By Jean D. Koehler
Are you among the millions of Americans who has pursued a moneymaking endeavor outside of your job, what is commonly referred to as a “side hustle?” If you have a passion for this venture, you might be looking for a way to turn it into your primary occupation.
What should you know before you try to turn your side gig into your main source of income? Here are five key questions to consider before you make your move.
1. Do you have the entrepreneurial bent?
What was the inspiration to pursue your side hustle? Was it to fulfill a desire to follow your dreams and start your own business, or was it primarily to provide some financial cushion in your life? If it was the former, chances are you have the right kind of entrepreneurial mindset to pursue your own business opportunity.
2. Is there potential for real growth in your business?
Whether you’ve been selling a product or consulting on the side, one of the most important questions revolves around the marketplace for what you are offering. Can you justify making your side hustle a fulltime gig from a financial standpoint? You need to honestly assess the opportunity to boost your business if you put more time into it.
3. Are you willing to commit the time it takes?
For most starting up a business, it is not a “9-to-5” proposition. If you’ve already been working at your business idea on the side, you should have an appreciation for the extra hours often required. Even if you are able to leave your current job, expect more of the same as you try to transform your business into a fulltime occupation. It can be more work than you think.
4. Have you done your homework?
If you haven’t already, you’ll need to establish a more formal framework around the business, including choosing a business structure (sole proprietor, partnership, limited liability corporation, etc.). Talking with an attorney and tax advisor as well as a consultant who works with start-ups may be beneficial.
5. Is your financial house in order?
You want to do all you can to ensure that your decision to make the leap into your own venture doesn’t have a negative impact on your personal finances. Review your current financial standing as it relates to key goals like retirement savings, your insurance needs (health, life, disability) and managing outstanding debt. You also want to have sufficient emergency savings on hand as a financial cushion. It’s important to be in strong financial position as you work to get your operation up to speed.
Your financial advisor can help you assess your personal financial situation and review important steps to consider as you prepare for this next stage in your working life.
Jean D. Koehler, CLTC CRPC CKA RICP is a Financial Advisor with Ameriprise Financial Services, Inc. a financial advisory practice of Ameriprise Financial Services, Inc in Arcadia, Calif. She specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years. To contact her, ameripriseadvisors.com/jean.d.koehler.