5 Tips for Building a Side Business

You’ve probably noticed that people are embracing entrepreneurship like never before. Due to the widespread availability of technological business tools, there’s never been a better time to become your own boss. With an internet connection and a smart-phone or laptop, you can work from just about anywhere on the planet.

If you’ve been dreaming of quitting your day job to start a business, you might be wondering if taking such a big leap is worth it.

While there’s nothing wrong with holding down a W-2 job and getting a steady paycheck, having income from your own business comes with many upsides. But if you’ve been dreaming of quitting your day job to start a business, you might be wondering if taking such a big leap is worth it.

The good news is that there are incremental ways to become self-employed that are stable and reduce your risk, instead of plunging abruptly into a precarious financial position. In this chapter excerpt from Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers, you’ll learn practical strategies for building a solo business while keeping the security of a regular job.

Tips for building a business on the side

Becoming your own boss may seem glamorous from the outside, but it can have stressful pitfalls, such as little pay, no insurance benefits, and unpredictable clients. However, you can avoid or minimize some of the downsides by maintaining a reliable day job while you grow your solo business.

Having the security of a job and the excitement of becoming a solopreneur gives you lots of upside with much less risk. A steady paycheck may give you the confidence you need to take business risks—such as buying more advertising, equipment, or software—that will make your venture more profitable.

Having the security of a job and the excitement of becoming a solopreneur gives you lots of upside with much less risk.

Aside from maintaining a reliable income stream, being both an employee and an entrepreneur can make you a better worker. In my experience, growing a side business also builds skills and experiences that make you more effective at your regular job. You may even find your side hustle revives an appreciation for your day job. There’s a lot to like about having a salary, benefits, and other perks, after all.

Whether you decide to be both an employee and your own boss for weeks or years, it will take some juggling to manage successfully. Here are five tips to face your career fears responsibly and prepare for the future by adding entrepreneurship to your resume on the side.

Define your vision for success

Before changing your job or making the transition from employee to self-employed solopreneur, take the time to define what you truly want to achieve in your career. Sometimes your ideas about success come from other people, and they can cause you to follow a career path that never truly fulfills you.

Maybe your boss thinks you should regularly work late so you can climb the corporate ladder, or a parent says you should go to graduate school. You might take a lucrative job in a field you’re not crazy about because that’s what your friends are doing. But if that job requires frequent travel when all you truly want is to start a family, care for aging parents, or spend time enjoying where you live, you’ll never be happy.

Never let external markers of success, such as a big paycheck or a fancy job title, become more important than your heartfelt calling and goals for your life.

If you don’t pause periodically to reflect on what success means to you, it becomes easier to follow other people’s priorities when it comes to your work. If your decisions aren’t purposefully leading you toward a life that excites you, you’ll likely wander away from what you genuinely want.

Never let external markers of success, such as a big paycheck or a fancy job title, become more important than your heartfelt calling and goals for your life.

That said, getting in touch with your real desires isn’t always easy, and you might have to listen carefully to hear your inner voice. Try incorporating some quiet time into your daily routine. When you first wake up or when you’re settling down at bedtime, think about what you’re grateful for—but also what you’d like your life to be. Consider your definition of success and any changes you’d like to make to your life in the near and distant future.

Ask yourself the following questions to better understand your values and get clarity on your unique vision for success:

  • What type of work makes me happiest? 
  • Where do I want to live? 
  • What types of people do I want in my work life?
  • What does a good life mean to me?

This exercise isn’t something you do once to figure out the arc of your entire life. You need to come back to these fundamental questions during different seasons of your life and career, because the answers may change, sometimes repeatedly.

Over time, your working life is sure to change, in both good and bad ways. When you find yourself getting restless or feeling like you want more from your job, slow down and become more introspective. It can reveal a lot about what your next career or business move should be.

RELATED: How to Create Your Own Self-Employed Benefits Package 

Create a side gig

Even when you’re clear about what you want, one of the fastest ways to ruin your financial future is to take a flying leap from a steady paycheck. Jumping from a day job into an uncertain, full-time venture too early could mean trouble. You might face significant financial struggles and even get into debt. Many businesses take years of hard work before they’re profitable enough to support you.

If you slowly add entrepreneurial experience to your career, you’re likely to gain a variety of skills that will make you more valuable to employers.

Hanging on to your day job gives you the financial security you need to try out new business ideas, especially if you have a spouse, partner, or kids who depend on your income.

The best side gigs combine work that you’re excited about with something that you’re uniquely positioned to provide. These businesses may also come with a large existing customer base or appeal to customers who are willing to pay you well for the skills and experience you offer.

I was a part-time entrepreneur for a decade before I said goodbye to my employer. I enjoyed having a mix of job stability and entrepreneurial upside. Plus, I found that expanding my career by adding self-employment to a W-2 job made me much better at both.

If you slowly add entrepreneurial experience to your career, you’re likely to gain a variety of skills that will make you more valuable to employers. It may be easier to experiment with business-formation ideas when you have less financial stress or know a side gig could actually complement your existing career.

The bottom line is that creating a business on the side protects your income, diversifies your network, and improves your skills, instead of leaving you financially vulnerable. If you enjoy your entrepreneurial work and find that it pairs well with your day job, the benefits and personal growth can really pay off.

Negotiate your job flexibility

If you plan to start a business on the side, or you already have, you know you’ll be working more, perhaps a lot more. You might need to work early in the morning, late at night, or on weekends to fit it all in. That could stress your relationships or cause you to burn out if you don’t take some precautions.

Consider some different ways that you can tailor your business for your day job, and vice versa.

Once you’re confident about your business idea or begin seeing increasing revenues, you may find that you need more flexibility in your schedule. At that point, consider some different ways that you can tailor your business for your day job, and vice versa.

In 2008, my employer began feeling the financial pinch of the Great Recession. My podcasting and blogging career had started to take off by that point, so instead of allowing my position to get downsized, I proposed a solution that my boss liked. I’d work four days a week for a couple of months and then go down to three days a week for the rest of the year. Then we’d reevaluate where the company stood and discuss whether he could still afford to keep me on as an employee.

My employer would save money by paying me less, and I’d have more time to work on creating content, partnering with brands, and writing my first book, while still having a regular paycheck coming in. If I hadn’t suggested that solution, my company wouldn’t have known that I was willing to cut my hours. I didn’t offer to tell my boss what my plans were for my newfound free time, and he didn’t ask.

You may be able to negotiate with your employer for more schedule flexibility.

You too may be able to negotiate with your employer for more flexibility. You might ask to work fewer hours, to maintain the same total number of hours but work fewer days per week, or to work from home a day or two each week.

If you have a long commute or spend a significant amount of time getting ready, packing a lunch, and getting out the door in the morning, working remotely could save a lot more time than you think. Then you can invest that saved time in your side business.

Find more time in your day

If you can’t get more flexibility or you worry that even asking for it could put your day job in jeopardy, there are other options. One is to structure non-negotiable time for your business into your day. For instance, make a rule that you’ll step away from your desk for a solid hour (or longer if possible) during lunch to accomplish something meaningful for your business.

Find a nearby cafe or reserve a conference room in your office where you can work and eat undisturbed. I did that for many years, and it’s incredible how much you can accomplish in 45 minutes if you truly focus. If you can’t find enough quiet or privacy in your office, you could even work in your car.

It’s incredible how much you can accomplish in 45 minutes if you truly focus.

If working on your business during your lunch hour isn’t possible with your day job, consider coming to the office an hour earlier or staying later. You could also work on your business in a nearby coffee shop or a co-working space (where drop-in memberships can often be had for the same price as joining a gym) before or after your job. The idea is to create a routine that builds in regular time to focus entirely on your venture and to complete essential tasks.

Another option is to outsource a portion of your work. If you can afford to delegate tasks to freelancers, that can help you balance your to-do lists.

When your day job is so unpredictable that it prevents you from working on your side gig for long periods, consider getting a different job with a more reliable schedule. If you’re truly committed to getting your business off the ground, you may need a position with more flexibility so you can do both more easily.

Have a solid exit strategy

Having an exit strategy is a common concept in the business world. Partners and investors want to know what will happen after clearly defined milestones are reached, such as taking a company public or selling it after a certain profit margin is achieved.

But employees should create exit strategies, too. It’s a great way to force yourself to think about the future and what you would or should do next. With a W-2 job, you never know what’s around the corner.

It’s wise to start every professional relationship with an idea of how it could end.

Your company could suddenly downsize after a merger or an unexpected loss of market share. Your department could be reorganized after new leadership begins. All these scenarios have happened to me at some point in my career.

It’s wise to start every professional relationship with an idea of how it could end. This ensures that you’re never caught entirely off-guard. Knowing that you’ve thought about the end of a job or a business partnership can make you feel more secure about a potential split.

If you’re unprepared for an interruption in work or business income, it can be devastating to your emotional and financial life. So whether you’re laid off or you voluntarily quit, prepare for it now.

If you have a financial runway to find new opportunities or you’ve built an income from a side business, quitting or getting fired can be a positive experience. Having a good exit strategy can make the difference between feeling crushed by a job loss or becoming empowered by it.

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Your Guide to Claiming a Legit Home Office Tax Deduction

I’d bet that on just about every city block or long country road, someone is operating a business from their residence. According to the U.S. Small Business Administration, about 50 percent of businesses are home-based, with a larger percentage (60 percent) working as solopreneurs with no employees.

Having a home-based business is one of the easiest and least risky ways to become an entrepreneur, test your business ideas, and increase your income. No matter if you run a business full-time or as a side gig, claiming the home office deduction can significantly reduce your taxes.

No matter if you run a business full-time or as a side gig, claiming the home office deduction can significantly reduce your taxes.

I received an email from John, who says, “My New Year's resolution is to earn more money working during my off-hours and on weekends. Since the work will likely entail making deliveries for different mobile apps, I’m not sure if it qualifies me for the home office tax deduction. Can you explain more about it?”

Thanks for your great question, John! In this post, I’ll give an overview of the home office deduction. You’ll learn who qualifies, which expenses are deductible, and how to legitimately claim this money-saving tax break no matter what type of business you have.

Who can claim the home office tax deduction

If you work for yourself in any type of trade or business, either full- or part-time, and your primary office location is your home, you have a home business. The designation applies no matter whether you sell goods and services, are a freelancer, consultant, designer, inventor, Uber driver, or dog-walker.

If you work for yourself in any type of trade or business, either full- or part-time, and your primary office location is your home, you have a home business. 

You can have a home-based business even if you’re like John and mostly earn income away from home. This is common for many trades and solopreneurs, such as musicians, sales reps, and those working in the gig economy. If you’re self-employed and do administrative work like scheduling, invoicing, communication, and recordkeeping at home, you have a home business.

Note that employees who work from home can’t claim a home office deduction. W-2 workers used to be allowed to include certain expenses if they itemized deductions. But tax reform took away that benefit starting with the 2018 tax year.

The home office deduction is available for any self-employed person no matter whether you own or rent your home, with the following two requirements:

  1. Your home office space is used regularly and exclusively for business
  2. Your home office is the principal place used for business

You must regularly use part of your home exclusively for conducting business. For example, if you use a guest room in your house or a nook in your studio apartment to run your business, you can take a home office deduction for the space.

You don’t need walls to separate your office, but it should be a distinct area within your home. The only exception to this “exclusive use” rule is when you use part of your home for business storage or as a daycare. In these situations, you can consider the entire space an office for tax purposes.

Additionally, your home must be the primary place you conduct business, even if it’s just the administrative work you do. For example, if you meet with clients or do work for customers away from home, you can still consider the area of your home used exclusively for business as your home office.

Your home doesn’t have to be the only place you work to qualify for the deduction. You might also work at a coffee shop or a co-working space from time to time.

You could also consider a separate structure at your home, such as a garage or studio, your home office if you use it regularly for business. Also, note that your home doesn’t have to be the only place you work to qualify for the deduction. You might also work at a coffee shop or a co-working space from time to time.

RELATED: How to Cut Taxes When You Work From Home

Expenses that are eligible for the home office tax deduction

If you run a business from home, two types of expenses are eligible for the home office deduction: direct expenses and indirect expenses.

Direct expenses are the costs to set up and maintain your office. For instance, if you work in a spare bedroom, you might decide to install carpet and window treatments. These expenses are 100 percent deductible, no matter the size of the office.  

Indirect expenses are costs related to your office that affect your entire home. They’re partially deductible based on the size of your office as a percentage of your home. 

For renters, your rent, renters insurance, and utilities are examples of indirect expenses. You’d have these expenses even if you didn’t have a home office.

For homeowners, you can't deduct the principal portion of your mortgage payment, which is the amount borrowed for the home. Instead, you’re allowed to recover a part of the cost each year through depreciation deductions, using formulas created by the IRS.

Other indirect expenses typically include mortgage interest, property taxes, home insurance, utilities, and maintenance. Allowable indirect expenses actually turn some of your personal expenses into home office business deductions, which is fantastic!

Allowable indirect expenses actually turn some of your personal expenses into home office business deductions, which is fantastic!

However, expenses that are entirely unrelated to your home office, such as remodeling in other parts of your home or gardening, are never deductible. So, your ability to deduct an expense when you’re self-employed depends on whether it benefits just your office (such as carpeting and wall paint) or your entire home (such as power and water).

Also, remember that business expenses unrelated to your home office—such as marketing, equipment, software, office supplies, and business insurance—are fully deductible no matter where you work.

How to claim the home office tax deduction

If you qualify for the home office deduction, there are two ways you can calculate it: the standard method or the simplified method.

The standard method requires you to determine the percentage of your home used for business. You divide the square footage of the area used for business by the square footage of your entire home.

For example, if your home office is 12 feet by 10 feet, that’s 120 square feet. If your entire home is 1,200 square feet, then diving 120 by 1,200 gives you a home office space that’s 10 percent of your home. That means 10 percent of the qualifying expenses of your home can be attributed to business use, and the remaining 90 percent is personal use. If your monthly power bill is $100 and 10 percent of your home qualifies for business use, you can consider $10 of the bill a business expense.

To claim the standard deduction, use Form 8829, Expenses for Business Use of Your Home, to figure out the expenses you can deduct and then file it with Schedule C, Profit or Loss From Business.

The simplified method allows you to claim $5 per square foot of your office area, up to a maximum of 300 square feet. So, that caps your deduction at $1,500 (300 square feet x $5) per year.

The simplified method truly is simple because you don’t have to do any record-keeping, just measure the space and include it on Schedule C. It works best for small home offices, while the standard method is better when your office is larger than 300 square feet. You can choose the method that gives you the biggest tax break for any year.

But no matter which method you choose to calculate a home office tax deduction, you can’t deduct more than your business’ net profit. However, you can carry them forward into future tax years.

As you can see, claiming tax deductions for your home office can be complicated. I recommend that everyone who’s self-employed use a qualified tax accountant to maximize both home office and business tax deductions.

Yes, professional advice costs money. But it’s well worth it, and it usually saves money in the long run when you know how to take advantage of every legit tax deduction.

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How to Measure Progress and Achieve Goals

Measurement! I just love measurement. That’s because it tells you how you’re doing and how much progress you’ve made. Progress checks can motivate you, help you catch yourself when you’re slacking, and tell you when to change course. 

Without giving thought to how you define progress, however, you can measure the wrong thing, or measure the wrong way. You might end up demoralized for no reason, or falling behind unknowingly on a project, or missing opportunities. So if you’re going to measure progress, do it right! Turn off auto-pilot “gut checks” and measure progress thoughtfully.

Measure process goals

If you’re Type A like me, you probably overwork yourself, under the assumption that more work gives more progress. But does it? Have you ever measured? Just being busy and stressed doesn’t mean we’re getting anything done. We need to track how far we are from our goal, and whether we’re closing that gap.

First determine the kind of goals you’re chasing. Episode 462, “Grow a Pair for Your Career,” outlines the difference between outcome goals and process goals. Outcome goals—like getting a promotion—are something you strive for, not something you just do. Process goals, on the other hand, are measurable actions that help you get closer to your outcome goal, like making ten more sales calls each day. 

If you’re going to measure progress, do it right! Turn off auto-pilot “gut checks” and measure progress thoughtfully.

On a daily basis, measure progress through movement toward your process goals. It doesn’t matter how much you work, only whether that work takes you closer to finishing that day’s process goals. Then check that your process goals are doing what they should, by tracking overall movement toward an outcome goal.

For example, if you work in sales, your process goal might be to make fifty cold calls a day. If that’s your goal, sending two hundred emails should not count as progress. What’s more, if your outcome goal is to close sales, and you haven’t closed one in months, you may need to rethink if you have the right process goals. Maybe “number of calls” doesn’t lead to sales. Maybe you need to make progress on the quality of your calls, instead. So make your new process goal tweaking your sales pitch, and direct some work toward that.

Measure how far you’ve come

Another way to track progress is to look at how far you are from your starting point. 

Sam is a twenty-something who’s just started up a fairly successful online delivery company. The vision of being the next Amazon.com seems impossible! Or at least, light years away. And it is. But knowing that it’s not Amazon yet isn’t a useful measure for evaluating progress. Furthermore, it’s so far away that it isn’t even clear which paths lead to that result.

Sam can instead concentrate on what’s been accomplished so far. They started sitting around a dining room table. Now they have office space, customers, a business model that works, money in the bank, and profit. By measuring progress based on how far they’ve come, not on how far they have left to go, Sam can realize they’ve made tons of progress, and can make sure it continues to unfold, as more and more milestones get added to the list.

Measure distance to your goals

At some point your goal is within reach. Then, you can start measuring how far you are from your goal, and concentrate on closing the gap.

Don’t do this too soon! You can hurt morale. At my last Harvard Business School reunion, for example, doing an “Am I there yet?” progress check gave me a soul-crushing burst of inadequacy as I was moderating a panel of my classmates, whose combined net worth was enough to purchase a third world country and pave it over. In gold. 

When you’re out on a long run, you get a surge of fresh energy when you see you’re only ten feet from the finish line, and there’s an entire 55-gallon drum of gummy bears waiting at the end. And an Oreo ice cream cake. The next thing you know, you’re barreling over the finish line.

When you’ve passed the halfway point, start measuring your progress by how quickly you’re closing on your goal. Keep that Oreo ice cream cake in mind, and set new goals to push you those last few feet.

Even if you get some steps wrong, just making the plan will energize you and be motivating.

A good way to do this is to make a checklist of things you’ll need to do to reach the end point. These can be high-level things like, “Run A/B testing with focus groups,” or low-level things like, “Write an email to call for A/B testing participants.” Once your plan is on paper, finishing your project will seem much more doable, since all the steps left to take are right there in front of you. And as I talked about in episode 466, "Make a Plan for Motivation," even if you get some steps wrong, just making the plan will energize you and be motivating.

Re-measure often

Once you figure out the best way to track your progress, and the types of progress you need to track, choose how often you’ll track. Sometimes, tracking progress once a week is plenty. But from my experience, it’s best to track progress every two to three days.

That way, if you suddenly notice you’re not where you should be, you only have to make up two or three days’ worth of work. If you were only checking once a week, you could get an entire week behind before you’d notice it.

From my experience, it’s best to track progress every two to three days.

What gets measured gets managed. And we love to manage progress. On a daily basis, concentrate your measurements on your progress goals, rather than your outcome goals. Then choose a less-frequent measurement that is based on where you are in your project: distance to your goal, or distance from your starting point. With a little experimentation, you can find the magic balance that keeps you on top of your game.

This is Stever Robbins. I give great keynote speeches on productivity, Living an Extraordinary Life, and entrepreneurship. If you want to know more, visit http://SteverRobbins.com.

Work Less, Do More, and have a Great Life!

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Does Your Small Business Need a Blog? Blog Writing Services Can Help

If you have a business, the next step to taking it further is to build and grow a connection with your customers. Simply providing a service or product is no longer enough. In a world that is always moving and full of change, people crave meaningful interactions. And that need extends to the products and services they use. Customers want to be surrounded by things they can identify with. If a business with great products or services is also able to provide some kind of added value for someone, that person is more likely to become a loyal patron. 

As a business owner, providing that added value can feel like a huge task. This is where the value of blog writing services can really shine. Not only can these services create more connections between you and your customers, but they can also make your life easier through a smoother workflow. Here are some questions you can ask yourself to get started.

What are my goals?

Ultimately, you probably hope to increase your sales. However, modern consumers expect personal connections. Set a goal for providing helpful facts that engage new readers. Establish a goal regarding how many new readers left comments on your blog. Consumers are more likely to complete sales when they feel that you hope to improve their lives. 

Do I even need a blog?

Yes. According to studies conducted by the Pew Research Center, people regularly turn to blogs and internet articles instead of using their televisions for news and information.

How can I connect with customers?

A blog allows businesses to connect with customers in many ways. Blogs provide answers to consumers' questions. They make your brand seem approachable and friendly. Blogs encourage readers to interact with your company and maintain meaningful connections. In addition to providing a blog, reach out through social media to invite readers to visit your website. 

Who are my current customers?

If you aren't sure about the needs, motivations, and concerns of your existing customers, it will be easy to miss out on meaningful connections. As you respond to comments on your blog posts or on your social media sites, you'll learn more about the needs that drive sales. While copywriters will spend time researching your current customers, it's also helpful for you to develop relationships with them.

Who is the target audience?

Who benefits most from the goods or services you offer? These people are your target audience. Take a look at the demographics of your existing customers to identify the new audience you want to attract. Remember to focus on how your offerings can improve the lives of your existing customers to understand how to attract people from your target audience. 

How busy is my schedule?

Building and maintaining a blog with a consistent schedule takes a lot of work. Some people make the mistake of underestimating the time commitment that goes into planning, design, and content creation. When your workday is already pushing beyond the 9-to-5 schedule, you don't really have time to produce consistent, fresh content. 

There are a lot of potentially great blogs out there that consist of just one or two posts … last updated eight months ago. If you want to have a blog that builds and sustains an audience, a consistent schedule is critical. Without a schedule, it can sometimes be impossible to ensure posts are written and content keeps flowing. If you have loyal followers and you disappear for several months, you may very well be forgotten! Using blog writing services makes this a non-issue. When someone else writes your content, you can tend to your life and work without having to worry about losing customers.

Can copywriters really represent my voice?

The task of finding someone to accurately portray your company should not be taken lightly. After all, writing in a business or brand's voice is a critical part of the copywriting process.

It is equally important to understand the value of professional copywriters. There are many factors involved in the process of creating great copy that leads to increased sales, and copywriters must understand and use these strategies. With research into your subject and your target consumers, talented copywriters can represent your voice. 

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How to Break Through and Overcome Financial Hardships

Your life and personal finances don’t always go the way you hope. We all have struggles and no one achieves success without their share of hurdles and challenges. However, there are tools that can help you break through financial hardships and live the life you want.

I interviewed AJ Gibson, author of Flipping the Script: Bouncing Back from Life’s Rock Bottom Moments, an Amazon #1 new release. We talk about the personal, professional, and financial challenges that he’s overcome.

AJ is a Los-Angeles based TV host, public speaker, and coach who loves great people, food, fashion, entertainment, and travel. He’s been the host of the nationally syndicated daytime talk show, Hollywood Today Live, a co-host on Access Hollywood Live, and a frequent anchor on Good Day LA. You’ll see him on CBS’s The Talk and even on several episodes of The Wendy Williams Show.

His journey from being a closeted gay boy in Ohio to a host chatting with the some of the world’s most admired celebrities on Hollywood’s biggest red carpets is incredibly inspiring. He has a gift for busting through life’s roadblocks and persevering despite failure.

On the Money Girl podcast, AJ and I chatted about key lessons from his book. You’ll learn how to shift your perspective to find the beauty in life’s most challenging moments. We cover:

  • Overcoming the financial hurdles of becoming self-employed
  • Tips for reaching financial goals when you have big dreams
  • Why fear and shame may be causing you to ignore your financial situation
  • Leaning on professionals to help stay on top of your financial life
  • Tools for turning hopelessness into a positive, fresh outlook on your future
  • Using a focus wheel for daily motivation to achieve your dreams and goals

Listen to the interview using the audio player above, or check it out on Apple PodcastsSoundCloudStitcher, and Spotify

ABOUT THE AUTHOR

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a trusted and frequent source for the national media. Her book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show. Stay in the personal finance loop! Listen and subscribe to the Money Girl podcast on Apple, Spotify, or wherever you get your podcasts.

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