The term side hustle is very popular amongst Millennials and Gen Z, who are all too aware that their “day job” can end at any given moment. If you weren’t already on the side hustle train, then 2020, the year of furlough, redundancy, and insecurity, might have you purchasing a ticket. (There has to be a pun about hindsight being 2020 here, right?!)
What Is a Side Hustle?
A side hustle is work you do on the side, separate from your main job. It could be literally anything. Some people sell things online, some people walk dogs, and some people flip furniture they find on the side of the road. A side hustle is just another way to make a bit of extra money. Some people use that money to go straight into paying down debt or saving for short-term or long-term goals. Other people may just use their side hustle to fund their designer shoe obsession or their yearly holiday. The sky is the limit for side hustles.
A Henley Business School Study in 2018 showed that 25% of the UK population had a side hustle. It is safe to say that number has probably risen during 2020 and 2021. Who didn’t have friends who were becoming TikTok influencers or starting luxury soap businesses.
Reasons For Starting a Side Hustle
Not that anyone really needs a reason to want to earn a little bit of extra money, but a side hustle is a great way to fund your goals. You can use them to fund “wants” like holidays or family day outs or to cover “needs” like bills when money is tight. They are also fantastic for helping to pay down debts quicker and reach that lofty goal of buying your own home a little bit faster.
An additional benefit of a side hustle is that it can diversify your skillset and open up new avenues of opportunity. People with side hustles are able to pivot a lot quicker when faced with adversity. They have additional transferable skills and may even have experience in another industry. Depending on the type of side hustle, they may even have the means to turn their side hustle into a full-time business.
In addition, if someone with a side hustle loses their job, then they have a little bit of a financial cushion to work with. Even someone earning an extra £100 from their side hustle will not eat into their savings as fast as someone who relies solely on their job.
How To Start a Side Hustle
So you’re keen to earn a little bit of extra money? Well, skip the “10 Side Hustles to Start in the New Year” articles and videos. We all know they’re pushing surveys where you will be lucky to earn £5 for hours of work. There are always going to be “unskilled” side hustles like dog walking, childminding, or housesitting available, but if you want to earn decent side hustle money, you need to work out what you can do well.
When deciding what type of side hustle you want to start, you need to consider a number of things:
- What things can you do better than 70% of the population?
- What resources do you have available to you?
- What market do you have access to?
Do you notice we said, what can you do better than 70% of the population, not skills and expertise? A common mistake people make is thinking that skills and expertise mean you have to be educated in top universities and have worked in the field for 20 years. But knowing more than the average person makes you an expert.
Write down things you are really good at, it might be excel spreadsheets, or you might make killer presentations with great graphics and cool transitions. You might be really good at writing love letters. Jot down anything that comes to mind that you think you could do better than the average Joe.
Now that you have your list of things you can do really well, consider what you might be able to monetise. You may be able to burp the alphabet perfectly or shuffle, but are people going to pay you to do it? (Hint: no, no, they won’t.) Cross off any that you think you are unlikely to get paid for.
Now it’s time to consider your resources and market. Let’s say, for example, you are a qualified mechanic, and you want to purchase cars, fix them up, and flip them for a profit. This is a fantastic idea, not many people have the knowledge or skill set to do that, and you can make a nice profit. But, you need to consider the upfront costs involved. The first car will need to be funded directly out of your bank account. You will need to buy the car and the parts first before you see any profit. Therefore, you need to consider if you have the resources to pay for the upfront costs before starting.
It is also important to consider the market you have access to. If you want to buy classic cars to fix up and sell to collectors, but you live in a town full of students, then you may struggle to find the right market for what you are selling.
To begin with, we would recommend picking a side hustle where you would already have potential customers. Let’s say you are a whizz at excel spreadsheets, and everyone at work is always asking you to fix their spreadsheets or make them prettier. You are also in a social media group or online forum about personal finances. Why don’t you start a side hustle making budget spreadsheets? You could offer a low price point template budget spreadsheet and then a higher price bespoke budget spreadsheet. Your online community is a perfect audience, and you will likely have a few people who would take you up on your offer right out the gate.
What Do I Do Once I’ve Picked My Side Hustle?
Once you have picked your side hustle, it is time to get the wheels in motion. The first thing you need to do is make your side hustle official. You need to register for taxes, boring, we know. At first, it is probably best to register as a sole trader, but it may be worth considering the different types of business entities and weighing up what works for you. If you plan to just earn a little bit of extra money, then a sole trader may be best as you are only taxed once. It also removes some of the paperwork of registering with Customs House etc.
Depending on your business, there may be extra tasks to do here, like reserve a domain, build a website, set up an account with a payment processing service, or start social media pages.
Important Things To Remember When Side Hustling
An easy trap to fall into when starting a side hustle is not calculating costs correctly. The whole idea is to make money, not break even or lose money. Your time is money too, so if you are doing 3 hours of work and only making £10 from a sale, you are only making £3.33 per hour. Is your time worth that little? In general, it is better to start off higher and adjust down than start off too low and have to raise your prices.
It is also really important to consider how much time you want to dedicate to your side hustle. If you are starting a side hustle on top of a full-time job, you need to give yourself downtime and time to socialise with friends. Without that, you will burn out very quickly. Look at your schedule and work out a realistic calculation of how much time you can dedicate to your side hustle. Pick a side hustle that works for that amount of time and stick to that timeframe. You may be able to work a couple of extra hours one week, but do not make overworking yourself a habit.
Your side hustle is a serious business. It is easy to think of your side hustle as a pet project, but it is a serious business and needs to be treated as such. You do need to act in an ethical manner and ensure you operate in a legal manner.