Tim Negus
Whether to supplement their income, pursue their passions or explore new career opportunities, more entrepreneurs are getting their start with “side hustles.” In a state that is fertile ground to small-business success, the opportunities are bright for Utah entrepreneurs who fall in this category.
Side hustles — an income-generating activity beyond one’s regular employment — fueled strong business growth in 2023, with 44 percent of new businesses being started by entrepreneurs who were working another job, according to a recent Gusto survey. That’s up from 27 percent from 2022.
Multiple factors have contributed to the jump, including inflation-squeezed budgets leading workers to seek other income sources. Nearly two in five Americans adults currently have a side gig, a 2023 Bankrate survey found. And many of these enterprises have the potential of becoming high-propensity businesses, creating jobs and fueling the economy.
Side hustles afford would-be entrepreneurs the chance to test the waters to determine if a business idea works, while still maintaining the safety net of their primary income source.
Side gigs also offer opportunities for traditionally underrepresented groups. The Gusto survey found that non-white entrepreneurs are more likely than white entrepreneurs to start a business as a side hustle. Around half of Asian American, Pacific Islander, black and Hispanic business owners kept their day job in 2023, compared to 42 percent of white new business owners. Young entrepreneurs are likewise apt to start their business as a side hustle. More than half (51 percent) of new business owners under the age of 35 started their company as a side hustle in 2023, compared to 38 percent of new business owners 55 or older, Gusto reported.
The popularity of side hustles comes at a time when entrepreneurship is booming in the U.S., with a record-breaking 5.5. million new business applications filed in 2023, according to the U.S. Chamber of Commerce. Meanwhile, the number of high-propensity business applications — those with high-growth potential — grew from 1.3 million in 2019 to 1.8 million in 2023, according to U.S. Census Bureau data.
Utah is at the forefront of this trend. Last year, the Beehive State saw nearly 72,000 new business applications, ranking sixth nationally in business applications per capita. Utah claimed 10 of the top 30 spots among “Best Small Cities to Start a Business” in WalletHub’s 2024 rankings.
A side hustle can be a great launching pad for a successful business. It requires business owners to invest their time, passion and grit, so there’s motivation to achieve their goals.
Here are six considerations savvy side hustlers can make as they scale their gig out of their basement and into a viable operation:
1. Seek advice. As an entrepreneur, you’ll wear many hats. Seek advice of people with knowledge in areas that are less familiar to you, whether it’s bookkeeping or marketing. It’s also helpful to get general advice from a business incubator.
2. Have a plan. Writing a business plan offers so many benefits and it doesn’t have to be complicated. If you want to win, have a plan for success. Agencies such as the Small Business Administration and SCORE, provide detailed information on developing a solid business plan.
3. Get a handle on capital. Lack of capital is one of the primary reasons startup companies fail, sometimes because business owners are unaware of financial resources that do exist. Large banks historically have been the most common source of traditional commercial loans and lines of credit. But there are other options, too. The U.S. Small Business Administration, as well as state and local economic-development agencies and various nonprofit organizations, offer low-interest loans to small-business owners who do not qualify for standard credit arrangements.
4. Remember, you don’t have to borrow big. As you scale, it makes sense to be prudent about how much capital you’ll need to launch. Some banks have specialized products to help you get funding quickly and efficiently. For example, many banks offer a streamlined loan application for U.S. Small Business Administration term loans up to $150,000. SBA term loans like this can be an effective tool for funding business needs, including equipment, working capital and start-up costs. Of course, loan products are subject to approval, so talk to your local banker about funding options for your business.
5. Avoid personal plastics. When business owners use their personal credit cards for the business, they end up using the debt as though it is working capital for day-to-day operations. More troubling yet, they may find themselves stuck making interest-only payments on their cards. Business owners optimistic about the ease of refinancing their credit card debt into a business loan may be surprised. To refinance this debt into a U.S. Small Business Administration loan, borrowers must show all receipts that demonstrate everything charged on the card was for a business purpose. A better way to fund the launch of a new venture is to start with a business plan and apply for a business loan. The process itself tees a business up for success. Why? Because the market research, cash-flow forecasts and long-range plans are literally baked into the plan.
6. Seek support. As you work to access capital for your business, remember that your banker can help tell your story in the best possible light and serve as your advocate to underwriters. As your banker learns more about your business, he or she can help you meet credit requirements and successfully apply for capital.
Entrepreneurship is vital to Utah’s economy, where 99.3 percent of businesses are considered small businesses — defined as businesses with fewer than 500 employees. These businesses employ 45.2 percent of the state’s workforce. Some of Utah’s most-admired small businesses and unique consumer products were developed by scrappy individuals who turned their side hustles into bigger bustles — and the momentum appears to be on the rise.
Tim Negus is the senior vice president and director of the Zions Bank Resource Center in Salt Lake City.