How to turn your side hustle into a business

If you’re making extra money with a side hustle alongside your day job – whether you’re tutoring opens in new window, baking opens in new window, or bookkeeping opens in new window – you may dream of turning it into a start-up one day.

Having a side hustle can be a great way to make money while doing something you enjoy.

But a side gig isn’t just a way to generate additional income and develop new skills opens in new window – it’s also a great opportunity to test a small business idea opens in new window before launching a start-up.

Depending on its level of success, your money-making hobby could well have the potential to become a small business.

After all, some of the best start-up ideas are inspired by personal passions – and if you’ve discovered a market need opens in new window for your side hustle, that driving force could propel it to success.

Take a smart approach to starting your small company, and it could prove lucrative for you – British SMEs (businesses with under 250 people) had an estimated annual turnover of £2.4 trillion opens in new window in 2023.

But if you want to take your side hustle to the next level, how do you know if it’s time to scale it into a full-time business?


When is the right time to turn your side hustle into a business?

While there’s no secret formula that reveals the right time to launch a start-up, there could be a number of signs that your side hustle is ready to become a priority:

  • increased sales
  • more customer feedback opens in new window asking for new products or services
  • you’re struggling to balance your full-time job due to the success of your side hustle
  • increasing profits.

Read our guide on when is the best time to start your business opens in new window.


Going part-time

If your side hustle is going well but you’re not convinced it’s a good idea to leave your full-time job, you could consider doing your day job part-time to allow you to devote more time to growing your start-up while retaining some financial security.

Read our expert guidance on how to juggle your job and your start-up opens in new window for tips on how to make this work for you.


How to upgrade your side hustle to a start-up

Here are some things to consider when looking to turn your side hustle into a full blown start-up.


Create a business plan

A business plan opens in new window is a document that outlines your core business objectives and how you plan to achieve them over a set period.

It is designed to help you run your business whilst also helping others, such as investors opens in new window or finance providers opens in new window, understand how you plan to generate money and make your business sustainable.

A business plan is a key document for many companies, and writing one can help you identify possible problems, gaps in the market, potential shortcomings, and how you plan to secure funding.

Read our guide on how to write a business plan opens in new window.


Organise your personal and work finances

Keeping your finances organised could be key when launching your side hustle.

Ensuring you have sensible financial habits can help you launch your start-up journey and put you in a good position to scale up opens in new window as it grows.

Consider keeping your personal and work finances separate using different bank accounts opens in new window, especially if you plan to self-fund your small business.

Keep track of the money you expect your business to bring in and expenses opens in new window that need paying with our cash flow forecast template. opens in new window


Find the right business structure

One of the first decisions for a start-up owner is deciding on a business structure, whether that’s as a sole trader opens in new window, partnership opens in new window, or limited company opens in new window.

This is important because the format you choose will affect the amount of tax you pay, the extent you are personally liable for any losses, and the reporting you need to undertake for Companies House opens in new window and HRMC.

There will be a business structure that suits your start-up depending on what type of company it is, so research what will work for you before you decide.

Read our complete guide to the different business structures for your start-up opens in new window.


Think about licensing and insurance

Some industries, such as childcare, healthcare, finance, and food require businesses to have specific licenses to operate safely and legally.

Having the relevant operating, selling, or safety licenses shows you are committed to providing customers with quality products and services – and helps ensure your start-up complies with applicable regulations.

As you plan to turn your side hustle into a full-fledged business, it’s a good idea to research local and national regulations to see what you might need.

You might need to factor in the costs of licences and insurance as your side hustle takes off.


Explore funding

Adequate funding – or a lack of it – can be a major factor in whether your small business can grow and succeed.

You may find it challenging to scale up your side gig into a business without suitable finances.

If you don’t have the funds ready yourself, there are several different options available, from crowdfunding to a Start Up Loan opens in new window.

You may find some solutions that better fit your business than others, so explore the best alternative funding options opens in new window before deciding.


Build a network

The phrase ‘it takes a village’ doesn’t just apply to raising kids – it’s also true for start-ups!

A network of fellow entrepreneurs opens in new window, professional organisations, suppliers opens in new window, mentors opens in new window, and more can prove essential in helping you identify business opportunities.

But your network can also provide invaluable support and advice during difficult periods, and help you decide if now is the right time to move your side hustle to the next stage.

It’s not as challenging as you might imagine to build up a better roster of industry contacts – consider joining relevant LinkedIn group opens in new windows, attending local business events, and reaching out to small business peers to suggest a coffee or chat.


Keep an eye on the competition

To successfully grow your side hustle into a start-up, it usually pays to know what your competitors are doing well opens in new window – or poorly!

This research can identify what products and services you could be offering, as well as any gaps in the market that you could take advantage of.

A simple online search for what you plan to offer could show up your closest competitors and also give you an idea of what kind of branding opens in new window and marketing could suit your business needs.


Set achievable goals

However successful your side hustle is looking, remember that overnight success is rare, and all businesses can benefit from setting realistic goals opens in new window about anything from marketing to sales numbers.

Consider setting targets for your start-up and breaking large goals into small, achievable steps.

For example, if a goal is to launch a website opens in new window for your new company, one step towards it might be to decide on the critical information you need to include.

Celebrating small wins could motivate you and make bigger targets feel more manageable – helping to turn your business dreams into a business reality.


Learn with Start Up Loans and help get your business off the ground

Thinking of starting a business? Check out our free online courses in partnership with the Open University on being an entrepreneur.

Our free Learn with Start Up Loans courses opens in new window  include:

Plus free courses on finance and accounting, project management, and leadership.


Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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