Chapter 1: What is the main topic discussed in this episode?
Generate is supporting my vision to improve the financial literacy of 100,000 Kiwis by sponsoring Keep the Change. Cheers Generate! Head to generatekiwisaver.co.nz forward slash change to find out more. If you're thinking about turning your side hustle into your main thing, well this video is going to help set you up for exactly that.
I've seen a number of people do this over the years and advise them on doing this and I'm going to put together some of the key steps that you want to think about. The first one is actually to ensure that your partner is on board. Obviously it doesn't apply if you are single, but for a lot of people that can be a very big change.
All of a sudden telling your partner that you want to go and take a lot of risk, because that is how business and turning a side hustle into a main thing can be perceived by your partner. So you're going to have to have a plan to de-risk it, but you're going to have to communicate that with them. If you don't take them on the journey with you, then you're going to run into problems.
So you want to think about that to start with. Now some of these next things are going to be a part of the plan that you're then going to be able to share with them to help de-risk it. Hopefully you have a supportive partner. The ones that are more risk averse and scared of risk, you're going to have to put more effort into showing them how this can work.
now for a lot of people if we think about it the key thing that they want to do is they want to replace their total employment income with their own income that they're in control of through their side hustle and various ventures now i just want to warn you that you're not thinking about how long it took you to get to that level of income so there's a point that most people forget
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Chapter 2: What initial considerations should I make before turning my side hustle into a main business?
If it took you years and years to go through education and to get to employment level where you're making say $80,000 a year, why do you then just expect that straight away you should be able to do $80,000 worth of profit in your side hustle? Maybe we need to be a bit more realistic. Now I'm not saying it can't be done, but I think it's something that people often miss as well.
Now, the next piece I want you to think about is actually highly practical, and it's accounting, and it's boring, I get it, but this is really critical. What you want to do is you want to run a budget. Now, you want to have your total income at present, right? And then what outgoings you have. And what that's going to show you is what do you have coming in, what do you have going out.
Now, in the things that are going out,
what you want to do is you want to go in there and you want to highlight green things that there's no way that they can be removed and then you want to highlight in red the things that can potentially be taken out so it might even be a gym membership it might be forms of insurance it might be eating out it might be investing it might be saving whatever those things are you
you wanna highlight those in red. Now it's not to say that we're gonna sack them off and not do them, but what you're starting to see is that your life that you currently have is built around the income that you currently have. So if your income is going to change, well then maybe we have to change the life that we have.
Now don't forget that in the future we're going to have an even greater life than we have now and we're hopefully going to have a higher level of income or a higher level of freedom of the things that we can do because we chose a different vehicle i.e. self-employment rather than employment. So, this can go right to the nth degree.
Realistically, your mortgage and your rent will be the highest cost that you most likely have in your outgoings. That can still be green. Well, no, it can't. Yes, you could rent your house out, for instance, and that may pay down the mortgage, and then maybe we go interest only for a bit. These are all options. I'm not telling you to do it, but this is how your brain has to start thinking.
Business is a game of solving problems. So you may rent it out. You may go interest only. That covers that. And then you may go live it. Your friends or with your parents. Oh, that's unrealistic. I've got kids. Again, solutions. It's not everything is about you and your situation. This is generalized to help plant ideas for you.
Now you may even decide, like I did, to go house-sitting and you completely remove that cost. Now a pro tip here is that housing in New Zealand is one of the largest costs that you will ever have. So if you can decrease this cost, even when you have a higher level of income, that's going to be one of the biggest levers that you can pull in your life to be able to increase your gap.
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Chapter 3: How can I effectively communicate my plans to my partner?
How long are we going to be able to survive with the cash that we currently have? You want to know what your window is. Now, two things here. One, you want to know because it may be longer than you actually realize and it may force you to change some of the levers in your expenses going out.
Secondly, is that your income may not grow as fast as you think that it will, and then maybe you do have to pill one of those levers that you didn't want to. That's where, for you, maybe you make those orange rather than red and go, okay, I don't want to do that, I'm not going to get rid of it, but maybe in the future I will have to.
Example would be your renting, for instance, and you go, I'm going to stay renting, and then you realise, no, I can't actually afford to do that, I'm going to have to move back home. Example could be, we have a mortgage and we don't want anyone living with us to subsidize that mortgage. Unfortunately, it's orange now. The revenue is not happening as fast as we thought.
Let's bolt on a tenant or a housemate or whatever it may be so that you can bring in income to then extend your runway. So highly practical, but an exercise I strongly recommend you do. However, don't let the runway that you have, if it's long, allow you to be complacent.
Because the thing that you're going to have to do when you go out there to build your side hustle or turn it into your main thing is you're going to have to do way more volume than you realize. And we'll come back to that in a second.
But firstly, before you do this, I want you to have a really, really, really, really, really fucking important conversation with yourself and ask yourself two things. Does the market actually want what I do? If you already have people that are asking you to do what it is that you do and paying you money to do it, that's great data to suggest that they do.
And secondly, do you have the chops to do this? Do you really have what it takes to go away from the controlled environment of a 9 to 5 and you can take a break now and it's highly stressful in here. You could even have a coffee at 10 o'clock if you really are feeling the pinch.
and you can shoot off early, and you can work from home, and don't worry, we're gonna check in with you and make sure everything's fine. I don't know if that's what employment's like anymore, but sometimes when I see people walking around, I think, holy shit, why am I moving at six times their speed? Maybe I could just cruise a little bit. But my goals are big enough that I can't act like that.
So what you're gonna realize, I mean, you don't have anyone checking in with you anymore. You know, oh, hey, how's it going? Have you got a deadline here? No, that's you. Your customers and your clients become that. So do you really have the chops to be able to do that? Business will weed out a lot of these people very quickly, but less businesses fail than what you realise.
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Chapter 4: What practical steps should I take to manage my finances during this transition?
Now we can take this to our partner. If we haven't done this at this stage, what are you going to show them? You're going to say, hey, I'm looking to expand my side hustle, and I become a sole trader, and then the tax side of things is going to be dealt with by Henry, for instance, H-N-R-Y. You've solved that bit as well.
Or you're going to set up a company and then you're maybe going to engage an accountant. But I've got this plan and I want to turn it into something. And I've already got proof from the market that it wants what I want. I've always wanted to do my own thing. I've run a budget on what it would look like if we didn't have the level of income that we need.
currently do and how long that could last us for. And I've also got some suggested changes that we could make as a household to ensure that we can do this. Solo people, individuals, you can do this too. It's still a very good exercise to do. And then you say, look, I'm committed to making this happen, but what's the upside? Paint the upside too.
For me, this is going to mean that I can bring in extra income in the future. I'm miserable at my current job. I can't do that forever. I want to provide more for us as a couple, as a family. I want to be able to use my unique skill set. What is the upside that you are tapping into by turning your side hustle into your main bank?
So you've done in the budget and then you're going to say, look, I've also run some numbers on what it would look like if we did X, Y, Z of these at scale. And here's the reality of actually being able to do that.
Now, that's probably going to be a lot better than going to your partner saying, I'm thinking about quitting my job because I don't like it anymore and I think I'll just do my side hustle. Which one do you think is going to get you closer to allowing you to really have a crack at it? So you've got to communicate with your partner. You've got to take them on the journey.
And I'll tell you what, once you get into business or go further down that path, geez, you're going to have to get some other people around you that understand business too because if your partner's not interested, You can't burden all of the stuff that happens. It is the ultimate solving and solution-focused game that you can play.
And if people don't get it, they're not gonna know the stress that you are going through, what it's like to not get paid by Barry because he's down the boozer and mugging you off and thinks you're a dick and just doesn't wanna pay. You know, someone that's constantly had a salary, including yourself or your partner, they're not really going to understand those things.
You're going to have to start building a support network around you as well so that you do know what to do when that time comes because you have to become a completely different version of yourself that you're not yet, but you can become that person. That's fine. Like so many people go through this journey.
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