It’s one thing to operate a died hustle, but another entirely to run a true business, and there are both glaring and subtle factors that differentiate the two. In our technology-enhanced and social media-infused era, people are starting businesses at a pace never before seen, and this landscape has given rise to a legion of so-called entrepreneurial gurus — “experts” who supposedly have all the answers for their hopeful and wide-eyed audience. They’re pitching side hustles, courses, ideas, funnels, coaching and more to the unsuspecting, few of which wind up being practical, perhaps least of all the concept of “side hustle” enterprises. Any moneymaking activity that you participate in should be treated like a business, plain and simple, for a whole host of reasons that we’ll explore here.
Fundamentally, I think that we can all agree that it takes a significant amount of grit for one to be successful in anything — whether a sport, business, education or just life in general — and hustling might seem a valuable component of that grit. I think of a hustler as someone who will do whatever it takes to succeed no matter what, who has an unchecked drive that makes it hard for them to fail or not reach their goals. Just hustling comes with obvious pitfalls, though. Without a proper plan, it can cause severe strain on an individual’s mental, financial and physical wellbeing. So, a first step in both starting a new enterprise and avoiding these pitfalls is to stop referring to it as a “side hustle.” You’re better than that term, and probably have a tremendous idea brewing, regardless of the vehicle you’re using to grow and present it.
1. Obvious and not-so-obvious financial benefits
While I’m not qualified here to give financial, tax or legal advice, I will preface this section by saying that in my experience there are a variety of benefits in turning a side hustle into a real business, not least tax advantages offered in the U.S. to entrepreneurs, including those operating small to mid-sized companies.
Even as a solo-preneur, you want to have a proper business structure in place, and its form depends on its nature, where you operate and how you operate. It could be an LLC, an S-Corp, a C-Corp or some derivation thereof. Its’s wise to consult with a tax professional and an attorney to figure out what would work best and provide you with the most advantageous legal and financial position.
Some of the obvious financial benefits of treating your side hustle like a business are:
• Potential tax write-offs.
• Attracting more clients as well as those of a larger size as a result of increased legitimacy.
• The ability to increase revenue as a result of better structure.
Some of the not so obvious financial benefits include:
• With a proper legal structure, you’ll be able to protect yourself from certain liabilities, whereas as a non-structured business side hustler, you might be exposed.
• An improved ability to raise capital for investment purposes.
• If and when you want to liquidate/sell the business, you’ll be in a better position to do so. (It’ll make due diligence easier on everyone, as long as you’ve kept track of everything appropriately.)
2. Growth potential
When you operate a business that has structure, you’ll find that it’s easier to grow. From a revenue perspective, this could be anywhere from a two- to ten-fold increase, or more. How is this possible? Throughout the last decade of my experience in startups and high-growth companies, I’ve noticed that if chaos looms or embodies the enterprise, growth is a figment of everyone’s imagination — more a dream than attainable reality, because there is no clear plan.
A proper structure of a business must include all facets; every department, no matter how big or small, has to have a level of structure about it. This could be as simple as creating a document that has all of processes and procedures outlined, which you can eventually refine into broader standard-operating-procedures (SOPs) as part of the company playbook.
Put simply, a business with structure is better positioned for success than one without it, and it’s only logical that such structure allows for (and plans for) a level of predictable growth, which would come in the form of executables developed as part of sales and marketing plans. It is absolutely imperative that you fully define these sales and marketing plans, as this will help position you to achieve target growth and revenue goals. The last required piece is to constantly monitor data/metrics and refine sales and marketing processes as you measure results.
3. Increased motivation
If you’ve read the self-help books and/or listened to the countless podcasts in the world of entrepreneurship and business, you’ll find that many of them address mindset and mentality. Fair warning: I’m not going to be different in that respect here, because much of what I’ve proposed thus far has to do with a shift in the way you think about things.
Purely from a mindset perspective, partaking in a side hustle is one thing, but running a business is completely different. I’ve found that most of the side hustles I’ve engaged in over the years never really took precedence in my life. The most logical conclusion I’ve been able to draw is that, because I was not treating them with an appropriate level of importance, they could fall by the wayside. That’s a mistake I see too many people making — just going through the motions with their ancillary enterprises.
The mentality shift that structure brings to your life and business will help you from a motivational perspective, because you’ve brought something to life in a more dimensional way. I liken it to a child: It requires comprehensive nurture and care, otherwise it won’t thrive or prosper.
4. You’ll focus on passion, not just outcome
Mostly, I hear side hustles referred to as nothing more than means to a financial end, which is another mentality shift that turning yours into a real business will engender. There’s an old adage from Mark Twain that reads, “Find a job you enjoy doing, and you will never have to work a day in your life.” If you’re truly into your business and love what you do, it’s imperative that you set it up properly, so you can focus on using all your energy to help further its broader purpose… something beyond the financials that it looks to achieve. Every business and business owner has a mission, whether they acknowledge it at the onset or not.
5. You’ll be in a better position to sell
Investors, whether of the institutional type or those of smaller caliber, are rarely going to stake money in a side enterprise. Investors both large and small want to be able to conduct a level of due diligence before they invest any level of capital, and if your business isn’t structured appropriately, you’ll find it hard to come by that extra money. And beyond investing is the opportunity to cash out on all of your hard-work in the form of selling. The same principles apply here: You want to make sure you’re structured in a way that allows potential buyers to realize the true value of what you’ve built. A side hustle in most cases just isn’t appealing on the same level, unless it’s a unicorn of sorts, and we know those are far and few between.
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Original source: Entrepreneur