According to the FlexJobs and Remote.co’s Side Hustle & Financial Flexibility Report, 41% of workers have quit or have thought about leaving their jobs to pursue a side hustle venture.
While only 10% have made the leap, 31% of these employees have considered quitting their jobs to work on a side hustle. Another notable statistic from the report is that 57% of the respondents shared that their side hustle had to generate at least 75% of their current salary before they would leave their full-time jobs to go all in with the side venture.
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The article attached to the report expressed you’ll want to test drive the side hustle before committing to it fully. Another piece from Remote.co pointed out that if you’re thinking about leaving your job, you can tap into gig work and side projects to find opportunities you’re passionate about and help you develop new skills.
For this article, GOBankingRates will assume that you already have a side gig that you’ve started making money from. We will share tips from Remote.co and other experts to help you if you’re considering quitting your job for your side gig.
Remote.co noted that it’s essential to understand the potential hidden costs of a freelance business. When you leave your job, you’ll be faced with new expenses that will impact your bottom line.
Some of the costs you’ll want to think about as a self-employed person are:
You don’t have to consider these costs when you work for a company because they’re all included. When you quit your job, your expenses will also increase, and you can’t ignore this.
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“I know this sounds boring, but make sure your side hustle can cover not just your bills but unexpected costs and everything being employed gives you,” said Leona Burton, a side hustle expert and founder of Mums in Business International. “Remember, there’s no holiday tick or sick pay when you’re the boss.”
Remote.co also expressed that building up your savings will help reduce the stress of a major professional shift. The amount that you should save up will depend on your personal situation. It’s generally advised that you have an emergency fund with at least three months’ worth of living expenses so that you’re prepared to handle your bills and any unexpected situations that could happen.
You’ll want to review your personal expenses and know your business numbers. For example, if you have insurance through your employer, you’ll have to factor in that this will be something you pay for on your own now. However, if you can work from home when you’re self-employed, you could save money on the commute.
Burton stressed the importance of having systems in place, a clear customer journey, a business banking account, and a vision for your side gig.
“If these things are not in place, now is the time to build that foundation and do it before handing in your notice,” she added.
If you want to leave your job, you have to ensure that your side gig is set up like a proper business so that you don’t end up with a profitable hobby that barely covers your bills.
“When a side gig reaches the point of replacing or exceeding your primary income, the key question isn’t just revenue, it’s reliability,” remarked Golan Haiem, an entrepreneur and founder of Destination Wagyu. “Before leaving a job, evaluate how diversified your client base is, how predictable your income stream has become, and whether you’ve experienced at least one full business cycle with setbacks.”
You don’t want to confuse momentum with viability because when you quit your job, you no longer have a safety net in the form of a steady paycheck. While it may be tempting to leave your main job as soon as your side hustle starts bringing some money in, you want to be confident that this revenue will be reliable for the long run.
This brings us to the next point.
“Consider creating memberships or retainer programs (depending on what makes sense for your gig) to ensure repeat business and recurring monthly income,” shared Drew Henry, a freelance career coach at Freelance Your Way to the Top.
The experts agreed that you’ll want to diversify your income streams so that you’re not quitting your job for one client or one stream of revenue with an unproven track record. This may require you to stick it out at your job a bit longer as you build up multiple income streams.
You get paid through your check at a specified time when you work for a company. As a full-time entrepreneur, you have to create your own revenue streams, which can be extremely challenging at times. This is why you’ll want to diversify your income and have multiple ways of getting paid. An easy way to start is to add different product offerings and to seek out multiple clients before you go all in.
Henry suggests that you announce that you’re fully embracing your side gig within your circles and social media and politely ask for referrals. He believes that you’ll be surprised just how much business this could bring you. If you’re confident in your decision to become self-employed, you’ll want to inform your network to find out what opportunities may exist.
Burton noted how the self-employment journey can feel isolating, especially when first starting. You’ll want to surround yourself with others who get it through mentoring, masterminds or groups.
When you leave your job, you’re also saying goodbye to your co-workers, meaning you’ll spend more time alone. To make this transition smoother, you’ll want to find relevant groups where you can connect with like-minded people so that you won’t feel isolated in your journey.
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This article originally appeared on GOBankingRates.com: Quitting Your Job To Focus on Your Side Gig? 7 Things To Know First
