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It’s never been a busier time for the UK’s side hustle economy. Whether dog walking or designing clothes, people all over the country are seeking second incomes.
Reasons for the surge are largely lifestyle-related. Working from home policies have given us more time to concentrate on our interests and side gigs. Rising inflation has also contributed, as consumers look for ways to offset more expensive energy and food bills.
Running a side hustle can be lucrative. As we reported last year, recent estimates value the market at a massive £346bn.
But there are also associated challenges to consider, such as tax implications, employer awareness, and upstart costs.
Debating whether to start your own side hustle? Below, we’ll go through the key steps involved, and get advice from experienced side hustlers on everything from balancing work commitments, to accessing funds.
Side hustles are essentially freelance jobs that you launch and run alongside your full-time career. They’re a great way to make a bit of extra cash. In some cases, they can even blossom into startups or small businesses.
Many side hustlers choose to monetise a hobby or interest that they’re already passionate about, such as turning your character doodles into vendible portrait drawings.
Helen Ruff is the owner of Margot’s Wedding, a wedding consultancy firm. In her spare time, Ruff also uses the Good Life Sorted platform to be a home helper for elderly vulnerable people in the community.
“It supplemented my income, helped me make new friends and connections and also meant that I could provide support to people who might need it more than ever after the pandemic.”
But side hustles can also be a way to carve a new career path – a journalist wanting to build a portfolio of freelance writing, is one example.
Maisie Nicholls is a full-time perinatal mental health practitioner for the NHS, while also running online EMDR therapy practice, Maisie Nicholls Therapy.
Nicholls tells Startups: “I work as a therapist to entrepreneurs as my side hustle.
“I started [it] as I wanted to work for myself and have a better work-life balance. It was difficult to juggle things when I was working full time but I’ve been on maternity leave for the past 5 months, so I’ve had more time to focus.”
Necessity is the mother of invention. During the pandemic, the entire country was told to follow strict COVID-19 measures. This included following remote working policies – here to stay for many.
This has had a significant influence on the number of people starting side gigs.
High levels of unemployment during the various national and tiered lockdowns forced people to find new ways to make ends meet. Meanwhile, those who were furloughed were given access to large amounts of time for trialling new ideas.
The result? 2021 saw an explosion of new business with nearly 80 being registered per hour in the first half of the year.
George Wu, founder of Para Para and Design Director at Mother Design
Every side hustle has different overheads. Some, like copywriting, only require an internet connection. Still, you’ll generally need to invest in a computer and phone separate from the one you use for your job.
In today’s online world building a digital presence is a must for any startup, and requires some capital. But there are many platforms where you can build a small business website for free, such as Wix.
Alternatively, you can also use social media pages to sell products if you want something with a quicker setup time.
Esther Showemimo is a full-time student and owner of beauty business, HerNailRoomUK. Showemimo turned to Instagram and Tik Tok after the COVID-19 lockdown put a stop to all in-person appointments, explaining:
“I [now] use Instagram as my main platform for my business and with all their new business account features, it is really easy to promote and view insights.”
Find out more about how to use Instagram for business in our full guide.
If you’re running a product-based business, your startup costs will also include an ecommerce website, so you can sell online. Some of the most popular choices for this are Shopify.
That’s unless you want to sell items through a third-party marketplace, like setting up an Etsy shop.
Chelsey Pippin is a PR executive by day, and runs Pip Cards Tarot, a creative coaching consultancy, by night. Pippin’s PR earnings have funded the business’s startup costs including “website, apps subscriptions like Zoom, Vimeo, and Flodesk, memberships to entrepreneurial and creative networks.
“While the business is still in its early stages, I’m breaking even on costs now that I host regular group workshops.”
Being time-poor is a common complaint amongst those running side hustles. You’ll be conducting most of your business after work and around other commitments.
One business tool that’s popular among startups is accounting software. It’s a good way to stay on top of finances and even forecast revenue.
Such systems are also smart for those that want to turn their side hustle into a startup, by helping you firm up foundations for larger sales figures.
Keep up to date with your side hustle finances with our top small business accounting software.
Another issue with working off-peak hours means that you’ll likely be working for your main job while your customers are looking for products/services.
Small business CRM software increases time efficiency by automating a lot of basic customer management tasks, such as sending welcome emails or invoices. That means even while you’re working at your desk, your side job will still be taken care of.
SME software doesn’t have to cost a bomb – there are plenty of free CRM systems and free accounting software brands to choose from.
People running side hustles generally choose to ‘bootstrap’ (meaning self-fund) their venture using savings or wages from their primary income.
If you’re starting a side gig with the intention of scaling it into a business, you can take out a business loan or reinvest the money from any sales back into your venture.
Crowdfunding is another way to fund your passion project. It amounts to pitching a project or business through an online crowdfunding platform, which can be a valuable form of marketing and has proven to attract media attention in the past.
Small business grants are also a good option to look into, particularly if you’re a woman. Specialist women-only grants exist to help combat the gender funding gap.
Richard Pakey is founder of Lime Licensing Group, a franchise consultant. Pakey outlines: “Most [side hustles] start slow and steady and fund their side hustle from cash flow. There is no right or wrong really, it’s purely how you perceive the risk.”
As long as all taxable income is declared to Inland Revenue via the gov.uk online self-assessment system, there is no problem with running a business while employed.
Your income is taxable if you’ve earned over £1,000 in the tax year.
If you’re not sure how to file a tax return, don’t worry. Self-assessment returns are relatively straight-forward. But, as the saying goes: fail to prepare, prepare to fail!
Ensure you keep detailed records, such as bank statements and receipts, so you won’t be hit with any penalties for missing information or not filing before the deadline. This is another good reason to invest in accounting software, which sorts through most of the data for you.
When starting a business, you should also make sure you register with HMRC within three months of launching.
Helpful tools for freelance tax returns include the Startups-100 listed company TaxScouts. The company charges a flat fee of £119 to match you with a vetted accountant who completes and files their tax return on your behalf.
The conundrum of whether to tell your boss you’ve started a business can be a tricky one to solve. Largely, the answer depends on who your employer is.
There is no legal obligation to tell the employer if you are running your own business.
However, there may well be a clause in your Contract of Employment requiring you, as the employee, to declare any other work.
Generally, this only applies to those wanting to moonlight for other companies. However, if your contract contains this clause, it’s a good idea to speak to your manager before starting any venture so you won’t be held liable in case of any fallouts.
Once you have checked your contract it is at your discretion as to who you tell, but we’d recommend keeping things as transparent as possible.
Telling your employer might even help you by showcasing a hidden talent, or growing your client base through word of mouth. Plus, if you’re looking to market your business online or through social media, your colleagues will likely find out about your side hustle anyway.
Managing a second income while working full-time hours can be difficult. Here are some of the top tips from freelancers:
Emma-Jane Stogdon is a full-time campaigns manager and freelance copywriter/filmmaker. Stogdon says working both jobs can be “a difficult balancing act [but] my employer has always known about my side hustles. Part of his decision to hire me was due to my writing and filmmaking experience.
“As long as there is no conflict of interest, I am free to work on whatever I choose to. If I’m particularly busy or have a large project on, I scale back my freelance work accordingly.”
Lucy Rogers owns Good Aura Co, an online vegan candle retailer. Rogers began the company as a creative outlet but admits her full-time admin job “comes first, always.
“I’ve set more of a routine and that has helped, using most of my early hours, evenings and weekends dedicated to Good Aura Co. My employer is aware of my side hustle and thankfully supportive. I use annual leave when needed for big orders.”
Research from The Accountancy Partnership has found that despite only 19% of respondents currently having managed to turn their side hustle into a full-time career, 73% plan to make this a reality in the near future.
While it is certainly possible to turn a side hustle into a full-time career, eager entrepreneurs should note a big gap between the two.
Starting a small business is no mean feat and requires, at a bare minimum, a lot of spare capital and time to perfect.
As Chelsey Pippin advises: “If there’s a project you want to start because it would be creatively fulfilling for you, go for it.
“But if you’re under the impression that a side hustle is an easy way to make some extra cash, you may want to re-evaluate because it requires investment – time, money, energy, and other resources.”
If you’re looking to start a business or side hustle in 2022, you’ll be in good company.
As one of the most optimistic signals for future work-life balance, thousands of employees are already making new business ideas from their hobbies or freelance work.
That being said, burnout is a very real threat when you’re essentially working two jobs. Focussing on a passion project is a good way to minimise the risk, as is setting clear boundaries about when to prioritise your primary income.
Similarly, make sure you have the right supportive tools in place such as accounting or CRM software. These can save you lots of time and can also make the transition simpler if you’re looking to start a side hustle.
We’ll leave you with the counsel of George Wu, founder of Para Para, who says: “I got some advice recently, ‘Don’t compromise on your vision. As soon as you do, you will lose the love of your product, and how can you sell something you don’t love?’.”
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Helena “Len” Young is from Yorkshire and joined Startups in 2021 from a background in B2B communications. She has also previously written for a popular fintech startup.
Included in her topics of interest and expertise are tax legislation, the levelling up agenda, and organisational software including CRM and project management systems. As well as this, she is a big fan of the films of Peter Jackson.
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