by Dr. Todd Saxton and Dr. Kim Saxton, co-authors of “The Titanic Effect: Successfully Navigating the Uncertainties that Sink Most Startups“
Side hustles are quite the rage right now, in part enabled by technology and the gig economy. Surveys suggest that as many as 45% of American workers have a side hustle. Among them, 30% say they need the side hustle to cover their expenses, while 34% use it to generate disposable income. Millennials are more likely to have a side hustle than older workers. And people earning higher incomes are more likely to have a side hustle — in part, as some side hustles require capital to start.
What exactly is a side hustle? Generally, side hustles are work someone does outside of their full-time job – maybe to earn extra money on the side. It’s not a typical part-time job, though — e.g., working at the fast food restaurant 12 hours a week for some extra bucks. People with side hustles tend to generate income doing activities they are passionate about via freelancing, contracting, on-call work, or even starting their own part-time business. Think Lyft driving on the side, running a seasonal baked goods booth at the holiday mart, sharing your handiwork crafts via Etsy or even helping a company with their digital marketing content. We group side hustles into three categories:
The Hobby Hustle. You have a passion that is a craft or hobby that you can do for more than yourself, and even earn a little extra money — like your guitar repair business.
The Side Ride. You have a need and/or opportunity to make some extra bucks doing something you enjoy, like Lyft/Uber driving. It is meaningful and provides extra income, but not exactly a passion.
The Gateway Gig. You are doing one of the above for now, but hope that it — or a related opportunity — will become your full-time gig someday. For now, it is a means to explore a possible change.
People can make a surprising amount of money through their side hustles. The average income is more than $1000 per month. But, the majority of side hustles generate less than $500 per month. There is a wide range of outcomes—and as noted, objectives run the gamut from a temporary source of fun or funding, to working on a hobby or even to an exploration into something that could be bigger.
So if you are so inclined, when should you turn a side hustle into a full-time gig? There are no hard and fast rules, but here are some guidelines as to when to pull the trigger to a gateway gig:
1. It is or could generate enough profit to support you.
It seems obvious, but you need to pay attention to the profit. Hopefully, the side hustle is generating a profit. If not, that should be the first focus. If so, can that profit replace your full-time job? Or, if you were to put more effort into the side hustle, could the profit be increased enough to do that? It is not infrequent that people doing side hustles think their business is making money, but do not factor in their own time and opportunity cost. Make sure to invest your time where you can get the biggest payoff — whether that is financial or through intrinsic rewards. That might be a side hustle or it might be by investing more effort at your employer.
2. It would growth quickly if you worked on it full-time.
Once you have paying customers, you likely need a dedicated resource to service them. You can’t disappoint your customers! Growing a business takes work. You can get it started on a part-time basis. But, it will likely need you going full-time to really take off. When your full-time job interferes with getting necessary work done on the startup or former side gig, it’s time to make a switch.
3. It has enough traction that others might want to invest in it.
If your side hustle is growing rapidly, it might become a fundable startup. So, consider if it’s time to actively seek investment. Here are some key factors investors are looking for: 1) A reasonably large market, 2) a strong product that can differentiate itself, and 3) a team that can make the product successful. Want to know if your side hustle is fundable? Check out this blogpost.
You should not feel pressure to make your side hustle into something more. You might not like your Hobby Hustle if you try to make it a full-time source of income. If you are in it for fun, make sure it stays fun. A Side Ride might not sustainable as a sole means of income. Even worse, doing it full-time might actually be annoying as what were minor inconveniences interfere with making money. But if you have the itch to try converting your side hustle to your main Gig, maybe now is the time to start planning. Start to consider what events or success indicate that you are hitting the kind of milestones that make a side hustle actually a fundable startup. Whichever route you choose, hustle on!
Todd Saxton is associate professor of strategy and entrepreneurship and M. Kim Saxton is clinical professor of marketing at the IU Kelley School of Business at IUPUI. The Saxtons are co-authors of “The Titanic Effect: Successfully Navigating the Uncertainties that Sink Most Startups”.
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