Whether you’re an employee or an entrepreneur, starting a side business is an excellent way to monetize your skills and increase your earning potential. Some part-time business opportunities can even serve as passive income streams, letting you make extra income without adding hours to your workday. For others, a side hustle is a chance to make a hobby or creative pursuit a more integral part of your day-to-day life, allowing you to profit from your passions.

Whatever your reasons for wanting to start a side business, it’s important to plan carefully before jumping in. Starting a side hustle can be rewarding but it can also be stressful, adding expenses and responsibilities to your life that you’ll need to be prepared for in order to give your new side business the best chance for success. If you’re considering a new side hustle, here are some steps you should take to give you the best chance of starting it successfully.

Step 1: Clarify your goals for starting a side business.

The first step to planning any business is to know what you want to get out of it. Answering this question will guide every other decision you make, from which side hustle ideas will be the best options to how much time and money you want to devote to your new venture.

The truth is, there are a lot of reasons that someone might want to start a side business. Many people start side businesses as extra income strategies to help them achieve financial security. In that case, finding low-cost business ideas that are largely hands-off will serve their goals the best.

On the other hand, some professionals start side businesses related to their full-time job as a way to develop new skills or grow their reputation within the industry. For these entrepreneurs, the cost-benefit calculations will be different than if the primary goal is generating more income. Then there are people who want to pursue an interest or passion, either to stay as a side venture or with the hopes of growing it into their full-time career down the line.

The definition of success will vary for each of these situations, and the short-term and long-term goals set to achieve it will be different, too. Knowing exactly what you want to get out of your side hustle before you start helps make sure you’re investing your time and money into the right things.

Step 2: Find the right side business idea.

While there are some consistently profitable side gigs, the truth is success is never guaranteed—and even an off-the-wall business idea can be wildly successful with the right person at the helm. There is no single business idea that will be the best fit for every entrepreneur. Choosing the right business for you starts by figuring out where market demand intersects with your unique skills and interests.

This is the first decision where knowing your goals will help you choose wisely. If you just want another income stream and aren’t picky about your niche, a good approach could be to research profitable online business ideas first. Once you have a list of options, you can narrow it down based on which is the best match to your skills and interests, or will be the easiest to fit into your everyday life.

For career or passion-driven side hustles, it’s often better to take the opposite approach. Start by listing the types of things you want to do, then research which of those has the most demand, or will be the most likely to be profitable as a part-time business. Both approaches will get you to the same outcome, which is finding the point where what you can offer overlaps with what consumers want.

Step 3: Validate your idea and the demand for it.

Before you commit fully to your new side business, take a second to assess the market and picture where you’ll fit within it. Start by defining your target customer and what motivates them to engage with a brand. Also consider who already offers the same kind of service or product, and what value you offer that sets you apart from this competition.

One thing to remember at this stage is that competition isn’t necessarily a bad thing. It’s actually a good sign if there are already a few businesses in your niche—that indicates there’s demand for what you want to do. That said, you want to avoid entering a market that’s already oversaturated. The ideal situation is if you can offer something slightly different than what customers can already get, letting you fulfill an unmet need within an existing market.

How you’ll want to validate your idea at this stage depends greatly on the type of business you want to start. For an online business, conducting research and analyzing data will often be the best choice. For a local business, you may be better served getting out into the community and talking to your future customers. Conducting surveys and polls, consulting with industry experts, or testing your concept with pre-sales or prototypes can also be good ways to validate side business ideas.

Step 4: Plan your schedule and set time boundaries.

Work-life balance for side hustlers can be challenging, especially when you’re balancing a full-time job and a side business. Even a “passive” business is going to require some kind of time and energy to keep it going, for one thing. In a similar vein, turning a hobby or passion into a side hustle doesn’t mean it’s going to always be fun. Once you’ve made something your job, there are times it’s going to feel like work—and you need to be prepared for that from the start if you want your side hustle to succeed long-term.

Before you start any side venture, take a step back and assess your current schedule. Evaluate how much time you can reasonably devote to the business in a typical week and when that time is likely to be. It can be helpful to plot out what your schedule will look like in a calendar or scheduling app. Make sure you’ll still have time to socialize and relax, too. You won’t be able to perform well in either job if you’re exhausted and burned out.

Once you have a rough idea of your side business schedule, go back to your list of ideas to make sure they align. Be realistic about how much time the side business will need. If you’re not sure, reach out to someone who has a similar business and ask how many hours they devote to it each week, and what they typically spend that time doing.

Step 5: Create a business plan.

Even for a home-based business startup that you only plan to work on part time, it’s smart to develop a business plan. This is where you’ll bring together all of the things you researched and the ideas you brainstormed during the first four steps, clarifying your vision for the business, your revenue goals, and how you see your new venture fitting into the market.

The idea of a business plan is intimidating for many people, but the truth is this doesn’t need to be a complicated document, especially if it’s just for your personal use and you don’t plan to use it to seek funding. This document should have a few core sections:

• Executive summary – A brief overview of the business, your objectives for it, and how you plan to achieve them.
• Company description – A description of your business location and legal structure, along with its mission, your vision for it, and the key value proposition it offers customers.
• Market summary – Your target market and ideal customers, along with an analysis of your competition and where you fit within the market.
• Products or services – A description of what you’ll do for or sell to customers.
• Marketing and sales strategy – How you’ll promote your business to acquire customers.
• Financial plan – How much capital you’ll need to start, how the business will make money, and projections of your revenue goals for your first 3-5 years (and how you’ll reach them).

As you can see, that’s all core information about the business that you should figure out before you start, anyway. You can find free business plan templates online if you want some guidance for how to put everything together.

Step 6: Register your new business.

Registration is technically optional for many side businesses, especially if you’ll be providing services like writing, web development, or bookkeeping services on a freelance or contract basis. That said, there are tax considerations for small businesses that you should be aware of from the start to avoid penalties or unexpected large bills down the line.

If you’ll be selling any products, for instance, that means you’ll need to register to pay sales tax in many states. Some forms of side business will require additional licenses or permits, too, and scaling a side hustle is much easier if you already have this legal step taken care of from the start.

The first step is usually registering with the IRS to obtain an Employer Identification Number (EIN). Once you have that you can register with your state and apply for any county or municipal permits or licenses you’ll need. This process differs depending on where you live and the type of business you’re starting, so it’s smart to talk to your local small business development center or a similar expert if you’re not sure about what steps to take.

Step 7: Market and build your brand.

The best side business marketing strategies will depend on the types of customers you want to reach. If it’s an entirely online business, then digital marketing is going to be the way to go. Online ads and social media can also be effective marketing tools for local retailers or service businesses, especially Google Local Services Ads and others with geographic targeting. More traditional print advertisements like fliers, mailers, and door hangers can be useful for local businesses, too, while businesses of all types can benefit from a strong email marketing strategy.

Marketing is another area where time management for entrepreneurs is a helpful skill to have. You can spend a lot of time and money on marketing if you let yourself, and while that can often be a smart investment in your company’s future, you don’t want to go overboard. Consider the volume of customers or clients you can reasonably serve without overloading your schedule and tailor your marketing to match. After all, you won’t get the full value out of generating tons of leads if you’ll only have capacity for a handful of them.

Starting a side business with staying power

With the wide variety of ecommerce platforms and freelancer marketplaces available today, it’s never been easier to start a side business. You’ll find an equally varied array of freelancing tips and resources focused on entrepreneurship for beginners that can help you answer questions or overcome challenges that come up along the way.

Of course, none of that means that running a business is easy. While some types of side business require more time and energy than others, any new venture is going to require dedication and patience to get it off the ground. The secret to a successful side business for full-time employees often rests in your ability to plan and manage your time so you can give the business the attention it needs without it eradicating all of your free time. Taking the time to plan and visualize how the business will fit into your life, before you start it, is the best thing you can do to set yourself up for lasting success.