Discover how to successfully launch a side hustle in South Africa, from identifying your business idea to managing finances and navigating challenges.
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With South African salaries slowly falling behind the rising cost of living, side hustles are becoming a practical and increasingly popular way for enterprising people to make up the shortfall.
Over the past five years, nominal take-home pay rose by 22.8%, but cumulatively inflation has increased by 26,6%, effectively reducing salary earners’ spending power by nearly 4%.
Add to this other pressures, such as rising electricity and other service costs, tax bracket creep, and finding a way to top up the monthly pay cheque becomes increasingly necessary.
Side hustles gained traction during the COVID-19 lockdowns, as people stuck at home had the time to explore new ways to supplement their income.
Research indicates that now between 14% and 16% of middle-income households earn additional income from one or more side hustles.
Starting a side hustle might seem increasingly appealing to cash-strapped consumers, but doing it successfully requires some thought and planning.
Some considerations include the following:
· Define the nature of the business: Side hustles are more successful when they align with your interests, expertise, and the need for a product or service. Basic market research is never wasted. This should determine the need for the business or the problem it will solve, and the competitive environment.
· Understand the costs: Before launching or structuring prices, consider the costs, which include:
1. Startup costs such as buying equipment, software, or setting up a website; operational expenses such as internet and phone costs, transport, rental, insurance, insurance and buying inventory.
2. Legal and compliance fees for registering the business, obtaining permits, and setting up an accounting function or tax structure, and professional fees for external consultants.
3. Branding and marketing costs for social media advertising, search engine optimisation, website hosting, logo design, and promotional material.
· Prepare a business plan: Summarise the nature of the business. Then define the target audience and the best marketing tools to reach them effectively. Use the cost breakdown to determine a pricing strategy and budget.
· Obtain the finance: Most people starting a side hustle to make ends meet don’t have sufficient disposable income to fund the business. DirectAxis’ data and client feedback indicate that personal loans are a popular funding mechanism because the application process is simple and quick, and the money is transferred immediately after the loan is approved.
· Start small: Don’t invest too much upfront. Test the concept before scaling up.
· Make use of free resources: Use free online tools, courses, and social media platforms to build knowledge, better understand the market, and how to run a successful business, and grow the brand.
· Manage the finances: Keep careful track of expenses, pricing, and profits to maintain cash flow.
· Stay committed: success takes time, so persevere and adapt to challenges.
* Letley is a specialist loan provider at DirectAxis.
PERSONAL FINANCE