By Ted A. Baker, CEO/Executive Director, Muncie Innovation Connector, Inc.—
MUNCIE, IN—Over the past years, the Innovation Connector has become the Muncie community’s hub for business startup and growth assistance. Calls and emails come to us nearly every day from entrepreneurs and hopeful business startup owners asking for assistance in some way. Regular requests include the need for funds to start or grow a business, help formally organize the business as an LLC or S-Corp, and some turn to us for encouragement. Most who contact us for assistance already have full-time employment but want to start “something” on the side. Starting a business is difficult, even starting a side gig, and requires funding for initial startup costs and ramping up the business.
In most cases, when starting a business, it can take one year or more to be profitable and have a positive cash flow. Therefore, a steady source of funds is needed to pay for personal and household expenses and to feed the new business venture. This is why maintaining current employment is so important – without cash, your household will suffer, and your business will fail. For this reason, if a person wants to start a business, full-time employment may need to be maintained to keep the household afloat during the initial stages of business development. Businesses started in addition to a full-time job are often called side gigs or side hustles. Chris Guillebeau, the author of Side Hustle, says, “it’s an asset that works for you.”
The Importance of Side Hustles
Side gigs are an important part of the entrepreneurial ecosystem. According to Zippia, the Career Expert, October 12, 2022, by Jack Flynn, 45% of Americans had a side hustle in 2022, with an average monthly income of $483. The global gig economy is expected to be worth $455 billion by the end of 2023. And Americans spend an average of 13 hours per week on side hustles. People often start working side hustles to earn passive income and use the money as extra disposable income. The top industries and categories of work for side hustles include online and social media, freelancing, selling crafts and art, ridesharing (Uber, Lyft,) delivery services, and software development.
Side hustle choices are often connected to a person’s area of expertise or experience. For others, the side hustle may be completely different. I have a friend who worked in IT for a major university and drove for Uber Eats in the evenings and on Saturdays. The extra money he earns delivering food is significant – often $500 – $750 weekly. I know another person who drives for Uber and Lyft during hours he is not working his regular full-time job. When he was downsized at his job, his side hustle became a source of income for his family. He started accepting more rides during daytime hours; before long, he was netting over $1,400 weekly. In this case, this person’s side hustle provided extra income and served as a safety net in case of job situation changes that happened.
Advantages and Disadvantages of a Side Hustle
I found an interesting blog post on the Washington Trust Bank’s website that mentions some pros and cons of starting a side hustle. The following content is excerpted from that blog.
Turning a passion into a money-making opportunity has some distinct benefits. If starting a side hustle sounds appealing, consider the upside:
- Enhancing your career. While it may seem counterintuitive, establishing a side hustle can create a competitive advantage in your career. Depending on the chosen path, developing skills that complement your day job may be possible. Exposure to a different line of work can broaden your experience and contribute to a fresh perspective on addressing challenges in the workplace.
- Mixing it up. A side hustle can provide a welcome change of pace from the usual 9 to 5, particularly if it involves using another part of your brain. If you’re normally writing code for 40 hours a week, a weekend working as a wedding photographer might be a refreshing break from the ordinary. Or your side hustle might provide an opportunity to give back to the community in ways you can’t manage during the work week.
- Growing your network. If you are promoting a side hustle, you’ll likely meet people that might not cross your path in your normal line of business. You can make new contacts for your side hustle; some may benefit your day job. Additionally, you might find your social circle widening when meeting others who share or appreciate your passion.
- Developing a creative outlet. Crunching numbers all day may pay the bills, but it may not provide the level of creativity you crave. A side hustle can provide a creative outlet without forcing you to sacrifice the financial security of your day job.
- Supplementing your income. Many people start a side hustle to supplement their income. If relying on this additional cash flow, be sure to calculate anticipated expenses to ensure that the venture will pencil out. As a side hustle takes off, it can provide a cushion in an emergency or unexpected change in your employment situation.
As with most situations, a side hustle’s positive attributes are tempered by some drawbacks:
- Reducing your downtime. If working full-time during the week and dedicating the weekends to side hustle, you may be robbing yourself of enough downtime to relax and enjoy pursuits that don’t involve making money or marketing yourself. This always-on mindset can be wearing, and if others – partners, spouses, children, and even pets – are in the picture, there’s a danger of leaving some feeling neglected.
- Becoming distracted at work. A side hustle that becomes all-consuming could have dire career consequences. If your passion project is taking too much time and energy, there is a risk that your day job – and main source of income – could suffer. Before embarking on a side hustle, limit how many hours you can devote to it and stick to them.
- Adding more stress. Filling valuable time with more work, even a passion project, may pile on the stress. In addition to taking time away from friends and family, a side hustle will require additional record keeping and may complicate tax filings. Additionally, if your project involves custom work for clients, you’ll be pressed to keep them happy to ensure referrals or repeat business.
- Determining your worth. It can be difficult to put a price tag on your work. Do research to determine the going rate for similar products or services, and don’t sell yourself short. You’ll be responsible for collecting payment and setting a fair price, so establish your expectations upfront.
If you need assistance setting up and organizing a side hustle or want to discuss how they work, don’t hesitate to contact our team at the Innovation Connector – 765-285-4902 or email@example.com. The Innovation Connector has many services and connections to assist you in your journey.
In next month’s article, I will be making a very special announcement. Stay tuned.