Noah Kagan's Side Hustle Rule for New Businesses

Key Takeaways

• Focus on selling a product or service before you spend money on fancy logos or complex websites.
• You must register for an EIN (Employer Identification Number) for free through the IRS website to separate your personal and business taxes.
• Check your local zoning laws and state business license requirements via USA.gov to ensure your side hustle is legal.
• Marketing should be your primary job in the first 30 days to prove your idea actually has paying customers.

Say you run a solo house-cleaning business in Ohio. You spend $400 on a website and $200 on business cards before you ever talk to a customer. Three weeks later, you realize nobody in your neighborhood wants house cleaning, but everyone needs window washing. You just wasted $600 and a month of work because you built the 'business' before you found the 'buyer.

Noah Kagan, the founder of AppSumo, recently reminded entrepreneurs that promotion is the fuel for any new venture. He said on X that he is looking for builders to promote to his audience of over 1,000,000 people. His message is simple: you build it, and he promotes it. But for a lot of solo owners, the 'building' part gets stuck in the mud of paperwork and overthinking.

If you want to move from a hobby to a real company, you need to stop acting like a designer and start acting like a salesperson. Most new businesses fail not because the product is bad, but because the owner got tired of doing admin work that didn't lead to a check.

Phase 1: The Legitimacy Sprint

Before you can take advantage of a big shoutout or a viral post, you need the basics. Don't spend more than a few hours on these.

• Get your EIN from the IRS to open a bank account.
• Check if your city requires a general business license.
• Open a separate checking account to keep your cash clean.
• Set a simple price that covers your time and materials.

Phase 2: The Customer Hunt

Kagan's offer to promote builders is a reminder that marketing is a non-stop requirement. If you aren't telling people what you do, you don't have a business. You have a secret.

• List 10 people you know who might need your service.
• Send 10 personalized emails or texts today.
• Ask for a deposit or a pre-payment to prove they're serious.
• Record one video of you doing the work to show proof.

What this means for you: If you spend more time on your 'About Us' page than on your sales calls, you're moving backward. Use the momentum of current trends to push yourself to ask for the sale.

What if I don't have a product yet?

Most people wait for a 'perfect' idea. That's a trap. Start with a service. It's cheaper. If you can mow a lawn, paint a fence, or organize a spreadsheet, you have a service. You can use the cash from those small jobs to fund the bigger 'product' later.

Does this apply to 5-person teams too?

Yes. Even if you have a small crew, the 'build and promote' cycle never stops. If your team is busy but your bank account is empty, you're building things that aren't being promoted well enough. Or you're promoting things that are too expensive to build.

Are you spending your Tuesday morning on actual work, or are you just rearranging the icons on your desktop?

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📋 Disclaimer

This article is for informational purposes only and does not constitute legal, tax, financial, or professional advice. Laws and regulations change frequently, and the information presented may not reflect the most current legal developments. Always consult with a qualified professional (CPA, attorney, financial advisor) before making business decisions based on this content. MyBizNerd may receive compensation through affiliate links, but this never influences our recommendations.

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