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How to turn your side hustle into a small business

Finance & Money

Posted on Monday, February 22, 2021

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You’ve been pushing a side hustle for some time and you’re looking to expand your business. But first, it’s important to understand the difference between a side hustle and a small business.

 

Side hustle vs. a small business

 

A side hustle is a way to make extra cash, aside from your main job or business. A small business, unlike a side hustle, is a full-time job and needs your undivided attention.

 

How do you make the shift?

 

  • Treat your side hustle like a business. Avoid working for free or you will eventually work at a loss.
  • Hold off on weekend plans and holiday trips. With a full-time job, building your side hustle means working after working hours and in your free time (holidays and weekends).
  • Don’t rush into anything. Give yourself enough time to gain stability before leaving your day job, especially if your new venture will be your main source of income. 
  • Assess your finances. You need to establish how much capital you have. Check your bank accounts and banking statements – it's a good way to identify where to cut costs.
  • Team up. Reach out to someone you trust and who has a similar vision – two is better than one. It also helps to have a sounding board to share guidance, advice and unbiased views.
  • Handle the risks. Taking this leap can also come with risks. Consider having small business insurance.

 

How to start a business

 

Starting a business begins with identifying a gap in the market and having a business idea. Once you’ve figured this out, you will need to:

 

  • Write up a business plan. This step is helpful when it comes to pitch possible investors your idea for funding.
  • Do some research. Familiarise yourself with the marketplace and your competitors and their strategies.
  • Talk to other business owners. With all the experience and knowledge they carry, you will get much insight and valuable advice.
  • Deal with administration. There are a number of things to register and pay for before your business can start running. For more information, contact the Companies and Intellectual Property Commission.

 

Finance your business.

 

Finding capital to start up your business can be a daunting task. Fortunately, there are a number of options to help you take off. If you don’t have enough capital to finance your business, here are some options to look at:

 

  • Bank funding.  Approach your bank for a business loan. All South Africa’s large banks have small business departments with specialists to offer advice.
  • Angel investors. Wealthy individuals use their personal funds to invest in a business with the goal of earning great profits over a set period of time ( 5 - 10 years).
  • Crowdfunding. Funds are raised from a number of independent investors, contributing small amounts towards a set target.

 

Important administration tasks

 

  • Register and pay to reserve your company name with the Registrar of Companies.
  • File your formation documents with the Companies and Intellectual Property Registration Office (CIPRO). This too has a payable fee.
  • Register for income tax, VAT (value-added tax) and employees’ tax with the South African Revenue Service (SARS).
  • Register for unemployment insurance with the Department of Labour.
  • Register with the Commissioner according to the Compensation for Occupational Injuries and Diseases Act.
  • Set up a business bank account and avoid mixing your personal banking with your business.

 

Starting a business venture is an exciting journey, so take the leap and make your passion a reality.