and health, especially if it's not giving you the results you need. Be honest with yourself about your needs and limitations. It might be time to consider other revenue streams instead.

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