More than 53 million Americans work as independent contractors according to a 2014 study issued by the Freelancers Union. LinkedIn research forecasts independent workers will comprise 40 percent of the workforce by 2020. Thats a substantial percentage of the workforce operating independently already, and a significantly larger number predicted to be working for themselves in just a couple years. The gig economy is in full-force and shows no signs of slowing down. Quite a few people will likely leave their full-time jobs to work for themselves over the next couple years.
The prospect of working for yourself and building your own business, free from the timeclock, corporate bureaucracy and mismatched management styles, can certainly be appealing for some, but intimidating for others.
Proponents, like Chris Guillebeau, author of Side Hustle: From Idea to Income in 27 Days, says, a side hustle is more than just another stream of income, its also the new job security. When you receive paychecks from different sources, it allows you to take more chances in your regular career. More income means more options. More options equals freedom. You dont need entrepreneurial experience to launch a profitable side hustle. You dont have to have an MBA, or know how to code, or be an expert marketer. You dont need employees or investors.
But striking out on your own isnt without its challenges particularly if it comes after an unexpected layoff or termination. Even if youve already started cultivating a side hustle, taking it from the side to center stage can be nerve-wracking. How do you prepare to turn your side hustle into your main gig, and how can you recognize when its time to take the leap?
Are You Ready to Build a Side Hustle?
- Craft your digital presence. No matter your business, its important to have a quality website, portfolio, bio and (if possible) testimonials online that potential clients can refer to when theyre considering hiring you.
- Have samples at the ready. Make sure you have relevant examples of your work accessible should a potential customer approach you.
- Find a client base. When you first start out, it might make sense to work with as many customers as possible, so you can pad your portfolio with a variety of samples. But eventually, finding a group of regular customers with whom you work well can provide a semblance of predictability in an unpredictable profession.
- Figure out how much work you can handle. Online freelance marketplaces help remove the difficulty from finding work.
Are You Ready to Take the Leap?
- How much does your side hustle bring in? If you can pretty well cover all your bills – even if that means you arent indulging in any luxuries – with the income from your side hustle, thats a good sign its time to take the leap. Youll likely have a bit more wiggle room in your finances once youre able to devote more hours to it.
- What does your savings account look like? Independent contracting is volatile, so contractors should err to the heavy side of a typically-suggested emergency fund of three to six months expenses. Since you never know when a gig will run dry – or when a client will be late with a payment – make sure you can cover your living expenses without relying on a regular paycheck.
- Are you willing to side hustle your side hustle? When youre first learning to live on independent income, it might not be a bad idea to have dollars coming in from an unrelated source. Whether you rent out a room on Airbnb or get a part-time job at a local coffee shop, the security of regular checks, however small, may help assuage the fear of striking out on your own.
- Have you thought about insurance? Especially if you dont have a spouse with employee-sponsored health benefits, consider your coverage options before you quit your full-time job. That way, youll know what your options are, for both health, life and disability insurance, and can likely avoid a lapse in coverage.
- What about retirement? Without an employee-sponsored retirement plan, youll need the discipline to contribute to tax-sheltered accounts on your own. Online calculators can help you figure out how much you need to save each year to meet your retirement goals.
- And … what about taxes? Without withholdings from regular paychecks, youre likely to owe the government a big chunk of money at the end of the year. Most experts advise setting aside 33 percent of your earnings for the IRS.
- How are your time and stress management skills? If youre keeping a successful side hustle and a full-time job afloat, theyre probably pretty good. As an independent contractor, youre your own boss. Thats great, but it also means nobody is keeping track of your deadlines, obligations, relationships and calendar. Make sure you can do it yourself.
- Can you say no? As an independent contractor, youll need to be your own advocate. That means figuring out how much to charge, who to work with, how much you can handle, and when you need to part ways with a client.
- Are you leaping for the right reasons? Make sure youre quitting to follow a passion, not to run from a problem. In most circumstances, impulsively taking a side hustle full-time just because you dont like your full-time position wont end well.
- Do you do good work? As an independent contractor, your work is all you have. If youve been able to produce quality work for both your side hustle and your full-time position, keep deadlines and maintain good relationships … congratulations, it might be time to turn your side hustle into your full-time gig.
Hanging out your own shingle can be exciting and scary at the same time. Sometimes the decision to go out on your own is made for you. What happens when you are let go from a job or the company you work for goes out of business and you are pushed toward freelance work? Fortunately, we have some tips for how to navigate that situation in this article.