A side hustle can be a great way to make extra income out of something you love, whether a creative passion or a business idea you want to develop. But the truth is that striking a balance between your job and a side gig can be a struggle. That’s why we’ve identified the most common mistakes people make when it comes to personal projects and how you can avoid them.

The Rise of the Side Hustle in America

‘Side hustling’ has become mainstream in America, with nearly half of the population reporting making extra money alongside their main job.

45% of working Americans report having a side hustle. [1]
The average income for a side hustle in the U.S is $1,122 per month, but the modal income is only $200 per month. [1]
41% of side hustlers rely on their secondary income to cover monthly bills. [2]
An Iowa University study found that side hustles improve productivity in a side hustler’s full-time job. [3]

11 Side Hustle Mistakes You’ll Never Make Again

A side hustle can be the opportunity of a lifetime but can also be highly stressful if not managed appropriately. These actionable tips will help you make extra income in the right way, putting your new business on track for success.

Mistake #1: Investing too much money up front

According to Peter Mitchell from Side Hustle Fortunes, while you may believe in your side hustle, investing in it financially at an early stage could lose you money and lead you into debt.

What to do instead:

Millennial entrepreneur Grant Sabatier recommends starting small with projects, building up clients and experience before expanding and sinking more of your own cash into it. [4]

Mistake #2: Not doing enough research beforehand

There are so many options for side hustlers, and it can be tempting to operate through a third party. However, it can be a mistake to jump straight into this without fully understanding what you offer and how various side gig apps operate.

What to do instead:

Millennial entrepreneur Grant Sabatier recommends starting small with projects, building up clients and experience before expanding and sinking more of your own cash into it. [4]

Mistake #3: Infringing on your employment rights

Having a side hustle is great, but you don’t want to get fired from your main job for breaching their rules. Some employers place exclusivity clauses into their contracts, making it impossible to take on extra work outside of your 9-5.

What to do instead:

Millennial entrepreneur Grant Sabatier recommends starting small with projects, building up clients and experience before expanding and sinking more of your own cash into it. [4]

Mistake #4: Failing to get proper business licenses and permits

We’ve all heard the story about the police shutting down a child’s lemonade stand because they didn’t have a permit. Not understanding whether your side hustle needs licensing can lead to it being shut down.

What to do instead:

Your local Small Business Administration will be able to assist in applying for licenses, and it provides a list of all federal permits you may need.

Visit sba.gov to get assistance in your area. [7]

Mistake #5: Not tracking income and expenses from day one

You wouldn’t run a full-time business without properly managing your expenses, and a side hustle shouldn’t be any different. It can be easy to lose track of money, and it soon adds up.

What to do instead:

Personal finance expert Diana Farmen advises aspiring entrepreneurs to routinely monitor expenses and income, adjusting their budget when necessary to manage the inconsistent nature of side hustle work. [8]

Mistake #6: Failing to charge the right amount for your services

For side hustlers just starting out, it can be uncomfortable talking about money or charging for your services at all. Charging too much may price your business out of work, and charging too little might make it unprofitable.

What to do instead:

Business coach Sara Oblak Speicher recommends calculating the minimum amount you need to charge in order to break even, factoring in every expense needed to make your side hustle possible. [9]

Mistake #7: Not using a business bank account

Not separating personal and business expenses can lead to tax headaches later on and make managing your side hustle more complicated. For example, securing a business loan is much harder without a business account.

What to do instead:

The Small Business Administration recommends setting up a business bank account as soon as you start spending money as part of your side hustle. They offer greater purchase protection and make it easier to receive payment directly from customers. [10]

Mistake #8: Forgetting to set aside enough money for taxes

If your side hustle earns more than $600 online, you need to submit a 1099-K tax form to the IRS. Understanding how much tax you need to pay, and setting aside enough of your income for it is essential to the success of your business. [11]

What to do instead:

Tax accountant Michele Cagan recommends setting aside 20 – 25% of your net business income for taxes. [12]

Mistake #9: Not setting healthy work-life boundaries

While it can be rewarding to pursue a side hustle you love, it often comes at the expense of free time away from your primary job. A recent DollarSprout survey found that 48% of people spend less time with friends and family because of their side gig. [2]

What to do instead:

Entrepreneur coach Murielle Marie suggests breaking your side hustle down into manageable goals that can be achieved in a limited time, making the job at hand less overwhelming and maximizing your efficiency. [13]

Mistake #10: Trying to DIY when you need professional help

Self-sufficiency is part of the appeal when starting a side hustle, but it can be a mistake to go it completely alone without seeking out advice from a lawyer or accountant.

What to do instead:

Independent websites like FindLaw and Bark can help connect you with a local attorney or financial expert. Additionally, speak with advisors at your local bank for additional support with finances. [14] [15]

Mistake #11: Ignoring the signs of burnout

Side hustles can be overwhelming, especially if you work full-time in a demanding job to support it. It can be a mistake to over-commit to extra projects and leave yourself stressed and burnt out as a result.

What to do instead:

Pro tip: Identify the common signs of burnout before it’s too late: [17]
- Experiencing self-doubt
- Feeling helpless, trapped and/or defeated
- Getting overwhelmed
- Having negative thoughts or a cynical outlook
- Suffering from increased tiredness and/or a lack of energy
- Isolating yourself away from others and/or feeling lonely
- Feeling detached from things you usually enjoy
- Procrastinating. Putting things off or taking longer to get things done

Whether you want to make some extra income from a skill or hobby or pursue an exciting new business idea, a side hustle can be extremely rewarding. Make sure the opportunity is right for you, and avoid the pitfalls of managing a small business to get the best out of your experience.

About OnDeck

OnDeck helps small businesses get the funds they need to manage challenges and opportunities — and succeed on their own terms. The team believes that small businesses are the lifeblood of the U.S. economy and historically have been underserved financially.

Since its founding in 2006, they’ve been committed to making it efficient and convenient for small businesses to access financing online. OnDeck pioneered the use of data analytics and digital technology to aggregate and analyze thousands of data points to assess the creditworthiness of small businesses rapidly and accurately. They also created a simple online application, backed by exceptional customer service – so business owners can get the funds they need, and back to running their business.

About NeoMam Studios

NeoMam Studios is a creative studio based in the UK on a mission to create digital content that online audiences will want to share.

Sources

Dixon, A. (2019). Survey: Nearly 1 in 3 side hustlers need the income to stay afloat.

11 Common Side Hustle Mistakes (And How to Avoid Them)

The Rise of the Side Hustle in America

11 Side Hustle Mistakes You’ll Never Make Again

Mistake #1: Investing too much money up front

Mistake #2: Not doing enough research beforehand

Mistake #3: Infringing on your employment rights

Mistake #4: Failing to get proper business licenses and permits

Mistake #5: Not tracking income and expenses from day one

Mistake #6: Failing to charge the right amount for your services

Mistake #7: Not using a business bank account

Mistake #8: Forgetting to set aside enough money for taxes

Mistake #9: Not setting healthy work-life boundaries

Mistake #10: Trying to DIY when you need professional help

About OnDeck

About NeoMam Studios

Sources

bankrate.com

dollarsprout.com

dailyiowan.com

forbes.com

Bark.com

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