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Are You Building a Business or a Side Hustle?

December 9, 2020

Are you just earning a little extra cash to get by or are you creating a business that is going to grow to enable you to reach your long-term goals?

Let me just say, I have had many a side hustles in my life.  Picking up extra projects for a friend, selling kitchen gadgets, children’s books. I’m sure I have forgotten some because I have been picking up side hustles for decades.  I think we all probably have at one time or another.  But the side hustle, was never the main source of my income or what my family relied on to pay the bills.  I used my personal bank account, took payment in whatever form it came and didn’t really track in depth my expenses, because I was just working for extra cash.

When I decided to launch Sowles Consulting, I was very intentional.  I got my Federal Tax ID number for the business, so I wouldn’t be using my personal social. I filed my LLC with the state and got my state business ID number. I opened up a business checking account.  I began creating an entity that was my business.

I recently was listening to a podcast with an expert on how to protect your business and personal assets.  The presenter asked the question “do you have a business or a hobby?” Her point was if you are mixing your personal and business finances, whether you have an LLC or Corporation in the eyes of investigators everything is mixed together and vulnerable to attack in a lawsuit.

This got me to thinking about how we set up our businesses, not just our finances but everything within our businesses.  Accounting, Banking, Insurance, Employees, Systems and so many more areas can be set up to scale, maximize productivity and profitability.

Sometimes we launch our businesses on a shoestring budget so we just use our personal resources (money, insurance, software, etc.) to get started.  We get so busy a year has passed.  It’s time to think about taxes, pricing, planning and growing our businesses.  All we have is a box of receipts and guestimating (yes, I count the blend of guessing and estimating as a real word) our expenses and income to guide our decisions.

If you want to build a business here are some things that you should put in place as soon as possible:

  1. Talk to your CPA and/or Attorney to find out if creating an LLC or Corporation makes sense for your business. There are a lot of different options, many do not cost a lot of money to establish.
  2. Open a separate bank account with a debit/credit card to use for all purchases and deposits for your business.
  3. USE an accounting software to track all of your income and expenses for the business.  Setting up the account and not using it doesn’t help you.
    1. QuickBooks and Wave are some of the popular choices.  Wave to totally free for the basics capturing information and generating profit and loss information.  I prefer QuickBooks personally, but it does have a monthly fee.
  4. Talk to your insurance agent.
    1. When operating a business, there is a variety of different coverages depending on your industry you should have in place to protect you and your assets.
    1. Many of the times your property and auto insurance coverages will have exclusions for business use.
  5. When you decide to hire your first employee, whether it is just a friend or family member, do it intentionally.
    1. Create the employment policies to protect your business and be compliant with the law.
    1. If you are using independent contractors, make sure you have the proper contracts in place to protect you and limit your liability for their actions.
  6. Use the free tools available to create systems within your business that allow you to grow and include a team of freelancers or employees (even if that doesn’t happen right away).
    1. Create a business specific email address
    1. Use an on line calendar program to track your schedule
    1. Customer Relationship Management (CRM) platforms allow you to track your interactions with customers, create lists of customers to contact, follow up with.  HubSpot offers a great FREE version to get started.  There are dozens of options that may be perfect for your industry.
    1. Keep track of projects with software like Asana and Trello (both have free versions if that makes sense for your business.
    1. I try different software out all of the time and stop using software that doesn’t work for my business.

As we go into 2021, do you have the structures in place to build your business?  Or are you still working a side hustle?

If you would like some guidance on creating your BUSINESS, book a complementary strategy call here.