Strategy, Legal & Operations

How to start a side hustle: Planning and execution tips

Got skills you can repurpose to generate income? or have a business idea to try alongside your day job? Enthusiasm is essential, but there’s more to it than that. Consider side-hustle practicalities like validating your idea and writing a business plan, managing tax, finding customers, and knowing when to bring in help.

6 March, 202419 min read Share

Successfully starting a side hustle comes down to a solid business idea, clear execution, disciplined finances, and the ability to test and adapt quickly. 

Maybe you’ve spotted a gap in the market, identified a customer need, or want to turn a skill or passion into extra income. The challenge is knowing whether it will actually work and how to turn it into something sustainable. 

Getting the fundamentals right early, like how you validate demand, manage money, and structure your work, can determine whether your side hustle generates occasional income or grows into something much bigger.

Here’s what this article covers:

What are the first steps to starting a side hustle?

How to start a side hustle comes down to a few practical steps you can execute quickly. 

• Choose a skill or service: start with something you already know how to do or can learn quickly, like freelancing, selling products, or offering a local service.  

• Validate demand: make sure people are willing to pay for your product or service by researching competitors or testing your idea with a small audience before investing heavily.  

• Define your offer: be specific about what you’re selling, who it’s for, and how it solves a problem.  

• Set up a simple way to get paid: use basic tools to invoice, accept payments, or sell online.  

• Start small and launch quickly: begin with a basic version of your idea and improve it based on real customer feedback.  

• Manage your time and finances: track income and expenses and set aside dedicated time each week to grow your side hustle consistently.  

How do you know if your side hustle idea will make money?

Before investing time and money into your side hustle, it’s worth doing some basic research to validate your idea. Here’s what to look into: 

• Identify your target customer. Who is most likely to buy from you? Think about their age, location, income, and problems they need to solve. The more specific you can be, the better. 

• Check that there’s a market for your idea. Search for your idea on Google, social media, and marketplaces like Etsy or Amazon. If others are already selling something similar, that’s a good sign: it means people are paying for it. 

• Size up your competitors. Who else is offering what you plan to offer? Look at their pricing, reviews, and how they market themselves. Identify where you could do things differently or better. 

• Test your idea before you commit. Talk to potential customers directly, run a small survey, or offer your product or service to a handful of people before going all in. Real feedback from real people is the most reliable validation you can get. 

Check that people will pay your price. It’s one thing to know people want what you’re offering; it’s another to know they’ll pay enough to justify the venture. Look at what competitors charge and test your pricing early. 

Do you need a business plan when starting a side hustle?

Yes, you need a business plan. Even if you already have customers lined up, you need to document and plan the fundamentals of your venture if you want longevity. 

Taking the time to strategise will help you later down the line, no matter how small your side hustle is. 

Your business plan is the roadmap your business will take, considering: 

• How you define your unique selling proposition (USP). 

• If there is a profitable market for your offering. 

• Who your competitors are and what makes you stand out in the market. 

• Overhead costs, paying yourself a salary, and cash flow. 

Your business plan is how you prepare to be successful in your business, so it’s a must-have. 

How do I write a business plan?

We’ve created a downloadable business plan template for you to use, but if you’d rather do it yourself, here’s a breakdown of the common components you should have: 

• Value proposition. This section explains the unique value of your offering. It needs to be cut and dried, with no jargon or corny marketing speak. 

• The problem you solve. This is basically your “why”. What problem do you solve? The solution you provide can resolve a known problem for your ideal customer or one they don’t yet realise they have. This section explains that. 

• Target market and competition. Who are you selling to, and who else is selling to them? What other options do your customers have, and what are their deciding factors when choosing? This will help you to identify your strengths and weaknesses. 

• Sales and marketing. How will you reach your target market to make sales? How will you explain your offering to gain their interest? In this section, you identify where your target audience is and your plan to draw them in. 

• Budget and sales. This is where you start to look at forecasting sales, cash flow, and where you’ll spend your money. How many sales do you need to make to turn a profit after you settle your expenses? 

• Goals and milestones. How will you measure success? This section is where you set your milestone targets to keep your business’s bigger picture within view. Vague targets are just ideas. Assign yourself due dates and go into detail about what needs to happen to achieve each goal. Things will be more manageable this way. 

• Finances. Break down how money will be used to get set up and maintain operations. Detail how you plan to pay off debts. 

• Risks. This section highlights what could go wrong and how likely it is for those things to happen. 

It can be easy to feel overwhelmed with all the things to consider. 

However, one easy way to give yourself a 360-degree view of where your company’s blind spots are is by doing a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis. 

Here’s what that is in more detail: 

Strengths 

What is your business already doing exceptionally well? How can your strengths help you to deal with risks? 

Weaknesses 

In what area is your business weak? Is it knowledge? Money? Bandwidth? 

Opportunities 

Where are the opportunities? 

Big or small, set a goal for each opportunity that is specific, measurable, attainable, relevant, and can be done in a realistic timeframe. 

 Threats 

Threats tend to attack your weaknesses first, so use this as another opportunity to remedy your weaknesses and reduce the risks.

How long should a business plan be?

A business plan should be however long it needs to be. 

When you first start out, your plan could be on one page. Or nailing down the details of your business could take several pages. 

This will be a living document; you will update it regularly as your company evolves. 

Review it often to ensure things are moving in the right direction or use it as your blueprint to change direction completely.

How to finance your side hustle

You can fund your side hustle in several ways, from traditional bank loans and investors to savings, grants, and crowdfunding. 

Funding option	How it works	Pros	Cons	Best for
Own savings	You fund the business yourself using money you’ve already set aside	No repayments; no interest; full control	Puts your personal finances at risk; may not be enough	Early-stage hustles with low startup costs
Bank loan	You borrow a fixed amount from a bank and repay it with interest over an agreed term	Keep full control of your business; predictable repayment terms	Requires good credit history; personal assets may be used as collateral	Hustles that need a significant upfront investment
Investors	An individual or firm provides capital in exchange for equity in your business	Access to large sums; investors are motivated to help you succeed	You give up a share of control and future profits; highly competitive to secure	High-growth ideas with strong earnings potential
Crowdfunding	You raise small amounts from a large number of people via platforms like Kickstarter or Crowdfunder	Validates your idea publicly; no equity required on some platforms	Time-consuming to run a campaign; success is not guaranteed	Product-based hustles with a compelling story
Grants	You apply for funding from government or private bodies; the funding doesn’t need to be repaid	Free money with no repayments or equity required	Highly competitive; strict eligibility criteria; slow to process	Hustles that meet specific criteria such as innovation or social impact

 

Here’s a closer look at the benefits and tradeoffs of these start-up funding options: 

Funding through business loans 

Pros 

This option allows you to keep total control of how your business moves forward. 

The loan repayment terms can be straightforward—meet repayments on time and the lender remains largely hands-off. Financial service providers such as banks aren’t looking to make a huge profit off your loan, either. 

As long as you keep your loan in good standing, they’ll have little involvement in how you run the business. 

Cons 

Getting approved for a business loan can be difficult if you don’t have a good credit history. 

You can use personal assets such as your home as collateral, but if the business fails, any assets used as collateral could be at risk. 

Funding through investors 

Pros 

Investors typically have abundant capital. 

You can use that to purchase technology to help you work faster and smarter for your customers. 

You also can make more product and hire more people to help you saturate your market. 

Your investor wants to help your business operate on the highest level for their investment’s biggest return.  

They won’t hound you for repayment because they’ll make their money through equity in your business. The more you make, the more they make. 

Cons 

It’s a competitive market for the attention of investors. Entrepreneurs everywhere claim to have the next big thing in their pocket. 

Unless your business is already generating significant revenue with high earnings forecast and manageable risks, it can be hard to stand out from the crowd. 

Plus, investors will want equity in your business, so you’ll have to give up a portion of your control. 

Alternative funding options 

Loans and investments can seem glamorous and tempting, but in reality, not everyone will be in a position for either (or have a desire to consider them). 

You could also use your own savings or income from your main job. There’s the option to reach out to friends and family, too. 

You might decide to go down the crowdfunding route; there are numerous online platforms you could try. 

There’s also the option to try to get a government grant (and if you’re successful, you won’t have to pay it back). 

Pros 

• Friends and family funding is informal and often interest-free, based on trust rather than credit history. 

• Crowdfunding validates your idea publicly before you launch, and some platforms require no equity in return. 

• Government grants don’t need to be paid back and winning one can add credibility to your business. 

• Your own savings require no repayments or interest, and you retain full control of your business. 

Cons 

• Borrowing from friends and family can strain personal relationships if the business struggles or repayments are delayed. 

• Running a successful crowdfunding campaign is time-consuming and there’s no guarantee of reaching your target. 

• Government grants are highly competitive, with strict eligibility criteria and a slow application process. 

• Using your own savings puts your personal finances at risk and limits how much you can invest. 

How to handle tax for your side hustle 

The amount of tax you pay on your side hustle income depends on how much you earn. There are different rules depending on whether you generate more or less than £1,000 per year. 

If you earn more than £1,000 in a tax year from your side hustle, you’ll need to register as a sole trader, and use the Self Assessment system to tell the tax office (HMRC) about what you’ve earned (and pay any taxes that are required). 

This applies even if you already have a full-time job that pays you a wage for which tax and National Insurance are deducted by your employer (through PAYE). 

If your side hustle brings in £90,000 or more in a year, congratulations; but that’s the cut-off beyond which you need to register for VAT. 

This means charging VAT on products and sending VAT returns to HMRC. 

It’s even possible to create a limited company, through which you can operate your side hustle and pay yourself a wage. Again, you can do this even if you’re employed full time and receive a wage. 

But most people with a side hustle simply register for Self Assessment. 

This means they calculate how much income tax and National Insurance (Class 4) is due on what they’ve earned, then submit a Self Assessment tax return form electronically by 31 January each year. 

To see how much you owe, you’ll need to know how much you’ve already paid in tax and National Insurance via your wage. 

That info is on the P60 and P11D that your employer provides between April and May each year. 

Pro tip: You can claim expenses via Self Assessment, which can reduce the tax you owe from your side hustle. If your side hustle is one that requires buying consumables, then this makes a lot of sense. 

After starting your side hustle, you need to register for Self Assessment as soon as possible, but definitely by 5 October in your business’s second tax year. 

What if I make less than £1,000 in a tax year? 

If you make less than £1,000 in a year, it is considered casual income and you don’t need to tell HMRC about it. Don’t get this confused with profit; this is based on gross sales, not how much you keep in your wallet. 

Note that in these circumstances, there’s no way to claim the tax back on expenses, as you can with the Self Assessment system. 

You might find you keep more money overall if you do this, even with an income under £1,000. 

It’s worth noting that HMRC’s recommended approach is that you should register your side hustle as a business, regardless of income and if you have any tax or National Insurance to pay. 

How to manage your side hustle finances day-to-day 

The three essentials for managing your side hustle finances effectively are a dedicated bank account, an accountant, and accounting software. 

Open a business bank account 

If you’ve set up a limited company, your business will be legally separate from you, and you will need a business account. 

However, if you’re running your side hustle as a sole trader or are freelancing or working as a contractor, then you don’t have to open a business bank account.  

No matter which of the two camps you’re in, opening a business account is a good move. 

The key to accuracy in reporting and calculating taxes is keeping your business and personal expenses separate. 

Your business account should be free of any purchases that don’t qualify as a business expense. 

Hire an accountant 

It makes sense to use an accountant right away, but it isn’t mandatory. 

If your side hustle is one in which you incur expenses (that is, you buy materials or consumables), then the use of an accountant is likely to pay for itself. They’ll know what you can claim to offset your total tax bill. 

Using an accountant also saves a lot of time and effort when the time comes to file a tax return, and they will remove the stress and worry that you might’ve got it wrong. 

If you bring an accountant in right away, they can also help you decide if you should set up as a sole trader or limited company. They can walk you through the tax implications of each and help you make your choice based on your business ambitions. 

Tom Coward, chief financial officer of Cytora, a platform that helps insurers to underwrite more accurately, advises to hire an accountant once managing your finances becomes unmanageable. 

He says: “I suggest dividing your financial tasks into two categories. 

1. “Do it yourself: business-critical things such as cash flow forecasting and business plan modelling. 

2. “Hire an accountant: things you must do but aren’t a value add for you, such as VAT reporting and statutory accounting, and repetitive things like payroll, payments, and invoicing. 

“If the DIY category becomes too much and you can afford it, bring someone in-house. You can start with a portfolio finance director who does this for two or three companies.” 

What if I decide not to hire an accountant? 

If you’d rather manage your finances yourself, accounting software can handle the heavy lifting. It automates the capture of your income and expenses, helps you forecast cash flow, and calculates your taxes accurately. This removes the guesswork, saves you time on processing data, and frees you up to focus on growing your side hustle. 

Look for software that integrates with your bank account and can scale with you as your income grows. 

support you need, so that is the best place to start investing if you are not especially skilled in that area.

How to find customers and arrange payment

To find customers and arrange payment, start by reaching out to people in your existing network or getting visible online, then set up simple, reliable ways for customers to pay you quickly and consistently. 

This is how you confirm that your fantastic-sounding idea actually solves a problem that exists and that people are willing to pay for it. 

You might already have the connections to secure customers from your experience, background, and contacts. These customers could be your best prospects for immediate sales. They offer the most cost-effective way to increase business because you already have a relationship with them. 

Website and marketing

If you don’t have pre-existing connections, here are some suggestions for finding your first customer: 

• Create a functional website and set up social media profiles to explain what your business does and provide ways to purchase your product or service. You don’t need to use every single social media channel; start with one or two. 

• Cold call and pitch your services, both online and offline. Advertise in both traditional (offline directories, community boards) and digital ways, depending on your budget. Get visible by using the media or attending online events, for example. 

• Partner up with business owners who offer services that your customers need for cross-promotion. 

Your website is often the first impression a potential customer gets of your side hustle, so it needs to look professional and be easy to navigate. Platforms like Squarespace, Wix, and WordPress make it straightforward to build a polished site without technical knowledge, while tools like Canva can help you create consistent, professional-looking visuals for your site and social media.

Getting paid

 How and when you get paid depends on your cash cycle, the time between completing work and receiving payment. 

If you’re a retailer or sell products online, then the buyer usually pays you immediately, so the cash cycle is very short. 

But if you invoice customers in a business-to-business transaction, you’ll probably need to wait for payment anywhere from 30 to 60 or even 90 days. 

The fastest way to see improvements in your cash flow is to ensure you have tight payment policies from the very beginning. 

Consider these actions: 

• Ask customers to pay by credit card and/or direct debit. It gives them a chance to conveniently pay the bill; for the former option, they can enjoy the interest-free repayment grace period offered by every credit card company, and for the latter, it can be set to a regular cadence, meaning the customer doesn’t have to think about it. 

• You could also offer online payment methods such as GoCardless and Stripe to your customers. 

• Keep new customers on a maximum credit limit until they have established a favourable payment history with you. 

• Ask customers for deposits upfront to reduce your exposure to late payments. 

• Ask customers for progress payments as you go, especially for large jobs. 

• Move from credit sales to cash sales. 

Along the way, measure the average number of days it takes you to collect debts so you can see if these changes to your payment policies have a positive impact on your cash flow.

When and how to grow your side hustle

As your side hustle grows, there will come a point where you can’t do everything yourself. You will need to bring in help and carefully consider what kind of help makes sense. 

The right time to hire will depend on your situation, but there are some common signs to look out for. These are nicely summed up by the experience of Sid Moore, founder of Moore Accountancy, who gives practical advice on dealing with this moment. 

On hiring people, Moore says to do it “when you don’t have the capacity—or, more importantly, the expertise— to handle something yourself”. 

The point is to be able to remain focused on what you’re best at, and that’s serving your customers.  

If there are parts of running your business that you find tedious, it’s best not to risk valuable time and inaccuracies. 

Moore adds: “I suggest subcontracting work out where you can as an easier step for getting additional support. 

“With a professional at the helm, you won’t have to worry about the risks of tax penalties, cash shortages, making payroll, and missing deadlines.” 

Your cash flow and forecasting will dictate how soon you are able to hire the support you need, so that is the best place to start investing if you are not especially skilled in that area. 

What are the easiest side hustles to start?

The easiest side hustles are those that require little upfront investment and use skills or resources you already have.  

Here are four categories worth considering: 

• Service-based. If you have a marketable skill, this is often the quickest way to get started. Freelance writing, virtual assistance, social media management, tutoring, and bookkeeping can all be launched with little more than a laptop and a few clients. 

• Digital products. Create something once and sell it repeatedly, like templates, online courses, stock photography, or downloadable guides. There are upfront time costs, but the income can become largely passive once the product is live. 

• Reselling and flipping. Buy items cheaply from car boot sales, charity shops, or online marketplaces like eBay, and resell them at a profit. Startup costs are low, and no specialist skills are required, though it does take time to develop an eye for a good deal. 

• Gig economy. Platforms like Deliveroo, TaskRabbit, or Fiverr connect you with paid work quickly, with maximum flexibility over when and how much you work. The trade-off is that income can be unpredictable and you’re subject to the platform’s terms and fees.

Final thoughts

There’s only one way to test if your side hustle has what it takes to make you money – and that’s to give it a try.

And at the same time, stay organised with your finances by using accounting software and you’ll have the clearest view to make smart decisions that will keep your business moving in the right direction.

Editor’s note: This article was first published in May 2026 and has been updated for relevance.

Frequently asked questions about starting a side hustle