Everything You Need To Know About Starting A Side Hustle In 2022: Part Two

• Can I start a business with no money?
• What's the easiest way to get a business loan?
• How do you keep a business profitable?

Don't throw in the towel just yet – there are plenty of ways you can still make a go of it, including growing your business slowly and applying for funding elsewhere. The following post explains everything from business loans to average budgets, with a few handy hints on staying profitable too.

Can I start a business with no money?

If you begin small, you might not need too much initial investment to start a business at home. Plus, some business ideas are intrinsically cheaper than others. There’s no stopping you, for example, offering a dog walking service, becoming a freelance proofreader or setting up a YouTube channel tomorrow, as none require forking out on specialist equipment. Having said that, you’ll probably need an advertising budget to get your brand known, and in some instances your business may require appropriate licences. In the case of dog walking, for example, some local councils demand you apply for a licence to walk multiple dogs at a time.

Not every self-employed venture is quite so straightforward though, and the average cost for new UK startup businesses is £5,000. This is where forward planning helps – identifying both running costs and how much you need to get the project off the ground in the first place will give a good indication of the financial implications of going solo.

Once you’ve got those figures sorted, it’s time to think about where the money is going to come from to fund your project. It can be tempting to use savings, but make sure you hold enough back to keep your head above water in lean periods, while you’re on holiday, or if your business takes a while to turn a profit. Experts recommend an emergency stash to cover at least three months’ worth of income.

This is where holding onto your day job comes in handy. Maintaining that steady salary while you grow your side hustle can give you the financial stability to really make a go of it. New businesses take time to develop. Starting small and testing the idea before depending on it for your livelihood is the safest and surest route to success. It’s also a chance to gauge whether self-employment is something you actually enjoy.

If you still need additional funding and your predicted costs are relatively small, you might be able to use the overdraft of your business account, apply for a business credit card or apply for a business loan. A word of warning, however: always make sure your business can afford to pay back the credit first.

Otherwise check out the grants available to small businesses. Unlike a business loan, which you’ll have to pay back within an agreed timescale, grants are essentially ‘free’, although a few are only offered on the basis that you invest the equivalent amount in your business. Many grants will also include mentoring, which can be just as valuable as the hard cash.

Crowdfunding is another option worth investigating. It involves asking a large number of people to donate money online, usually in relatively small amounts, in return for the promise of goods or services when you’re up and running.

For many new companies, however, a traditional business loan remains a key source of funding. These can range from a startup loan to help get your new venture off the ground, a short-term loan to ease cash flow problems, and long-term business loans to help you expand and enhance your offering.

Both business loans and personal loans are offered on a secured or unsecured basis. The amounts and terms vary widely depending on which lender you’re applying to. Typically, however, the shorter the term of the loan, the higher the interest and monthly repayments. That doesn’t necessarily mean long-term ones are better – you’ll be paying them back for longer so you may rack up more interest overall. Plus, it’s sometimes harder to get approval for a longer-term loan as there’s more risk your financial situation could change.

What's the easiest way to get a business loan?

The easiest way to get a business loan is to first make sure you meet the eligibility criteria. Each provider will be slightly different, of course, but you’ll need to be based in the UK, have a solid business plan showing how you’ll repay the loan, have no outstanding CCJs or late payments and have good credit history. First check your credit report – it’s worth doing this before applying for any type of loan, as credit checks can impact your credit score.

You should also be aware that most lenders will want to see two years of accounts when you apply for a loan. Obviously this is impossible if the side hustle you want funding for hasn’t even launched yet. In this case, a quick loan option may be to use a personal loan instead. But you’ll have to check the provider allows this before applying, or you’ll run the risk of your application being turned down.

Once you’re confident you meet the requirements for a business loan, be clear on the details. This includes how much you’re asking for (make sure you can meet the repayments first) – as well as a good explanation of why you need it. Any supporting documents will help. We’ve mentioned a business plan already, but if you’re able to provide business bank account statements and details of your profits and losses to date, even better.

If you would like more information, we have a dedicated guide on how to apply for a business loan. You can also compare business loans on our site, to help find the best solution for your business's needs.

How do you keep a business profitable?

Keeping a business profitable requires organisation and a close eye on the numbers. From the very start you’ll need to keep on top of tasks like invoicing clients, tracking expenses, meeting monthly repayments if you’ve taken out a loan, and saving money for your tax bill.

Having a good routine can help with this. Maybe set aside one morning a week purely for financial admin and stick to it. On the subject of establishing a good working pattern, it can be very helpful to have a regular ‘clock on’ / ‘clock off’ time each day to make sure your side hustle doesn’t spill into family or leisure hours. Another way to make sure there’s a clear distinction between home and work life is to set aside a room or corner in the house to be your office, or try using a café or flexible workspace in town from time to time.

You’ll also need to learn how to adapt. If recent years have taught us anything it’s just how unpredictable life can be. Granted, few people would have forecast anything like the Covid pandemic before it came, but planning for the worst – as best you can – could be the difference between a small business that stays in the black and one that goes under.

A lot of this is about evaluating risk. There are business risks during an economic slump that you need to consider, but think about risks to your personal finances as well. We’ve already talked about the need for a cushion of savings, pension provision and maybe income protection insurance, but also consider your mortgage eligibility in future as self-employment can impact that too.

Finally, be confident. If the customers aren’t coming to you, don’t be shy about sending a pitch or proposal to people you’ve worked with in the past, met at industry events or communicated with on social media. The more people you know, the more chance of success, so put time aside to build your network and see how your business grows with it. They say it takes a whole village to raise a child. Well, it often takes an entire community of people, whether on LinkedIn or your newsletter subscriber list, to nurture a small business too. Invest in people and the profits should follow.