6 Steps to Setting Up Business Systems That Will Help You Make Extra Money

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(Last Updated On: April 19, 2019)
systems for side business
how to set up your side business for success
BUSINESS-SYSTEMS

 

Want to know a huge mistake that some side hustlers make when trying to make extra money? Not setting up the right business systems from the very beginning. This guide is to help you with the systems part of starting a side business.

What’s the purpose behind this whole thang? When you’re excited to start a side business, it’s easy to get distracted by pretty frills that you don’t really need. Tons of business cards, colorful brochures, pens, cutesy paper clips, and post it notes — not necessary. What you really need is an online presence and business processes first so you can:

  1. Effectively promote yourself
  2. On board and provide your customers a service efficiently
  3. Get paid for your work and on time
  4. Keep detailed financial records for tax purposes

In this report, there are productive steps you can take to create a solid side business foundation. (Before we start, if you need a side business idea head here. If you have a side hustle idea that you want to make more money from, go here.)

To Do #1: Create a Website

Customers usually want to know the type of work you do and whether you have samples or testimonials.

A website is a good place to organize all of this stuff. The cool thing about putting a lot of thought into your site’s design and content is that it can attract the right kind of people.

The right kind of people are those who appreciate the work you do and what you’re about. These people are the easiest to work with because you understand each other. This website uses SiteGround for hosting and WordPress as my website builder.

 

To Do #2: Write Your Contract Terms

Having a solid contract that protects your interests is super important. Accepting someone’s “word” that they’ll pay is a one way ticket to getting scammed.

Remember, you’re running a business. Whenever you exchange a service for pay there needs to be a contract with the terms of the assignment, protections, disclosures, and the pay rate.

If you work with a larger company, they may offer a contract for you to sign instead of the other way around. That’s fine, too. However, if after reading through the contract you have questions and would like adjustments made, never feel afraid to ask. Here are two things to make sure are in your contract:

Description of Services

If you’ve never heard the phrase “scope creep”, you’ll get familiar with it when you start running a service-based business. After you get assigned a project, almost 90% of the time the client will ask for adjusts or last minute favors.

It’s not their fault, people forget things. You just need to make sure that your contract clearly states that you expect payment for any additional tasks that you do.

Avoid “scope creep” frustrations by clearly outlining the initial service description along with the terms and due dates, so there’s no question as to what you agreed to do at the beginning of the deal. This way you can refer back to the terms if you decide to charge more for additional work later on.

Payment Terms for Services

Of course, you want to include the rate that you both agree to in the contract. You also want to include the number of revisions or “favors” that are covered by this rate. Edits and revisions aren’t the same as an increase in the scope of the work we just talked about.

“Scope creep” would be them adding completely new tasks onto the project. For work like writing, design, and other artistic side hustles, a few revisions or tweaks are to be expected. But more than two or three revisions means there’s probably some sort of breakdown in communication. Because of this you should be compensated for your time.

Put your hourly rate in the contract to show how much you expect to be paid if you need to do excessive revisions. You can also include any additional conditions of the contract.

For instance, if you only work with clients that give you ongoing projects, you can specify how many times you need to receive an assignment per week or month to continue the partnership. Include the method you’ll use to send invoices and when you expect them to be paid.

We’ll talk about accounting systems next. Lastly, always include a late fee.

Whether you stick to your guns and actually charge a late fee is another story. But a late fee is something you can at least threaten to charge if someone is giving you a hard time on payment.

How can you get this contract signed? Hello Sign is an awesome way.

 

To Do #3: Choose a Bookkeeping Method

When this business was started, we sent invoices through PayPal and recorded my income and expenses in a spreadsheet.

It suuuuucked. The following year, we invested in Freshbooks, an accounting and invoice system. You can use it to send invoices, record expenses, track your income, and track your time spent on business related activities.

Plus, there are tons of reports you can dig into including your revenue per client, your profit and loss statement, and more. Probably the BEST part about Freshbooks is that if you send invoices through the service and a client pays with PayPal, each transaction only costs you $0.50.

In contrast, if someone pays you directly through PayPal the seller’s fee is 2.9% + $0.30. The PayPal fee may not seem like a lot at first, but when you start to get payments that are in the four-figure range it’s quite a bit of money. We also love the fact that the invoices through Freshbook are easy to use and look professional when clients receive them.

The starter Freshbooks plan is $19.95 per month. However, you can try it free for 30 days hereWhether you go with Freshbooks or another system, understand that you need to keep business records in order to properly report your income to the IRS.

 

To Do #4: Research Business Entities

When you start running a business unless you register for another business entity like an LLC, you’re a sole proprietor. Sole proprietor status is running a business where you’re personally responsible for losses and liabilities.

Unlike a brick-and-mortar business, an online or small side business has less start up costs or expenses that you may need to go into debt for. For this reason, establishing a separate business entity is something some solopreneurs wait on. But you should speak with a professional (i.e. accountant) before making any decisions. You can find out more about sole proprietorships vs. LLC’s here.

 

To Do #5: Open a Business Account

Even if you start as a sole proprietor, you should keep your personal money separate from your business income. There are many online accounts where you can store your business income. Capital One 360 is one account with no fees. There are also other online banks like Ally and Charles Schwab.

 

To Do #6: Create an On-Boarding Checklist 

Last “to do” is your on-boarding checklist. This list includes the steps that you will take each time a prospect comes your way to smoothly transition them into a full-fledged client.

What you want to do is create a flow sheet of on-boarding steps. This way you’re not reinventing the wheel each time someone is interested in working with you.

The goal in the future would be to pass on this workflow to an assistant while you focus on the real work. You can create the on-boarding check list in a simple word or excel document.

Almost 2,000 words later and you have some steps to help streamline your business.

El Fin

Now, do the damn thing a.k.a. get to these tasks. Looking for more business/make money related posts? Check these out!

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