Turning your side hustle into a thriving business requires this important step
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By Janine Horn
As South Africa navigates the third wave, the nation is once again beset by the economic impact of Covid-19. A sluggish economy, job losses and record high levels of unemployment have set many South Africans on the entrepreneurial path of self-employment or looking to other avenues to earn additional income, like starting their own side hustle.
Many South Africans are seeking a side hustle to supplement their lost household income. Finding financial security is no longer about nailing down a job to work at for the next 30 years and retiring with a pension (although retirement savings are important!) Instead, diversifying your earnings and taking control of your own financial destiny is the only path to true financial security.
According to specialist advisory service Cova Advisory, South Africa faces one of the highest failure rates for SMMEs, with five out of seven of these businesses failing within the first year.
But it’s not all doom and gloom. There are ways of creating multiple streams of income that can also boost your career, teach you new skills, and help you find personal fulfilment - especially if it involves something you are passionate about.
However, many of those looking to start a side hustle or a new business tend to make some simple financial planning mistakes, which are relatively easy to avoid with a little know-how.
Planning and focus
The best place to solidify your small business success always starts before the beginning. Planning lies at the heart of a winning business. It is important to ensure that your business is viable by doing as much research as possible. If you think you have found a good niche, trust me when I say there is likely someone else who got there first. But those businesses might be lacking your unique perspective and skillset. Identify exactly what it is that you bring to the table.
Once you are confident your new venture will no doubt bring a worthwhile income into your household, the next step is simple. Focus on what you need to do and just do it.
The beginning is going to require a lot of effort and hard work, and you will need to remain focused on getting all your ducks in a row.
Consider the customer journey
As a customer of many businesses yourself, you know what you are looking for when you choose to give your money to a business in exchange for a service or goods. Horn says this usually happens in a particular order.
First off, as with most businesses, your customers want to know about you. Remember their first impression of your business is usually not of the product or service you sell, it is you, the salesperson. Once they get to know you, they then turn their attention to your company. Is it dependable and will it offer support after the sale has been completed? Once they are on board with who you are and the business you have set up, only then do they want to know about your product.
Customers don’t really buy because of price alone. They take into account the value that a product or service offers them. They pay for this value.
Once price and value have been established, the final piece of the purchase puzzle relates to timing. If the price and value boxes are ticked, the purchase is almost complete. The next question is ‘when?’. If you can give the customer a sound reason on why to buy now, you might just convince them.
Side hustle vs. small business
Some of the most successful businesses in the country began as side hustles, thanks to South Africans who were passionate about making a difference.
The line between a side hustle and a fully-fledged business is largely a legal and financial issue.
The reality is that every business has to start somewhere, and they all typically begin as part-time or after-hours ventures. If your side hustle starts to gain momentum to the point where it looks like it could provide you with a stable income, perhaps it should be upgraded from a side hustle to a fully-fledged business.
When you are confident in your business’s growth, you need to register your business, protect your intellectual property, and secure your financial stability as soon as possible,” says Horn. “If you don’t know how to do this, it would be a good idea to talk to a financial adviser to help you make a checklist.
Seek professional advice
The reality is that not every entrepreneur is a skilled business person. This is why the majority of SMMEs fail. There is no substitute for the right advice, especially when you are putting your livelihood on the line against things that you may not fully understand. Is it worth the risk?
Before you cash in your life savings in the hopes of entrepreneurial success, you should probably seek the advice of someone who knows what they are talking about. Many financial advisers have seen a hundred small businesses achieve success, so they know what you need to do, regardless of your product or service.
A financial adviser has the objectivity and experience to help you with financial planning and to grow your wealth, adapt to meet the full range of challenges you might face, avoid costly mistakes, and help you stay focused and on track.
Get your side hustle on the right track, and you may just start your journey to the JSE Top 40 – with the right advice, of course.
Janine Horn is a Financial Adviser at Momentum