3 Important Questions To Ask Yourself About Your Side Hustle
Are you running side business? Whether you’re doing clothing alterations for friends of friends, knitting baby hats, applying eyelash extensions or reselling clothes on eBay, side businesses are a great way to earn uncapped income outside of your salary. But while you’re grinding away on a Wednesday evening, have you considered the viability of your business?
Here are 3 questions that every side hustler should ask themselves:
Are you wasting money on fees, hosting or logistics?
Are you getting ‘good money’ for your side hustle but finding yourself ending up with hardly anything at all? Lots of side businesses rely on a fee-based structure, by operating through an existing model. Sites like eBay, Uber or Pawshake are great for small side hustles as you don’t need to take on the risk or expense of paying for hosting. You just sign up and off you go. But are the fees cutting into a huge chunk of your markup? It could be postage, exchange rates, credit card fees, transaction fees or platform fees. Make sure you factor these costs in when setting your prices or assessing the viability of a side hustle. By way of example – and transparency – every time I make a sale on the TBG online thrift store, I pay 3% to Squarespace for hosting my website, 3% to my payment processing platform, and then sometimes I lose money on the shipping if the parcel weight is high. Not to mention I’m of course paying monthly hosting fees for the blog and store itself…
2. Is it future proof?
In 2019, more and more people are using these platform-based side businesses to make big money – or even working on them full time. eBay, Poshmark (in the US), Pawshake, Uber, Depop, and even Instagram for influencers… all these apps have made it easy and accessible for more people to earn extra money. Great! But the downside is that you do not own that platform. If any one of those platforms shut down tomorrow, your entire business model is gone. Now, while it’s unlikely, it’s also very far from impossible. That’s not to say you should stop hustling through these apps, but there are steps you can take to make your side hustle future proof, and take ownership of the business model you’ve built up. This is particularly important if you rely on your income from these platforms to live, or if you run these businesses full time.
Keep track of all customers/clients and their email addresses (where you’re permitted to do so). If the platform shut down tomorrow, you’d still have a chance to connect with loyal customers and transact elsewhere.
Consider whether you can set up on your own and cut out the middle man. Like I said in point 1, often you’re doing all the heavy lifting and letting a third party take a cut just for the simplicity of it.
Keep diligent records of sales/income/expenses/contact info. Relying on your records being stored in a third party platform is risky. Not only could you lose them and struggle to report income to the tax office, without some way to contact the people that make your side business go round (your customers/clients), you have no business.
Keep an eye out for alternatives. Squashing your reliance on the middleman might not be something you can do right away, but by being dynamic in your side business offering and keeping your eyes and ears open for new avenues to operate through, you can be prepared to adapt accordingly.
Try to have your own website or profile, even if it’s a free one. Establishing your business identity independently from the platform you operate from sets the tone of your work, and it’s something you can fall back on if the platform disappeared or you had to work out another way to operate. It also allows people to contact you or identify you with your business without that middleman connection.
3. Is the money you’re making worth your time?
One of the most important factors to consider when it comes to the profitability of a side business is how much time you’re really spending on it… and I mean ALL of it. Not just the very act of transacting a sale or providing a service, but all of it. Admin, tax filing, emailing before the initial sale/engagement, sourcing/listing/photographing product… lots of side hustles take up more time for the hustler than it looks like on the outside. Factor your labour hours in before jumping in feet first.
That said, there is a caveat to that point. Passion and showing up for what you love is important, too. If I’m honest, the total number of hours I spend running the TBG online store (and the TBG brand overall) probably averages out to a few bucks an hour – seriously. But there’s another unit to consider here, and that’s how much you love it. I get total joy from almost every aspect of this blog, Instagram and online store. Most of the time, it doesn’t feel like work at all, it feels like therapy to me. Any income I make is just a bonus. In this case, there are more benefits beyond the money, though your actual input vs output should still be considered.
Side income can be difficult to assess in this way because often it’s all ‘extra’, so you don’t feel like you need to worry about whether it’s worth it. And in some cases, that’s true. But if you’re not making up for any losses with ‘love currency’, your time could be better spent on something else.