So, like an estimated third or more of other people living in the UK, you decided to start your own side hustle to earn a few extra quid and things have worked out rather well. Well done!
You're making good sales, some welcome additional cash and you're quite enjoying it. Now you want to ramp things up and grow your side hustle into a larger, more successful business. The problem is, you're not sure how to do it or what new challenges could come your way. Here are seven key areas you should think about.
1 Marketing
Before you do anything, carry out basic market research to find out how feasible it is to scale up your sales. Having sound, current knowledge of your customers and competitors is essential to better understanding whether you'll be able to make enough new sales to grow your business.
If research leaves you confident that it's possible, you should devise a marketing plan, setting out your new sales objectives. You should also identify your target customers, explaining how you'll attract and sell to them.
Do you need to develop new products or services? Do you need to start selling via different channels (eg online if you're not already doing so)? Should you target different types of customers, possibly those living in other places?
Tip: Find out how to create a marketing plan and read the essential guide to writing a business plan.
2 Funding
Some businesses achieve organic growth off the back of their own sales. However, your current profits may not provide all the money you need to grow your side hustle as quickly as you want. Much will depend on how ambitious your plans are. If your business profits aren't sufficient to fund that growth, you'll either have to invest more of your own money or seek external funding.
Carefully assess the pros and cons of possible sources of external funding and make sure you realise the full implications before you make any firm decisions. Remember that using external funding to grow your business will bring additional cash flow pressures.
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3 Skills
If you haven't successfully grown a business before, inevitably, you'll lack some of the know-how. But just because you've no experience to draw upon, doesn't mean you cannot increase your knowledge. There's a wealth of information out there that you can draw on - from business books and online business advice to small business forums and professional advisers and individuals who have run and grown their own successful small businesses.
Online and offline networking can also be a great way to grow your knowledge and contacts. And, budget permitting, you can pay others for the skill and knowledge required to grow a business, you don't have to do it all yourself.
Tip: Websites such as Fiverr, Upwork, and Freelancer.com might help you find cost-effective freelance support. For example, if you want to develop your brand or website.
4 People
You may need to take on employees if you are to truly take your side-hustle business to the next level. Recruiting and managing staff can be a huge challenge if you lack the knowledge and experience. You must also comply with a wide range of employment legislation and there can be serious consequences if you don't.
You may also need to provide training, to ensure that your employees represent your business in the right way and their performance is in line with your expectations. Making good recruitment decisions is vital to your success.
Tip: See the Law Donut for guidance on employment rights and legislation.
5 Suppliers
If you are to grow your business, you must ensure that your current suppliers can continue to meet your requirements as you move forward. If you need to order more stock or material volumes increase and they cannot deliver, you'll need to explore other options. Finding new, reliable suppliers can take time. Another consideration is that you may not get the same credit terms you currently enjoy, so there could well be cost and cash flow challenges to negotiate.
6 Premises
To take your business from a side hustle to a more successful full-time business, premises may be a key consideration. If your business is currently home-based, you may need to find premises. If you already have premises, will they help or hinder your growth ambitions? If they're likely to hold you back rather than propel you forward, you're going to need to find new premises. This can take time, but you don't want to rush, because it could have costly consequences.
Tip: Read the essential guide to finding premises for your business.
7 Tax and software
As long as your sales are below the trading allowance threshold (£1,000), you don't need to register your business. However, if growing your business means you'll go over this threshold, you must register as a sole trader via GOV.UK (sole traders make up more than half of UK businesses) or register a limited company.
Although a sole trader has fewer responsibilities than a limited company, you must make sure you fully understand your tax responsibilities as a sole trader and the implications if you earn other income. You should also invest in good accounting and tax return-filing software. It will save you much effort, time and money. Be sure to claim all of your tax allowances and expenses.
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