Five tips to get your side hustle started

A version of this article was originally published on 10 November 2020.

Thinking about a side hustle to supplement your income? Or are you wanting to test the waters before branching out solo and starting your own business?

Whether it's arts and crafts, writing and blogging, health and fitness, beauty and wellbeing, tutoring and education — or gig economy side hustles, like Uber driving or being an Airbnb host too — you can earn money on the side of your formal employment, or even start monetising your passions.

Side hustles present many opportunities and, according to our research*, can earn you an additional £4,500 a year.

Want to know more? If you’re building up the courage to start your own business or side hustle, here are five tips to get you started:

1. Find your niche

Think about what makes your, or the products you sell, unique.

Is it the materials you use? Is it the personalised service you give to customers? Is it the quick delivery service or sustainable packaging that you wrap your products in? These are the points that will set you apart for the competition.

Identifying your unique selling points (USPs) and communicating your niche at every touchpoint will reinforce your message.

2. Understand demand

Once you’ve found your niche, you’ll want to make sure there’s a market for your side hustle.

It can help to start with your friends and family. Pitch them the product or service you’re thinking of launching and find out whether they’d buy it.

Then, consider doing a ‘soft launch’ to test real-world appetite and to get objective feedback. This could be through a waiting list, pre-sale or special introductory offer. This will then also help you think about how to price your offering, and where to sell and promote it.

All of this will come in handy later if you decide to take your hustle to the next level and seek out funding to support your growth.

3. Dedicate your time

Any business owner — whether running a side hustle or an enterprise with a multi-million-pound turnover — will tell you how all-consuming their job is.

Your side hustle requires many hours of your time to get it off the ground. It also needs many hours to keep it running and growing and doing this alongside full-time employment shouldn’t be underestimated.

At times, it can be incredibly lonely and stressful — but don’t let that stop you. Just make sure you’re prepared.

Joining premium freelancer communities, like our partner Passionfruit, can help manage boring admin tasks, including payments. Communities like these also provide opportunities to connect with other freelancers and potential clients.

Make sure your goals are attainable and ensure you have a clear plan for how to succeed. And above all, be prepared to stick to it.

4. Protect yourself and your side hustle

Setting out on your own is an exciting but daunting undertaking. You might want to consider having business insurance in place to protect yourself in case something goes wrong.

If you plan to offer consultancy or advice, professional indemnity insurance (PI) can be a good place to start. If a third party accuses you of professional negligence, having professional indemnity insurance may help to cover any associated legal costs.

Business contents insurance is designed to cover things like laptops, as well as any specialist machinery you might need for your side hustle. Cyber insurance is sometimes a growing requirement for any business — large or small — that handles any third-party data.

5. Set aside money for your tax requirements

As a business owner, it’s down to you to keep track of what tax you’re liable for and make sure you pay it on time. The government allows you to earn £1,000 tax-free for your side hustle, but you’ll need to pay tax if your side hustle earns you more than that each year.

As of January 2024, side hustle sites including Vinted, Airbnb, and eBay will collect and share details of transactions with the tax authorities, allowing HMRC to seek out anyone who should be declaring any extra income but isn't.

Tax is calculated through a Self-Assessment which you need to complete once a year. Check out these tax tips to understand tax for your side hustle in more detail.

*Survey of 2,002 people with side hustles conducted by Censuswide, on behalf of Superscript, between 10th-15th September 2020.