Starting a side hustle can be a great strategy for creating a new revenue stream. And, it can even be a low-risk operation for achieving your dream of potentially starting your own business.
However, establishing and running a new business, especially within your available free time, takes plenty of passion and determination. It also comes with its fair share of mistakes.
Although some of these setbacks are unavoidable, some of the biggest side hustle mistakes can be circumvented with a bit of know-how.
Here are nine of the most common mistakes and pitfalls you can avoid when starting a new side gig.
Avoid these side hustle mistakes
1. Leaping before you look
Trial and error is part of running a business. But just figuring it out as you go can wind up wasting precious time and resources. Not to mention delay the returns you’re working for.
“Not defining a profitable niche from the beginning” is a common side hustle mistake, says career coach Jess Chua.
To avoid this, start with some competitive research to see what’s out there and how you can do better and create more value.
“This will help you target an audience that is willing and able to pay for a solution via your product or service,” explains Chua.
2. Failing to set clear priorities
Often times, running a side hustle is only possible if you do it in your spare time.
“You have even less time than you normally would working on a project or business full-time,” points out John Turner, entrepreneur, and founder of meditation aid QuietKit.
With limited time, you have to be clear on what needs to come first and which strategies to focus on.
“You won’t have enough time and resources to actually learn what will work and what won’t,” says Turner.
Learning through trial and error isn’t really an option. First, hone in on a strategy, then proceed.
“Go all in on just a few things that you think will make the difference between success and failure,” Turner says.
3. Spending too much time on menial tasks
Once you’ve identified your key action items, you still need to clear out enough time to tackle them.
However, the menial, day-to-day tasks of simple upkeep on a business can eat into the time you have to grow your business and complete your work.
“If you’re spending say 15 minutes a day on a task (say creating social media posts), the cost to your business over the year could be 50+ hours,” says Ian Wright, founder of payment comparison site Merchant Machine.
“So start asking yourself how to get more out of your time, which in turn will translate to a faster-growing business and ultimately more money,” Wright suggests.
This could include investing in software, services or digital tools that automate tasks as you develop your side hustle business.
4. Trying to do it all
A perk of a side hustle is you can be your own boss. But just because you’re running a one-person show doesn’t mean you should be doing everything yourself.
Side hustling is all about using your unique talents and skills to earn more. But, entrepreneurs
“have to be very aware of where their skills and talents end,” says Brian Bagdasarian, founder and senior growth strategist for Big Idea Marketing Group.
If you’re stepping into unfamiliar territory, essentially you “need to be able to drop any ego, and find support for the rest,” Bagdasarian says.
“Virtual Assistants, other friends with complimentary skill sets” can help, he adds.
5. Spending too much — on the wrong investments
As stated above, identifying key tools or services can free up time and resources you can use to take your business further and earn even more.
However, sometimes new entrepreneurs take this a bit too far.
“It’s easy to overspend when one is feeling optimistic and overestimating revenue,” Chua warns.
She recommends combating this with a clear, realistic business budget. You also should have a clear strategy and expectation of how each cost will benefit your side hustle.
“Stay disciplined and keep your fixed costs low, especially during the early days of your business,” Chua adds.
6. Underpaying (or overpaying) contractors
AJ Saleem, the owner of tutoring startup Suprex Tutors Houston, says his biggest mistake in starting this business was misunderstanding all of the implications of paying his contractors.
“I was simply not keeping track of what to pay my contractors and withhold taxes from them,” Saleem says. “I actually had to deal with the IRS to remedy the issue, but it was a major problem.”
If you start outsourcing work to others, make sure you’re aware of the pay and tax laws that could apply.
For instance, it’s possible that if you do a certain amount of work with a contractor you will have to issue them a 1099 tax form.
7. Failing to incorporate
You’ll need to separate your personal and business pay and expenses fairly early on.
Failing to do so can create a complicated mess. Not to mention open you up to becoming personally liable for business costs.
“If you have a fairly lucrative side hustle and are considering branching it off into a small business, it’s worth it to incorporate or form an LLC,” says Deborah Sweeney, CEO of incorporation service MyCorporation.
“Entrepreneurs who do this are able to protect their personal assets with liability protection and save money on taxes,” Sweeney adds. “Plus an LLC or Corporation legitimizes your company and makes you credible with customers.”
8. Underpaying personal taxes
What you don’t know could hurt you and cause some major pain once your tax bill comes due.
Tanner Callais, who runs cruise information site Cruzely.com as his side hustle, found this out the hard way. Even though he paid quarterly taxes, he wasn’t accounting for the employer-paid half.
“I didn’t realize at first that because self-employed people have to pay both sides of Social Security, the tax bill you will face is a lot higher,” Callais says. “At the end of the year, I ended up owing Uncle Sam about $3,000 more than I realized because I didn’t catch my mistake until it was too late.”
To avoid similar mistakes, read up on the ins and outs of filing taxes when you work for yourself.
You should also carefully track your ongoing revenue and expenses, so you can write off your expenses without guesswork. Or, consider outsourcing this and getting a tax professional’s expert advice for managing the tax work fro your side hustle.
9. Selling yourself short
A common problem with side hustlers is getting underpaid for their work.
When you’re first starting out, you might not have the experience to charge top dollar. Or, you might want to offer more competitive prices to attract customers.
Although this can be a smart strategy, don’t stick with it for too long. And don’t sell yourself short in an attempt to undercut the competition.
Another way side hustlers sell themselves short is by letting late, missed or partial payments slide.
“They are uncomfortable talking about money, so they don’t collect all that is owed to them,” says Andrea Miller, an entrepreneur who runs Music Studio Startup which provides business services to self-employed musicians.
At the end of the day, you want to make sure that you’re earning enough to pay for your time and effort. Otherwise, what’s the point?
Interested in refinancing student loans?Here are the top 5 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of March 4, 2020 and is subject to change.
2 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Splash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member.
The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 1, 2020.
Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan).
Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.21% APR (with Auto Pay) to 6.67% APR (with Auto Pay). Variable rate loan rates range from 3.21% APR (with Auto Pay) to 6.67% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of May 22, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 5/022/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.8100000000000002% effective April 10, 2020.
|1.99% – 6.65%1||Undergrad & Graduate|
|1.99% – 7.10%2||Undergrad & Graduate|
|3.21% – 6.67%3||Undergrad & Graduate|
|3.21% – 6.67%4||Undergrad & Graduate|
|3.22% – 6.25%5||Undergrad & Graduate|