Do you spend half your day dreaming about quitting your job so you can do something you love?
I spent most of my days like this before I quit my job to become a full-time freelance proofreader.
Right now, you might think your dreams of being your own boss are distant pipe dreams.
But I’m here to tell you, they’re closer than you think.
If you’ve got patience, persistence, and faith, you can make your self-employment dreams come true.
And if you’ve got a side hustle business or a few side hustle ideas, below are my top tips for turning that into a full-time job.
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#1 Verify your side hustle business is capable of taking you full time
The first thing you need to do is verify that your side hustle is profitable enough to make you a full-time income. You can find this out by asking one question:
Is your side hustle business already making you money? Even if it’s as little as $100 to $300 a month?
If so, great! You’re ready to move on to the next section.
If your side hustle is not already making you money, don’t sweat it. Maybe you’re just starting out. If that’s the case, then we need to make sure that it WILL make you money eventually.
So your next question is: Is anyone else making money doing this?
If the answer is yes, then that gives you the greenlight to move forward and see if you can bring in $100 to $300 a month.
Carve out time each morning or night (outside of your full-time job) to work on your side hustle. This will help validate whether it can make you money ($100-$300 a month is a good start).
If you’re able to make some extra money with it, like $100-$300 each month for a few consecutive months, move on to the next section.
#2 Create a ‘severance’ savings account
If you want to transition from a full-time employee to doing your side hustle full time, you’re going to need a lot of money.
Just off the bat: you’ll need money for taxes, health insurance, rent, bills, and all of the other day-to-day necessities.
This means that one of the first steps to taking your side hustle full-time is saving as much money as possible.
The best way to make this exciting is to create a new savings account inside of your bank account and label it “Severance”.
Every dollar you put into this savings account will act as your “severance” for when you finally quit your job.
This means that when you quit your job, you have a chunk of money to float you for 3 to 6 months in case your side hustle starts off bumpy.
And titling your savings account “severance” makes things more exciting. Every time you log into your bank account, you’ll see the account name and be reminded that you’re saving to FINALLY do what you love for a living.
It might even entice you to save more!
#3 Save until you have at least 3 months of expenses
Now that you have your fun savings account set up, it’s time to get serious and start saving money.
When I quit my full-time job, I had 3 months of expenses saved up. This felt comfortable for me in my situation, but everyone is different. If 6 to 8 months of expenses makes you feel more comfortable, go with that.
(And in fact, if I had to do it over, 6 months of expenses would have been better!)
Now, back to the saving part. If you still have a full-time job, you’re in a great position to save money in the most stress-free way possible. Set aside $50 from every paycheck into your severance account (or whatever you can).
Some weeks you might be able to set aside a little more, and some weeks maybe less. But regardless, make it a habit to set aside SOMETHING every time you get paid.
Some banks, like Bank of America, will let you automatically deposit $50 from your checking account every week or two weeks, so you can build up your severance without having to think about it.
Next, I would recommend adding whatever side hustle income you have to this account too.
It gets tricky if you have business expenses, because that side hustle income should ideally be covering those expenses.
But any side hustle income you’re currently making that you can squirrel away, whether it’s $100 a month or $500 a month, put as much as you can into your severance savings account.
#4 Become a sole proprietor or an LLC
Everything works better when it’s official. So while you’re getting some extra side income in, I’d recommend getting either a business license and becoming a sole proprietor, or becoming an LLC.
This helps you keep things official and organized when it comes time to do your taxes.
There’s no right moment to know when to do this. But I did it as soon as I realized I was bringing in a good amount of side income through my side hustle proofreading service, Proof Mango. Just to be on the safe side.
Now, I’m no business license or legal guru, so I can only recommend what I did and what worked for me. (You might need to do some extra research to see what works best for you.)
For me, I went through LegalZoom and got a business license, and became a sole proprietor for my side hustle business (proofreading).
I was officially doing business as (DBA) Proof Mango out of my home office (my apartment).
This is an easy way to get started because it’s very easy to get up and running with a sole proprietorship. The only downside is that you’re liable for everything in your business.
I don’t know the specifics, but with a sole proprietorship, if things go south in your business, all of your personal assets could be at risk.
For me, I took the risk because my business (and income at the time) was pretty small.
But if you’d like to fully separate yourself from your business, go with an LLC. The only reason I haven’t gone with an LLC is because it’s expensive as heck here in California. But I’ve heard in other states, it’s not that bad!
I don’t have experience getting an LLC, but if I had to get one, I might go through Legal Zoom again, just because that’s what worked for me with my business license.
But my recommendation, if you’re just starting out making $100 to $300 a month in your side hustle, is to at least become a sole proprietor. If you’re making more than that and you can afford an LLC, go for it!
#5 Get a business checking account for your side hustle business
The next thing to do to make yourself “official” as a business owner is to get a business checking account.
This makes things a lot simpler when it comes to paying business expenses and knowing how much you’re making each year in your business. Everything goes in your business checking account: from business bills to payments from clients.
It’s nice to have everything separate.
For me, I got the business license first, then shortly after, signed up for a business checking account with Wells Fargo because their monthly fees were minimal.
In hindsight, I might have gone with Chase if I had to do it again — just because I’ve heard good things about their business checking accounts!
But this is a great way to keep your business and personal finances separate and organized. And you’ll need to do this if you’re hoping to quit your job and take your side hustle full time.
Once you get your business account set up, make sure all of your client payments get deposited into your business checking account. I use WaveApps to invoice clients, and all client payments go to my business account.
I also hooked up all of my recurring business payments (for things like Adobe Acrobat DC or website hosting) to my business checking account so that I don’t have to worry about it.
Then, you can always transfer money from your business account to your checking account when you need it.
#6 Confirm your plan for consistent revenue WORKS
One of the biggest mistakes I made when I left my full-time job was not having a plan for consistent revenue.
I had ideas, but I didn’t have a plan that I had already seen results from — big mistake.
Before you turn in your two weeks’ notice, make sure you are seeing results from whatever plan you’ve developed to bring you clients or income.
This is a plan that you should put into place while you STILL have a day job so you can test it to see if it continually brings you new work.
If you’re in the service-based industry (like me as a proofreader), this could mean that you’ve implemented a plan to bring you consistent clients.
For example, maybe you’ve tapped into a good way to get Upwork clients repeatedly. Or maybe you’ve formed relationships with partners in your industry to get new referrals on a weekly basis.
If you’re selling a product, maybe you’ve implemented a plan to consistently make money from the products you sell.
For example, maybe social media, collaborations, or advertising has been working for you.
Whatever that side hustle business is, we have to confirm that it will bring you money week in and week out before you quit your job. Key word being BEFORE.
Trust me, you’ll be so happy that you did this BEFORE you quit. Your stress levels AFTER you quit will decrease tenfold.
Once that plan is in place, and you’re actually seeing results from it (that’s the key part), then you might be able to make it on your own without a full-time job.
#7 Get clear on money coming in and going out
Create a spreadsheet in Google Sheets to map out all of your expenses and how much money you’re bringing in each month.
I wish I could say there was a great template I used for this, but honestly, I just started mapping out my expenses and revenue in Google Sheets in a way that made sense to me.
And sometimes that works great!
Whatever way you do it, you’ll need to carve out a space somewhere to review how much money your client work is bringing you each month (either hourly or on a retainer) and how much money will go to expenses.
I use three spreadsheets to keep track of money coming in and going out of Proof Mango:
- A cash flow tracker: This is a tracker I use to see what expenses are going out on what dates, and what dates I’ll be paid from clients (or from infoproducts or affiliate revenue).
- Expense tracker: This is another basic sheet I use to see at a glance what expenses go out on what days (for business and personal finances).
- Revenue tracker: This is a tracker I use to see how much money I’m bringing in each month from different clients/info products.
Like I said, I wish I could offer you a template for this stuff, but I’m such a manual person, that you might be scared of my spreadsheets and the way I manually add everything!
One thing I’m investing in this year is a bookkeeper to keep it all straight! I’ll be sure to update this post with tips from my bookkeeper once I use one to get more organized.
But for now, don’t worry about hiring anyone (especially if you need every cent and you’re just starting out). Just make sure to keep track of everything.
#8 Have a positive mindset (seriously, it helps)
It sounds cliche to say that “thinking positive” will help you turn your side hustle into a full-time business.
But I’ll say it anyway — think positive because mindset is everything.
When you realize that your ability to find clients (or sell products) determines whether you can make rent each month, you’ve got to have the mindset to find work, even when you’re “not feelin’ it.”
When the client work is slow and your revenue projections for the following month start making your palms sweat, you need to pick yourself up and keep moving.
Have strong faith that you were meant to do the work you are doing. Believe in a higher power to help you access the side of your mind that is calm and certain about the future (and your ability to pay the bills).
In my experience, the money has always shown up right when I needed it. I’ve had to make some sacrifices here and there (and learn the hard way sometimes), but I’ve never missed a bill payment since being a freelancer, and I attribute much of my “good luck” to mindset and faith.
Ready to turn your side hustle business into a full-time thing?
Now that you’ve read some of my tips, you might be eager to get started either saving money with a small side hustle or growing a business you’ve already got.
From now until February 23, 2023, I’m hosting a small pop-up Facebook group to support anyone hoping to start or grow a business this year. Hope to see you in there!
And if you’re looking for a fun, free business training by a 22-year business veteran, check out Marie Forleo’s Dream Business Bootcamp. It’s happening from February 7 – 9, 2023, and it’s sure to get you moving in the right direction!