Johannesburg - Generally, most people who have achieved success have more than one stream of income.
Entrepreneurs who have made it in the world of business tend to diversify their income streams by taking on ventures in different industries.
The cost of living in South Africa is rising consistently. The cost of fuel, food electricity have all gone up. These high costs are compounded by high-interest rates and inflation.
All these factors put a strain on the financial resources of individuals, forcing them to look for alternative ways to supplement their income.
One way of doing this is by starting a business on the side or what is commonly known as a side hustle.
According to the 2021 BrandMapp consumer insight survey, 30% of middle-class adults (those with a monthly household income of R10,000 and above) have side hustles such as running small businesses, home industries, and completely different jobs from their main employment.
Nkululeko Nombika, Business Operations Director at Sage Africa and Middle East, weighed in on the increasing number of individuals who have taken up the challenge and started side hustles.
“Whether they are doing it to make sure they can pay the bills at the end of the month or to pursue a personal passion outside their day job, a growing number of South Africans are running side hustles,” Nombika said.
“The 2022 Old Mutual Savings & Investment Monitor shows that 51% of South Africans have multiple income streams. The report also shows that as many as 20% of respondents run a side-line business, while 33% do contract or freelance work in addition to their permanent job.
“This highlights how much entrepreneurial energy there is in South Africa – from graphic designers taking on freelance work after hours to people who walk dogs, write code, or make designer jewellery to earn some cash on the side.”
Nombika gave aspirant entrepreneurs some advice on how to start and maintain a successful side business.
“While some are happy to keep their side hustle small and informal, others dream of one day turning it into their day job or even a business empire.”
Whatever your ambitions, Nombika shares some tips about how you can run a successful side venture:
Seek help
Look for a mentor who can teach the ropes of running a business or mastering the trade or profession you have chosen. They can help you avoid rookie mistakes, saving you time, money, and frustration.
Reach out via social networks or your personal contacts to find someone who may be interested in helping.
As your business grows, you may realise that you don’t have the time or expertise to do everything yourself. When your budget allows, it might be wise to invest in professional support. An accountant or tax practitioner can help you optimise finances and avoid paying unnecessary taxes.
Professionals in fields such as human resources, marketing and technology can also add value as your business grows.
Keep your overheads low
Whether you’re running your side hustle for fun or to make ends meet, you don’t want to lose money in the longer term. Especially in the early months, it’s important to keep tight control of fixed and variable costs. For example, don’t splash out on an expensive new laptop if your existing one will do the job.
A great way to keep costs low is to barter goods and services with other side hustlers and solo entrepreneurs. For example, if you’re a digital marketer, you can offer to help a copywriter with search engine optimisation for their website. In exchange, they can write copy for yours. Also, be sure to save a cash buffer for your side hustle to help you through the leaner months.
Have a clear value proposition to set you apart
When you first start, you might be tempted to chase every cent of revenue that presents itself. But having a clear value proposition for a well-defined audience will help set you apart in a competitive world. Use your business plan to assess whether the opportunities that cross your path will help you advance towards your goals. To scale your business, you’ll need to deliver an offering that wows people.
Ensure you are tax-compliant
You need to declare any income from your side hustle to SARS and pay tax on your profits. This applies even if it is small and even if you are operating as an individual rather than through a limited company.
Keep your personal bank account separate from the one you use for your part-time business to make it easier to track your income and expenses. Also ensure you keep records about your expenses—Wi-Fi, inventory, contractors, and so on—including any invoices and statements. This will enable you to claim them as tax deductions. When your part-time business becomes profitable, make sure you keep money in your bank account to pay provisional tax in August and February.
Automate your finances
An online accounting solution can help you to track your finances in real time, as well as to plan and budget more accurately. It will also enable you to send out professional-looking invoices each month; track and document your expenses; and watch your cash flow. This will help you to save time, comply with tax laws and focus on growing your business.
vusi.adonis@inl.co.za
IOL Business