Law #5: Learn How to Identify and Exploit a Good Side Hustle to Get What You Need Without Wrecking Your Life, Relationships, and Mental Health
The Law
A good side hustle can be your gateway to enhancing your savings quickly, building an emergency fund, saving for retirement, stashing cash for a vacation, and more. But not all side hustles are made equally. Pick the wrong side hustle, and you’ll become entrapped in a never-ending cycle of chaos and exhaustion with little to show for it. Choose a side hustle wisely and make it work for your goals. Get what you need from it without wrecking your life, relationships, or mental health.
Your Keys to Power
Consult in your field of employment. Sometimes working in an industry allows you to see the gaps that consulting can fulfill. Suppose you are an engineer and work for a company helping to identify ways to build new products. That skill is transferable to consultancy, allowing you to provide the same service for startup businesses, but perhaps in a niche that is not competitive with your primary job. Suppose you are a teacher. Your day job could be teaching at a high school, but your side hustle could include writing or reviewing curricula for programming in another district or country. Suppose you are a CFO of a company, and your primary day job is to oversee the firm's financial development. A side hustle could include writing financial management plans for startups, reviewing financial controls for growing companies, or reviewing growth plans for a company that is getting ready to go multi-location.
Learn a new skill set. If you want to go entirely outside of your job, you may be able to pick up a new skill set. Real estate is an option in almost every state, as new homes hit the market and people need to sell them. Website development and graphic design are other skill sets you can pick up to build a great side hustle.
Exploit a hobby. Turning a hobby into a side hustle or a full-fledged business is an age-old game. Someone who loves growing plants as a hobby decides to start selling them to neighborhood friends and then beyond the neighborhood to the entire local community. Someone who loves sewing or crocheting starts selling beautiful blankets in the community and online. Think about your hobbies and see if they are side hustle-able.
Gig economy. The gig economy, an economy of short-term contracts or freelance work instead of permanent jobs, offers many opportunities for a side hustle. Dog sitting companies like this one and house sitting companies like this one contribute to a growing industry worth an estimated $350 billion as of 2021. Here are 25 examples of gig economy opportunities to get your creative juices flowing.
Virtual gig economy. A subset of the previous section that we want to call out, the virtual gig economy exists online with virtual work opportunities that offer short-term contracts. Imagine gigs for writing, proofreading, graphic design, website development, coding, bookkeeping, management consulting, and more—all things you can do virtually. Websites like this and these others are virtual gig engine marketplaces where people looking for contractors find people looking for contracts. For niche-specific graphic design engines, check out this one. Use these platforms as a source for contracts, but have a robust strategy for growing your client base outside these platforms, including networking with family, friends, colleagues, and social networks.
Rental income. Earning money by renting properties is an age-old side hustle that keeps pumping money for savvy investors. Sure, you have to identify good tenants, find quality properties, maintain your properties, and manage money well, but rental income is a fantastic way to build passive income when done right.
Join a board of directors. As you mature in your career or have a particularly useful skill set, joining a Board of Directors can also be a great side hustle. Board members earn anywhere from a “thank you” for serving on most nonprofit boards to upwards of $250,000 to serve on large-scale corporate boards. The average base rate is between $25,000-$36,000, with many great opportunities that pay a combination of cash and stock options. Every company will have a different payment structure, but that’s a great way to stash cash through a side hustle if you can get on a board.
Part-time job. A traditional part-time job can also be a side hustle. It’s not your main job, and if you find the right one, you’ll have the flexibility to work the hours you prefer. You earn this income actively, but the commitment is typically quite temporary. You can save all of what you make or use this actively earned income to build a passive income stream.
Practical Application
Know the difference between passive and active income. Active income is what you earn from labor directly correlated to compensation. If you work, you get paid. If you don’t work, you don’t get paid. That’s active income—it requires you to take action to receive compensation regularly. Passive income is what you earn without a direct action needed for every dollar you make. Beware of the myth that you earn passive income without any work. Passive income does require inputs from you, but the distinction is that the input does not correlate directly to income received. For instance, rental income from real estate is largely considered passive income, but it requires some effort. First, you have to acquire a rental property, which involves work. Then, you have to maintain that rental property, pay bills, deal with tenants, and handle contractors that do work for you to keep the property livable. That’s a lot of work; however, that work is not required as a consistent input to receive continued benefits of rental income. Indeed, you may spend several months or years collecting rent payments without having to do much work or hire a management company and do very little other than respond to a few emails.
In summary, active income is what you earn in return for employment, commissions, tips, or earnings from self-employment or businesses you own when you're involved in day-to-day operations. Passive income examples include earnings from interest, payouts from companies that you own that don’t require your material involvement, and rent payments from real estate. Keep the distinction in mind as you consider options. With a limited number of hours you can physically work, active income will have an unbreakable ceiling if for no reason other than the fact that you have to spend hours earning it. There’s only so much you can do. The potential for passive income sources is unlimited, and you can have a single or dozens of passive income sources all going simultaneously. Are you ready to walk away from active income in favor of this life-changing passive income? Not so fast. To acquire assets that allow passive income, you usually have to earn active income at least for a while to afford to buy or build a passive income source.If you’re earning active income, price based on value, not only hours, whenever possible. Value-based pricing is a pricing strategy that sets prices primarily, although not exclusively, on the value to the customer rather than on the cost of the product or historical prices. That is to say, rather than calculate the total cost of the resources, materials, and labor required to deliver a product or service and then add a markup, value-based pricing encourages you to focus primarily on the value your product or service provides a customer. So instead of considering only the cost of direct and indirect inputs, you’ll ask, how much pain am I solving for a customer? Or worded differently, how much of a problem am I solving for my customer? Therefore, what is the perceived value of my offering? Value-based pricing isn’t necessarily against billing by the hour, but if you are billing hourly, the strategy suggests basing that hourly price on perceived value. Here’s a story to frame the concept of value in pricing. You’ve probably heard some version of this over the last few years as it made its way around the internet:
One day, a critical piece of equipment at a large factory suddenly stopped working. This machine brought the factory’s entire assembly line to a complete halt. The workers were nervous, as they didn’t know what to do to bring this machine back to life. No amount of fiddling by the operators or floor engineers could get the machine fired up. No one on the factory floor knew how to get this critical component back online. The chief mechanic called an expert. When the expert arrived, he examined the halted machine from every angle, skillfully moving all around for about ten minutes. He then removed a hammer from his toolbox, walked up to the machine, and inspected one specific spot before he struck the machine once with the hammer. Suddenly the machine came back to life and started running at full capacity. The corporate executives rejoiced. The expert presented the chief mechanic with a bill for $10,000. “This is outrageous!” the chief mechanic exclaimed. “10,000 dollars to hit a machine with a hammer? You spent ten minutes here just to hit it with a hammer! I’ll require an itemized bill for this!” The expert pulled out an invoice sheet, wrote a few things down, and then presented the chief mechanic with the following itemized invoice:
Hitting machine with a hammer - $1
Knowing where to hit the machine - $9,999Knowing where to strike is everything; you must ensure that whatever you sell is as valuable as knowing where to strike. We’ll diverge from our expert in presenting the price upfront. The pain point was big enough. The company was losing money hand over fist, minute by minute. What if the mechanic walked in with his $10,000 consultation fee pre-negotiated with a guarantee that the factory wouldn't owe anything if he couldn’t get results? He could have reminded them that $10,000 is nothing—they were losing $10,000 each day the machine wasn’t working anyway. Then, there’d have been no cause for alarm.
Make sure your gig pays. I don’t care how much you love your side hustle; if you aren’t making money on it, it’s not a side hustle you need to entertain. The purpose of a side hustle is to make money. If you’re not going to make any, use that time volunteering with a reputable organization—they'll value your time, and you’ll deliver something extraordinary for someone in need while enjoying the warm fuzzies of volunteering. Working a side hustle for free when you set out with the intention of getting paid just means you're exploiting your skillset and talents for the hell of it. If you’re going to put in hours each week, get paid for them. Know your numbers and make sure you’re making a profit, not just earning revenue. For instance, if you’re selling home-baked cookies, how many hours does it take you? If you don’t know, you’ve already failed this test. From buying ingredients to packaging and delivering, your total hours in might be 30 on a $180 net income after factoring in the cost of ingredients. That’s $6 an hour, and that’s probably not worth your effort, even if you love baking. On the other hand, if a few tweaks (i.e., a larger oven and an assistant for pickups and delivery) get your production up 20x for the same amount of time, and you’re netting $3,600 with 30 hours of input, you’ve crossed $100 per hour, and that may be worth your investment.
Find something scalable. When something is scalable, growth provides more profit than it costs to grow. For instance, when you build an online course, your profit from 10 to 1,000 customers will be far greater than the costs of delivering to 1,000 customers instead of 10. Think about what’s required to deliver to 1,000 customers instead of 10. You’ll have more people on your email list, and you may pay a bit more for those subscribers. You’ll have more downloads, which may come with some increased credit card merchant fees. Those costs are small and incremental, but you won’t have to build the course again. You won’t be paying more in design, curriculum development, coding, or video fees to make the online course again. That kind of business is highly scalable. The same concept applies to other side hustles outside the digital download world. A rental property side hustle can also scale quickly. Once you’ve paid off your property, or as you’re paying it off, you can invest earnings into new properties.
Find a flexible gig. Your side hustle needs to be controlled by you—when you deliver it and how you deliver it—when possible. Your hustle can’t get in the way of your main job, which would compromise your primary income stream. So a gig that has flexibility with schedules, methods of performing the gig, and deadlines is a huge benefit, especially if you have a high-stress job as your primary source of income.
Consider engaging in a side hustle with a partner. Working with a partner comes with struggles, but you’ll have a support system as you navigate the side hustle world if you find the right person to work with. Having a solid support system with anything helps balance us out and build accountability. Also, having someone else involved helps balance the risk of failure with some projects.
Tap into an existing client base if you can. Jumping into a side hustle with an existing client base makes finding clients much easier. If you’re interested in pet sitting, doing it through a marketplace like this instead of finding your own clients can take some of the work out of it. If you’re a photographer or graphic design artist, partnering up with a website developer could allow you to offer your services to their existing client base without investing in building your base from scratch.
Don’t barter. We believe there is a time and place for most things legal and ethical, but this isn’t it. Bartering doesn’t put money in your hands. Instead, you’re leveraging a service or product for another service or product. The goal of a good side hustle is to put money in your pocket, and bartering, in this case, isn’t going to do that for you.
Authority
“Good things happen to those who hustle.” - Anais Nin
“The dream is free. The hustle is sold separately.” - Unknown
“You can’t use up creativity. The more you use, the more you have.” - Maya Angelou
“Challenges are gifts that force us to search for a new center of gravity. Don’t fight them. Just find a new way to stand.” - Oprah Winfrey
“You gotta run more than your mouth to escape the treadmill of mediocrity. A true hustler jogs during the day, and sleepwalks at night.” - Jarod Kintz
“Hustle until you no longer need to introduce yourself.” - Anonymous
“Things work out best for those who make the best of how things work out.” - John Wooden
“If you are not willing to risk the usual, you will have to settle for the ordinary.” - Jim Rohn
“You can’t have a million-dollar dream with a minimum-wage work ethic.” - Stephen C. Hogan
“Time is more valuable than money. You can get more money, but you cannot get more time.” - Jim Rohn
“The day you plant the seed is not the day you eat the fruit.” - Fabienne Frederickson
“Don’t wish for things to be easier, wish for you to be better.” - Jim Rohn
“Hustle beats talent when talent doesn’t hustle.” - Ross Simmonds
“If successful and unsuccessful people share the same goals, then the goal cannot be what differentiates the winners from the losers.” - James Clear
“Some people want it to happen, some people wish it would happen, others make it happen.” - Michael Jordan
“I never dreamed about success. I worked for it.” - Estée Lauder
Our Vote
Over the years, I've engaged in many different side hustles. I've also seen many colleagues and friends master the side hustle game—everything from dog sitting to freelance gigs to entrepreneurship. One of the most exciting combinations I saw was someone side hustling with a dog-sitting side gig in a home they owned while simultaneously running their business from that home and working on freelance consulting gigs. The freedom that technology afforded him to run his business and complete consulting gigs virtually allowed him to be home during the day, which opened the door for him and his family to maximize the dog-sitting side gig in a way that neighborhood competitors couldn’t. He invested in a scalable pet sitting environment with a fence, toys, and a dog-feeding system so he could host several dogs at once, thus growing this simple side hustle into tens of thousands of dollars. I love that kind of stacked side hustle, and what was even better—once he reached his savings goals, he scaled back the dog sitting with the click of a button.
A blended strategy with multiple revenue streams will always tickle my fancy more than a single income stream because I love the benefit of being diversified. As I write this now, I’m staring down the barrel of multiple owned businesses—some of which I’m involved in the daily operation and others that I bought and made entirely passive—while laying the foundation to delve into additional business acquisitions and real estate investing.
Reversal
Not everyone needs a side hustle. If your primary source of income is sufficient to achieve your goals, if you’ve already reached retirement, or if you’re comfortably earning from passive income streams, you may not need a side hustle. If you do seek to engage in a side hustle, there is no reversal to this law that your side hustle should never consume you.