What are the benefits of starting a side hustle?

There are plenty of examples of people out there with a side-hustle. Everybody thinks it’s great to have one and it seems that most people do not regret starting one (or at least so they claim).

The stories are also enticing. If you listen to everybody, a side hustle can bring you in hundreds of thousands of pounds, help you land a book deal with a famous publisher and even meet angel investors to kick-start your next venture.

Some of these statements must be nuanced. While having a side-hustle can be a great thing, it is equally important to know why you are pouring so much of your time into it. Remember, time is your greatest asset.

What is a side-hustle?

I like Chris Guillebeau’s definition of a side-hustle.

“A side hustle is not a part-time job. A side hustle is not the gig economy. It is an asset that works for you.”

Let’s review each sentence. Carefully.

“A side hustle is not a part-time job.” Getting another job at the local store to pay a few extra bills is not a side hustle. That’s just a second job. It is incredibly hard to do. The hours are long and the marginal cost of time, exhaustion and anxiety that accompany a second job is prohibitive. If you already work from 9 am to 5 pm, you don’t get another 6 pm to 12 am for a similar pay (at best) unless you absolutely have too. Sure, students might get one or two jobs here and there. But not a mother of two unless she has no choice.

The bottom line: if you are working a second job (as an employee), you do not have a side-hustle. You have a second job and you are just working more. There is nothing wrong with working more but that’s not what side-hustling is about.

“A side hustle is not the gig economy.” This one is trickier. If someone tells you that he or she “Ubers” a couple of hours a week for some extra cash, then most people would see that a side-hustle. Most people would, however, be wrong. To some extent, working for the gig economy is almost worse than having a second job because you are not eligible to employer pension contributions, paid vacation, medical insurance to name a few work-related benefits. An Uber worker is entirely dependent on the company that runs the platform connecting drivers and passengers.

The bottom line: what you have is also a second job. Instead of working for the boring local store, you are not working for a technology company. It’s sexier but it is not necessarily better (unless you can show me those stock options).

“It is an asset that works for you.” Here is the key feature of a side hustle: capital. All side-hustles aim at creating and building capital in the hope that such capital will passively generate returns (without significant input). The capital aspect is critical to understand. Capital is not necessarily cash in a bank account or stocks in a brokerage account. Blogs with partnerships and advertisement are a very common example. Another example is selling niche products online for a certain foreign market, and take advantage of price discrepancies between countries.

The bottom line: All side-hustles have one common component: develop and grow capital (i.e. your product, a blog, a marketplace), which will eventually generate returns (i.e. sales, blog income etc). You have ownership and control: two key features that are absent with part-time jobs and gig economy work. A good question to ask to determine if your side hustle is one: “can I sell my side hustle?” You can sell your position with the local store or the hours spent driving for Uber. You can sell your blog, your marketplace or even the books you are writing.

What are the benefits of starting a side-hustle?

Get extra-income

Most people start a side-hustle to generate extra-income and pay off debt faster. It’s a good reason because it is one that will keep you motivated for a while. It’s not sufficient either because to generate meaningful income, it is going to take a really long time. You could have a lucky break, and if you do, congratulations! But we can’t rely on luck to chart a reasonable course of action.

Switch jobs

Very successful bloggers have left their day jobs to entirely focus on blogging. One of the best examples is Financial Samurai, a US-based personal finances website. Sam used to be an investment banker at one of the elite Wall Street firms before engineering his layoff and focusing full-time on Financial Samurai.

There are plenty of other examples, including outside the personal finances community. In the world of fashion and blogging, everybody knows Chiara Ferragni. Prior to becoming an Instagram celebrity and being endorsed by the likes of Dior, she started more humbly with a fashion blog in October 2009. Two years later, she was introduced by the New York magazine as “One of the biggest breakout street-style stars of the year.” Remember: it was around that time that the first digital influencers figured out that the social media trend was here to stay. To some extent, Chiara was already early to the party as Instagram only launched in 2010.

Do realize that if you end up switch jobs to focus on your side hustle, then your side hustle becomes your primary job and you no longer have a side hustle. This is not necessarily a bad idea but it’s not for everyone. It’s one thing to muster the courage to start a side-hustle, it’s a very different matter to be a serial entrepreneur. Move with caution, calculate the income you need to make ends meet and try not to stress too much.

Acquire new skills

I went to graduate school to become a lawyer. I wasn’t quite sure in which exact field I would end up in but at least the destination was reasonably clear. Being a lawyer would be my primary job. The same reasoning applies to most people with a career. Of course, there can be changes in someone’s career but the base case scenario is that you study to qualify for a certain profession. The rest is experience and hard-work.

Learning how to build and improve your side-hustle. If I take blogging as an example, you will not enroll in engineering school to become a WordPress coder. Similarly, you won’t crash a marketing class in business school. Yet, figuring out why your site is down and the best distribution channels are key competencies for a blogger. As a result, you must be capable to learn on the fly without the benefit of a structured curriculum. You will virtually google everything first and then sometimes reach out to fellow bloggers (be nice to them!).

Your side hustle doesn’t have to be your passion but it helps

The journey will be a lot more enjoyable if you have a genuine interest in your side hustle. It does not have to be your “passion” – you may not even know what that is. It will still feel like work if you are trying to build a real side hustle (it’s not called “hustle” by mistake!) but it should not feel like carrying a burden. If that’s the case, then please stop and find something more enjoyable to you. You tried one side hustle, it didn’t work out, then move on.

I cannot emphasize enough how important it is to enjoy the journey. Statistically speaking, your side hustle is a start-up, and most start-ups fail within two years. Give yourself at least two years and enjoy the journey and the progress you are making. Do not get discouraged because someone started a similar project two months ago and they already appear to be more successful. And think about that quote from Seth Godin, an incredibly talented and well-known blogger:

“Twelve years from now, your future self is going to thank you for something you did today, for an asset you began to build, a habit you formed, a seed you planted. Even if you’re not sure of where it will lead, today’s the day to begin.”