How to start a side business without quitting your job

Starting a side business is an exciting venture that combines your unique skills with business savvy. Modern technology makes it more accessible than ever to start, but that does not mean success is guaranteed.

This guide will take you through the practical steps of validating your business concept, obtaining necessary licenses, acquiring equipment, and building supplier relationships to help you launch a successful side business in the U.S.

Step 1: Plan and validate your business idea

Market research and competitor analysis

First, confirm people will pay for your idea. You can create a simple survey with Google Forms to ask potential customers about their needs. A common misstep is to only ask friends for feedback. Instead, find unbiased opinions in online groups or forums related to your industry.

Next, look at your competition. Use Google Trends to see how search interest for your service or product has changed over time. Tools like Ahrefs or Similarweb can show you where competitors get their website traffic, which gives you clues about their marketing strategy.

Startup cost breakdown

A clear budget prevents future financial strain. Most side businesses can start with between $500 and $2,500. Your costs will likely fall into a few main categories. Expect to spend $100-$500 on legal fees for an LLC and business licenses.

Equipment and software could range from $200 to over $1,500, depending on your needs. You should also set aside an initial marketing budget of $100-$500 for a basic website or some social media ads. Planning for these costs helps you start on solid ground.

Here are 3 immediate steps to take:

• Create a one-page survey on Google Forms to poll 20-30 potential customers.
• Use Google Trends to compare search interest for your top three business ideas.
• Build a startup budget spreadsheet that lists estimated costs for legal, marketing, and equipment.

Step 2: Handle your legal and financial setup

Choose your business structure

For most side businesses, the choice is between a sole proprietorship or a Limited Liability Company (LLC). A sole proprietorship is simple and has no setup cost, but it offers no personal liability protection.

An LLC separates your personal assets from business debts. State filing fees range from $50 to $500. With an LLC, profits pass through to your personal tax return, so you avoid the double taxation that corporations face.

Secure licenses and permits

First, get a free Employer Identification Number (EIN) from the IRS website. You will need an EIN to open a business bank account, which keeps your finances separate and clean for tax time.

Next, check with your Secretary of State to register your business name. A frequent oversight is forgetting local permits. Your city or county clerk’s office issues general business licenses, often for $50-$100 annually. Specific services, like food prep, may require additional health permits.

Here are 4 immediate steps to take:

• Decide if a sole proprietorship or an LLC is right for you.
• Apply for a free Employer Identification Number (EIN) on the IRS website.
• Visit your city or county clerk’s website to find business license forms.
• Open a dedicated business bank account with your new EIN.

Step 3: Secure your business insurance

Understand your coverage needs

Your first step is to get general liability insurance, which covers accidents like property damage. If you offer advice, you also need professional liability insurance for work-related claims. Other policies to consider include commercial auto, property, and workers' compensation if you have employees.

For both general and professional liability, a $1 million policy is a common starting point. Annual premiums can range from $300 for basic liability to over $1,500 if you need multiple coverages. This investment protects your personal assets from business-related lawsuits.

A frequent misstep is to buy a policy that does not meet client requirements. Some contracts demand specific coverage amounts, so always confirm the details before you commit. This ensures your policy serves its purpose.

Find the right provider

Now that you know what you need, you can find a provider. Companies like Next Insurance, Hiscox, and The Hartford focus on small businesses and offer online quotes quickly. An independent insurance agent is another good option, as they can compare rates from several carriers for you.

Here are 4 immediate steps to take:

• Get a quote for a $1 million general liability policy.
• Check if your service requires professional liability insurance.
• Ask potential clients about their insurance requirements.
• Compare quotes from at least two providers, such as Hiscox or Next Insurance.

Step 4: Set up your workspace and get equipment

Find your location

Most side businesses start at home, which keeps initial costs down. Before you begin, check your city’s official website for zoning laws related to home-based businesses. Some residential areas have rules about customer traffic or inventory storage that you need to know about.

A frequent oversight is assuming you need a commercial lease. If your home is not an option, consider a co-working membership. These can range from $100 to $400 per month and offer more flexibility than a long-term commitment. This avoids getting locked into a multi-year lease.

Acquire your equipment and supplies

With your space sorted, it is time to get your gear. Your needs will vary by business type. A freelance writer might only need a good laptop ($800-$1,500), while a photographer could spend $1,000-$3,000 on a camera and Adobe Lightroom software.

Many new owners overspend by buying everything new. You can often find quality used equipment on Facebook Marketplace or specialized sites like B&H Photo Video for camera gear, saving you 30-50%. Create a list of what you absolutely need to start and what can wait.

If you sell physical products, you will need suppliers. For shipping materials, Uline is a popular choice, but their minimum orders can be high. You might find smaller, local packaging suppliers or even Amazon Business better for starting out with smaller quantities to manage cash flow.

Here are 4 immediate steps to take:

• Visit your city’s planning department website to review home-based business rules.
• List the equipment you need and compare prices for new versus used items.
• If you need a separate workspace, research local co-working space monthly fees.
• Get quotes from two different suppliers for any raw materials or packaging.

Step 5: Set up your payment system

Choose your payment terms and solution

First, decide how you will get paid. For services, a 50% upfront deposit is standard before work begins. For products, payment is usually due at the time of sale. Clear terms in a simple contract or invoice prevent misunderstandings later.

When you choose a payment processor, look closely at transaction fees. Many new owners get caught by hidden monthly fees or expensive card readers. Your goal is a simple, low-cost way to accept payments that fits your business model.

Accept payments with JIM

For businesses that accept payments on-site or on-the-go, JIM offers a streamlined solution. You can accept debit, credit, and digital wallets directly through your smartphone. Just tap and the sale is done.

The rate is just 1.99% per transaction with no hidden costs. This is much lower than the typical 2.5% to 3.5% from other providers. Since no extra hardware is needed, it is particularly useful for mobile services or for sales at local markets.

Here is how it works:

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available on your JIM card as soon as the sale is done, with no wait for bank transfers.

Here are 3 immediate steps to take:

• Decide on your payment terms, such as a 50% deposit for service projects.
• Compare the transaction fees of at least two different payment solutions.
• Download the JIM app to explore its features for your business.

Step 6: Fund your business and manage finances

Explore your funding options

For many side businesses, traditional bank loans are out of reach. This is where SBA Microloans come in. They offer loans from $500 up to $50,000, with interest rates typically between 8% and 13%. These are great for startups with less credit history.

You might also look into grants. While federal grants on Grants.gov are competitive, your local Chamber of Commerce or city's economic development office often has programs with less competition. These are worth a search.

Plan your working capital

With funding in mind, you need to calculate your working capital. This is the cash required to cover expenses for the first six months. For most side hustles, this could be between $1,500 and $5,000, depending on your inventory and marketing needs.

Many new owners rely on personal credit cards. If you go this route, be careful not to mix personal and business spending. It creates a headache during tax season and can put your personal assets at risk if you are a sole proprietor.

Here are 4 immediate steps to take:

• Research SBA Microloan lenders in your state.
• Search your city’s economic development website for local grants.
• Calculate your estimated operating expenses for the first six months.
• If you use a credit card, dedicate one card solely for business expenses.

Step 7: Build your team and streamline operations

Decide when to hire

Your first hire will likely be a part-time contractor, not a full-time employee. Consider a Virtual Assistant (VA) when administrative tasks take up more than 10 hours of your week. A skilled US-based VA charges between $25 and $50 per hour for tasks like email management or scheduling.

Many owners wait too long to get help, which can slow growth. A good signal to hire is when you start to turn down new projects because you lack the time. This shows that the revenue to afford help is available.

Set up your operational systems

With a team member on board, you need systems to manage the work. For project management, you can use the free versions of Trello or Asana to create task boards. This keeps everyone clear on responsibilities and deadlines without constant check-ins.

To automate client bookings, a scheduler like Calendly is a solid choice. It connects to your calendar and lets clients book appointments directly. This eliminates the back-and-forth emails that consume valuable time. For team communication, a free Slack workspace is a common solution.

Here are 4 immediate steps to take:

• Track your time for one week to identify tasks you can delegate.
• Review Virtual Assistant profiles on a platform like Upwork to understand available skills.
• Create a free Trello board to outline your current project workflow.
• Set up a Calendly account to automate your client appointment scheduling.

Step 8: Market your business and get customers

Start with a simple online footprint

First, claim your free Google Business Profile. This step is vital for local businesses as it puts you on Google Maps. A frequent misstep is an incomplete profile. Make sure you add photos, your service area, and business hours to build trust with potential customers.

Next, you might want to create a simple one-page website on a platform like Squarespace or Wix. A basic plan costs about $20 per month. Your site only needs to list your services, show examples of your work, and provide a clear way for people to contact you.

Focus your marketing efforts

Instead of using every social media platform, pick one and master it. For visual products like crafts or design, Instagram is a strong choice. If you offer professional services, LinkedIn is often more effective. You can start with a small ad budget of $100 to test what works.

As you get customers, track your Customer Acquisition Cost (CAC). To find it, divide your total marketing spend by the number of new customers you gained. If you spend $100 on ads and get two clients, your CAC is $50. This metric tells you if your marketing is profitable.

Here are 4 immediate steps to take:

• Create and completely fill out your Google Business Profile.
• Build a one-page website that lists your services and contact information.
• Choose one social media platform and post consistently for 30 days.
• Run a small $50 ad campaign to calculate your initial Customer Acquisition Cost.

Step 9: Set your pricing strategy

Choose a pricing model

First, decide on a pricing model. With cost-plus pricing, you add a markup to your costs. For physical products, a 20-50% markup is a good start. For services, a 50-100% markup on your time and material costs is more common.

Another option is value-based pricing. This model works well for creative or consulting services where the price is based on the outcome you deliver to the client, not just the hours you work. It allows for higher profit margins if the perceived value is high.

Research your market price

With a model in mind, research what your market will support. Look at what three direct competitors charge for similar offers. You can find this on their websites or on platforms like Etsy for products and Upwork for services.

A frequent mistake is to price too low just to win the first few clients. This can set a precedent that is hard to break later and may signal low quality. It is better to price confidently and justify it with excellent service or product quality.

Here are 3 immediate steps to take:

• Calculate the total cost for one of your main products or services.
• Research the prices of three direct competitors for a similar offer.
• Decide if a cost-plus or value-based model fits your business best.

Step 10: Maintain quality and scale your business

Establish your quality standards

To maintain quality, you need a way to measure it. For services, you can send a simple two-question survey after each project to get a Customer Satisfaction Score (CSAT). For products, aim for a return rate below 5%. These numbers give you a clear benchmark.

Many new owners only react to loud complaints. A better approach is to proactively seek feedback. This helps you spot small issues before they become big problems and shows customers you care about their experience.

Know when to grow

With a quality system in place, you can plan your growth. A good signal to expand is when you consistently turn down work or sell out of inventory. For service providers, being booked more than four weeks in advance is a clear sign you need help.

As you grow, spreadsheets become inefficient. You might want to move your finances to a dedicated platform like QuickBooks Self-Employed. To manage customer details, a free CRM from a provider like HubSpot can keep your contacts organized and prevent leads from falling through the cracks.

Here are 4 immediate steps to take:

• Create a two-question feedback survey to send after each sale or project.
• Calculate your product return rate or service revision rate from the last month.
• Set a specific revenue or workload goal that will trigger your first hire.
• Explore the features of a free CRM like HubSpot to see if it fits your needs.

Starting a side business is a marathon, not a sprint. The key is to take small, consistent steps forward rather than wait for the perfect plan. You have the roadmap to begin. Now, all that is left is to start your journey.

As you prepare for your first sale, a simple payment solution helps. JIM turns your smartphone into a card reader, so you can accept payments without extra hardware for a flat 1.99% fee. Download JIM to get started.