(side hustle – 5 minute read)
If you’re reading this, chances are you have a side hustle or are thinking about getting one. Before we jump into the meat of the article, I’d like to preface by saying: It’s hard work! If your goal is to have an easy, mostly comfortable life, then this may not be the way for you. If, on the other hand, you’re keen to smash some financial goals, lay the groundwork for an early retirement and build something that is your own, keep reading!
In the wake of the pandemic, lots of us have side hustles. Just some extra bit of work that we do to make extra money on the side. This can range from rideshare driving, courier deliveries and home based retail businesses. Side hustles tend to be flexible because they have to work around our main hustle. It is often this flexibility that makes them appealing as potential choices for our main hustle.
But if you’re looking to turn your side hustle into your main hustle, you need to answer these questions first:
Can your side hustle support your current lifestyle?
Is the most important question of all. There’s no point in quitting your current career if by doing so you plunge yourself and your family into financial hardship. To better answer this question, have a think about what your monthly household spending is like. If you use an accounting software for home accounting, this is A LOT easier.
Mainly you want to outline how much you spend on what I like to call the ‘big 4’:
- Eating Out
- Motor vehicle expenses (fuel, insurance, repairs, etc.)
And calculate how much on average you need to spend on meeting those basic spending necessities. Let’s say you’ve worked out a spend of $4,000 a month for all of the above. If you have a partner, they can share in some of the expense burden. If you are single or are the main breadwinner, you won’t have anyone else to support you here. Your goals is now to work out how your side hustle can generate you $4,000 a month so you can go do that instead of the current job you have.
How can you scale up your side hustle?
If you can already support your current lifestyle with whatever you are making from your side hustle, AWESOME! For most of us though, this probably isn’t the case. The next step is to think about how you can scale up your side hustle. Generally speaking, there are a few variables you can look at tweaking to increase the sales from your side hustle:
- Increasing your sales price
- Increasing your number of customers
- Adding new products/services
- Reducing your costs
Of course each business is unique. Let’s take the example of Shaggy Man’s Beard Product, a home based online beard care product retailer. Adam started Shaggy Man’s two years ago, hand crafting his own product from the finest beard care ingredients. He sells his product online and has grown his business to a monthly sales average of $4,000 a month. He works full time in IT at the moment, but would love to be able to run Shaggy Man’s full time.
His current net profit averages out at $2,000 a month. To support his current lifestyle he needs to bump this up to $5,000. He works out that if he increases his sales price by 20%, grows his customer base by 30% and bulk buy his product to save on costs, he should be able to reach that $5,000 net profit mark. Armed with a plan, Adam feels confident about making the switch to full time business ownership.
Don’t quit your job just yet!
But wait! Don’t go quitting your job yet! In some ways, having steady employment is great. It gives you predictability and stability in income. Something which takes time to build up in your own business. You need to make sure that your side hustle can generate enough to support your lifestyle before you can quit. In the meantime, you gotta keep working at both your main AND side hustle until you get there.
There will be a stretch of time where it feels like you are working two (or more) full time jobs at once. You will still need to meet the obligations of your employment and work hard on building your business at the same time. The best analogy I’ve read for this is to think of yourself as a trapeze artist in a circus. You are swinging from the employment platform to the business platform but doing so in slow, graduated motions. Eventually you can build up enough momentum to fully launch yourself onto the business side of things! If you have a good relationship with your employer, you can talk to them about slowly reducing your hours while you build up your business.
While you may be excited to leave your full time job behind, always remember to keep a good relationship with your former colleagues. Business can be volatile and difficult – so it’s always good to leave an option open to go back to your old job if things don’t quite work out the way you plan.
Start swinging towards your goal!
If you’re looking to turn your side hustle into your main hustle, I congratulate you! It takes a lot of courage and hard work but I have faith that you will make it. Just remember to be clear about how much you need to make to live comfortably and make sure you can build your side hustle towards meeting that requirement.