Side Hustle Economy: A second job or a pathway to untold riches?
Mar 04, 2024
I have been growing more and more concerned about the ‘side hustle’ economy and I think you should too.
Before things get too far out of control, I think we need to have a long hard look at the side hustle, it’s impact on our lives and on the economy.
In this blog I share my thoughts on the side hustle economy, my concerns, the issues and how to ensure that your side hustle remains a side hustle and doesn’t become a second job that keeps you locked down and miserable.
What is a Side Hustle?
A side hustle is meant to be a secondary income that you achieve through working on passion projects. The birth of the side hustle term became huge with social media, but in effect, side hustles have been around forever. It’s just that we called them second jobs or a home business.
What’s the difference?
The difference is meant to be that you can earn money usually from the comfort of your own home, in your own time, under your own management and from a passion or interest you have.
What’s the issue?
My concern is that, if you think historically, it used to be that only one person was working in a household. So, for every household unit only 1 income was required to make ends meet and hopefully do slightly better than that.
Over time, with changes in family units, two people would work and now the cost of living really does mean that for every household unit there are two incomes required to make ends meet and hopefully do slightly better than that.
With the rise of the side hustle, it is becoming necessary for that same household unit that originally had 1 income to now have 2.5-3x income.
BUT what came first? Was it the increased cost of living and flatlining of regular wages that has pushed many into looking for ways to increase household income? Is it the availability of opportunities we are seeking to increase joy in our lives that has pushed us into looking for additional income? Is it the absolute dissatisfaction in the workplace that pushes us into looking for something more and so our passions are ignited? I think it is hard to tell exactly what it is but what we do know is that it is driven by dissatisfaction in one area that drives us to look for increased satisfaction in another.
The concern
When I am most concerned about the ‘side hustle’ economy is when I hear, especially young people, speak about getting a side hustle ‘to make ends meet’. I have seen budgets drawn up that include paying electricity and food with ‘side hustle’ money. When your side hustle is ‘making ends meet’ you have a second job. It is not a hustle at all. You might have created that job, you might have founded the business that brings you that income but when you are reliant on that income to make ends meet, it is a job.
It is not going to lead you to a life of freedom and keep your passions ignited. You will be stuck and unable to move. You have now created a life that requires 60-80 hours or more a week of work. You have created a situation where you have no choice but to carry on, just to make ends meet.
If your side hustle is bringing you the income you need to make ends meet, that is excellent. But let’s call it a second job so that we can keep a focus on what a side hustle should truly be bringing us. That is flexibility, passion and opportunity to elevate our lifestyle beyond making ends meet.
How to stop a side hustle becoming a second or third job
First ask yourself what the purpose of this venture is. Are you wanting to improve your life and fund additional opportunities like investing or once in a lifetime holidays? Are you wanting to let your creative side come out and explore a different side to you?
If the answer is YES, then you have a side hustle. If the answer is no, it is a job.
So how can you get to the ‘side hustle’ when you are busy making ends meet? Well, this is exactly where my concern is. If we are busy making ends meet and now we are working 60-80hrs plus per week, how can we ever use it to improve our lives? It is my concern that this will imprison many people.
To stop a side hustle becoming a second or, even, third job then it’s simply recognising it for what it is and finding a way for the income from that second job to stretch beyond making ends meet. If it isn’t doing that, you need to look at ways that it can, like getting a new job with higher salary or reducing your expenses.
You know that you have a side hustle… when it makes a difference in your opportunities and lifestyle.
I also believe that the ‘side hustle’ should be transitory. If it is not used during a time of transition, then you will become reliant on it to make ends meet again. Your base living will increase but now that it has, you will need to keep on with your existing hours of work. The process should be stretching and growing you so that eventually you can pull back from work or from the side hustle and not remain working those long, arduous hours. The process will be creating freedom.
How to create a profitable side hustle – build your business plan
Despite the many google searches that will tell you otherwise and the many, many, many internet influencers that will want you to believe it, there is no easy way to establish a side hustle. Everything takes time, effort and has risk attached. The more successful your side hustle, the more time, effort and risk you will have.
Finding your side hustle should not be like looking for another job, it has a creative element to it and it is something that brings you joy. It has flexibility and comfort built into it’s core and it will take you closer to your goals than anything else on offer.
Here’s the steps I recommend you follow in determining your potential side hustle:
- Decide that a side hustle is only for improving your lifestyle and opportunities. Define, with crystal-clear clarity what it is that you want from the side hustle. When you can see that the benefits outweigh the time, effort and risk… you know it’s time to get started.
- Decide that it will be transitory only. It is temporary until you have achieved what you have defined in Step 1.
- Consider what product or service you are willing to spend your time, effort and money on. Consider if you enjoy talking about this with your friends, family and anyone else who will listen. What brings you joy? What are your skills and experience? Where does that intersect with your passions?
- Define the product or service you considered in Step 3.
- On a sheet of paper, write down the following:
- The description of the product or service.
- Who purchases this type of product or service. Be specific – where do they live, are they male or female, what income bracket would they need to be in to afford it?
- What they do with this product or service. How does it change their life? Why do they want it?
- Where and how they access this product or service now.
- State how you can offer this product or service in a way that someone would choose you, rather than their current provider. If the product or service is new, state how you will you get the word out there and how long will it take.
- State how you will obtain the product or service and how you will get it to these people. State if you need to create, manufacture, custom, purchase, deliver. State the steps and other people involved in this process.
- Calculate how many sales you need, how many hours it will take, how long you will run it for and how it will end. State what your exit strategy is. Will you sell the business you have created? Will you create systems and processes that enable a team to take over for you and you manage remotely?
Once you have worked your way through this mini business plan, before even looking at the financial feasibility, consider the time and effort that it is going to take to achieve the above. Is it something that you feel strongly enough about to trade your free time, your weekends, your weeknights for?
Just going through this process will help you eliminate and refine what you are hoping to achieve.
When you have the list refined, continue on to financial feasibility.
- What does the product or service item cost?
- Product Design and Development
- Manufacturing and minimum quantity ordering
- Delivery and transport costs
- Packaging
- Product materials and supplies
- What overhead costs do you need to consider?
- Website or sales platform
- Market stall
- Consignment fees
- Shop display fees
- Marketing and sales team
- Advertising
- Insurance
- Legal
- Accounting
- Stationery
- Computer Equipment
- Warehousing or if at home will there be increased costs for internet, telephone, electricity, water, cleaning etc?
- How much can you charge for the product or service? Once you deduct the product or service item cost from the amount you can charge per item, is there anything left over? That is your profit per item.
- How many products or services could you sell? How much profit would that give you? If you believe you could sell 5 items per week at $100 profit, that would be $500 profit.
- Is the profit enough to cover your overheads? If your overheads add up to $300 per week, you would then take your $500 profit less your $300 overheads costs and that will leave you with $200.
- Only you know if the time, effort and risk you have taken in delivering the product or service is worth it to you for $200 (don’t forget to deduct taxes, guess 25% so $150 after tax).
$150 per week additional can make a huge difference to a household, especially if you are putting this money to work in other income generating or investing activities such as shares, property investing or home ownership.
- Write down how long will you be happy to do this for.
Voila! There is your mini business plan for your side hustle!
You have asked yourself the relevant questions, you know what it is you want out of it, you know why, you know how long you will do it for, you know the time, effort and risks that are involved. Next you need to dip your toe in.
You are never going to know if you don’t try and start. There is only so much you can learn before you need to take action. Start small if you are nervous. Not sure what your friends and family will think. Then don’t tell them. Go about it quietly and start achieving. If it doesn’t work out, go back through your business plan – what was different? What didn’t you account for? Can that be fixed?
Right about now, you might be hoping that I provide you with a list of potential side hustles. Bu I am not going to. The reason I wont do this is because you are unique, your experiences in life are unique and the skills you have are unique to the extent that they are paired with you and your experiences. If I give you a list, I would simply be repeating what is already available elsewhere and I would be robbing you of the creative spirit that is within you.
Conclusion
You know that you have a side hustle… when it makes a difference in your opportunities and lifestyle. If you let it, it can be a second job OR you can use the side hustle to elevate you beyond your current situation and into the life that you desire.
You are never going to know if a side hustle is going to succeed if you don’t try. You will need to take action. There are no get rich quick options and there are no ways to avoid the input of time, energy and risk.
A side hustle can be a pathway to anything you want in life. It is your choice, it is your passion and your dreams that must drive your side hustle.
