Starting a side hustle is an excellent way to build your income stream and pursue your passions when time and resources are limited. Depending on your long-term plans and goals, a side hustle offers the potential to become a full-time entrepreneurial endeavor. However, as the saying goes, it often takes money to make money.
Securing financing for a side hustle can be challenging, but it doesn’t have to be impossible. Creating a strategic business plan and closely monitoring your finances can help you get your monetized passion project up and running.
Here are five tips for financing your side hustle so that it becomes sustainable – and even profitable – in the future.
Get Creative With Bootstrapping
Bootstrapping is the generation of funds to run a business with little or no help from outside sources like banks and investors. While bootstrapping a business can be challenging, it offers a few notable benefits that can contribute to long-term success. One of the biggest benefits is maintaining control over your business. When you work with a bank or investors, you’re subject to their terms. Another benefit is that you’re less likely to spend too much and burn out quickly, taking a more-tortoise-than-hare approach to success.
The key to success with bootstrapping is to outline every expense and stick to a strategic plan. Do what you can with personal savings or consider working extra to save up capital for your project. Take a frugal approach, prioritizing value and savings over cheap, quick fixes.
Take Advantage of Freemium Tools
One of the best ways to save money while starting a side hustle is to use freemium tools. From accounting software to marketing-related platforms, a freemium tool offers a free version with tiered payment plans for scaling up or down. Social media scheduling programs are an excellent example of tiered freemium payment plans. Many of these platforms offer an unpaid version for scheduling a limited amount of posts on a few accounts. To access more posting bandwidth, you would pay a monthly fee.
You can use freemium tools for everything from virtual meetings to cloud data storage to sourcing images for marketing collateral. Once your side hustle starts to generate revenue, you can reinvest to upgrade the most practical freemium tools to keep your project growing.
Seek Borrowing Options
There’s no shame in securing a loan or borrowing money to fund your side hustle; it’s all about doing so responsibly. Take some time to talk to a financial advisor or your bank about low-interest rate options. Alternatively, you can speak to investors or trusted contacts to lend money to your efforts.
If times are tough and your side hustle has the potential to be a fruitful endeavor, you can also consider higher-risk loan options. This strategy is also ideal for those who have less-than-perfect credit scores and aren’t eligible for low-interest business lines of credit. Take some time to research personal loans and even online car title loans to determine whether one of these options could be right for you.
Crowdsourcing is an alternative to borrowing money that many brands use to secure marketing collateral and fund their company launch. The key to crowdsourcing is to create an emotional connection with your audience and get demographic buy-in. For example, if someone in your following has an artistic background and supports your cause, they may be willing to donate a logo to help you out.
Presales also fall under the umbrella of crowdsourcing — consider Kickstarter campaigns as an example. With this strategy, you secure the funds upfront to help launch the business or produce the product. Only take this approach if you know you can follow through and deliver what’s promised.
Try Bartering and Trade
Finally, reach out to your network and investigate ways to trade or barter your services in lieu of payment. For example, a tattoo artist might offer a large tattoo in return for car repairs from the local mechanic. For this approach to work, you’ll need to prove your value and build trust with potential partners.
With these five tips, you can fund your side hustle to build a profitable business endeavor.