If you’re looking to earn some extra money by starting a business, there are literally hundreds of different things to choose from. But if you’re looking to enhance your life at the same time, finding the right side gig that also suits your talents and aspirations is vital, particularly if you’re going to be taking away from your leisure time.
List Your Talents and Interests
Make a list of the top ten things you feel you are good at, or simply enjoy doing. Don’t worry at this point whether or not you could make money doing any of them. The point of this exercise is to identify some of your skills. Here’s a sample of ten interests:
- working out
- making friends
- watching TV
Now, beside each of your talents and interests, list at least two or three jobs that would require that skill. You may find some of these are easy to list, so feel free to write down anything that comes to mind. If one of your passions is photography, for example, you could make money as a wedding photographer, portrait photographer, pet photographer or commercial photographer.
To come up with even more ideas, use a search engine like Google or Bing. Type your interest or skill along with the word “hire” or “per hour.” You will usually get results showing you how other people are making money using that skill or interest. You may be surprised by some of the ideas that come up. You may not think you can make money watching TV, but that notion may change when you see other people blogging about their favorite shows and hosting ads on their websites.
Using the key words “hire” and “photographer,” at the time of publication, reveals that Google is looking for Google Maps photographers whom businesses can hire to take photographs of their premises. All you would need is a suitable camera.
A search for “hire” and “walking” reveals a potential for making money as a dog walker, offering walking tours of your city, or hiking tours if you live in the country.
Click on the websites you find to discover how people are marketing themselves online and how much they may be charging for their services.
List Some Problems You’ve Had
Another great way to generate ideas is to list problems or challenges that you, your friends or family have encountered recently. In most cases, any problem you have faced is something that other people are facing too – and they may be willing to pay you to help them.
Perhaps your family has found that your grandmother can no longer live on her own and needs to go to a retirement home. This can come with several challenges. First, you have to select the right home for your budget and needs. Secondly, you need to help decide what she can and cannot bring with her.
Ask yourself what opportunities these might present for starting a part-time business, like helping a family evaluate all of the retirement homes in your area, or a specialty moving service that helps families move their loved ones into a new home, while helping them to assess what should be done with furniture and other belongings that would have to be left behind. Would families be willing to pay you to check in on their relatives and visit with them on the days they can’t visit themselves, either before or after the move?
A more disconcerting challenge families face when moving a loved one into a retirement home is coming to terms with the fact that the relative won’t be around forever. Would the family be willing to pay someone to convert all those old photo albums to digital images on a DVD? If you’re someone who enjoys making friends, perhaps there is an opportunity to make money listening to the stories and recollections that an elderly person has to share, while recording it in video for their families.
Turn the Idea Into a Business
Review the dozens of business ideas you have now listed and select one that you are the most excited about – and which has a good chance of being successful. Research what other people are doing, how they are presenting themselves and what additional services they are offering. Write down the ideas that you find most useful and prepare to incorporate them into a business plan.
While many people may think a business plan is something you need only if you are going to a bank to get financing, it’s actually an important tool to help you define what it is you want to do and how you are going to do it.
A business plan doesn’t have to be a long, complex document. One or two pages may be all that you need. A good business plan should answer each of the following six questions in detail:
1. What will your business sell? In addition to your main products or services, what ways could you generate additional revenue? If you plan to make hand bags and sell them online, for example, are there other accessories you could offer on your website? Are there local stores that may be willing to sell your products?
2. How you will market your business? Will you place ads on Craigslist or purchase online ads? Will you make flyers or posters? Do you have friends, family or coworkers that may be interested in what you offer?
3. Who is your competition? What do they offer? How do your products or services differ from what is already available?
4. What are your costs? This includes starting costs and recurring costs for each product or service you plan to offer. If starting costs are too high, look at ways you can do something similar for less money.
5. How much will you charge? This should be substantially more than your costs so that your business makes you some money.
6. How much time and energy will you invest in your business? You may be able to work four hours every night, or just ten hours each weekend. Whatever amount of time you plan on putting into your business, write it down and make the decision to stick to it, through good days and bad.
Manage Time and Money
Whether you have one client or a hundred, you must ensure that your business will make money. If you decided you wanted to try your hand at painting portraits of people’s cats, you may be tempted to charge a very small fee for your first customers – or worse, ask clients to pay what they want. However, you will need to invest in professional-grade paint, canvas, varnish and often framing services. Work out what your average costs would be and ensure that your planned sales price exceeds it.
- Paint $45
- Canvas $12
- Framing $120
- Total: $177
Your time is worth money, as well. If you’re not going to make money from your endeavors, you would be better off taking a part-time job at a fast food restaurant. Determine approximately how much your time is worth, and factor this into how much you plan to charge.
While you’re just starting out, record in your business plan how much time you intend to invest in your business each week. Whenever you aren’t working for a client, you should spend that time finding clients. Make phone calls to local businesses or attend local business meetings related to your work. Use a website like Meetup.com to find where people in your industry get together. If you can't find a group, consider starting one yourself.
Taxes, Licenses and Fees
In addition to your costs, you also need to factor in the additional income tax that you'll pay, over and above that for your day job. In 2017, if your day job paid $37,950, you would be in the 15 percent tax bracket, but any income above that would be taxed at 25 percent, assuming you are single. While this isn’t something you should put in your list of costs, keep it in mind before deciding how much profit will make your side gig worthwhile to you.
Consider the above example in which you spent $177 for painting supplies. If you charged $200 for a framed painting, your profit of $23 would be reduced considerably at tax time.
You should be able to deduct expenses like these; however, be sure that your side gig meets the IRS requirements for distinguishing between a business and a hobby. You should be prepared to show that you are pursuing your side gig in a business-like manner, that you are devoting sufficient time to it with the intention of making a profit and, if you aren't yet making a profit, that you are taking the necessary steps to make it profitable in the future.
Finally, you need to check with your state and local governments to determine whether you need a business license before you can start charging customers. If you plan to work from home, you also need to ensure that your working situation doesn’t violate local laws. Starting a blog that reviews your favorite TV shows may be something you can do from home without a license, but usually more stringent licensing requirements apply if you plan to make or serve food, or have customers coming and going from your home.
Plan on Expansion
If you find that you enjoy your side gig, you may soon be dreaming about quitting your day job to work on your business full-time. Before making a leap, ensure that your income will scale with your increased efforts to give you enough to live on. Suppose you’ve decided to be a wedding photographer. You aren’t making enough to live on, but your weekends are all booked. Since few people get married on weekdays, you would probably need to charge more before pursuing photography full-time. However, if this requires that you immediately double or triple your pricing, you may find fewer people are willing to use your services.
This is where accurate record-keeping of all your expenses and income is vital, so that your future decisions are based on real data. Revisit your business plan on a regular basis and keep it up-to-date. Use it to explore additional revenue streams. For example, as a wedding photographer, perhaps last year’s clients are now looking for a baby photographer. Your business plan should grow alongside your business and become a document you can use should you decide it’s time to expand and need to go to the bank to discuss financing.