What would you do with an additional $8,000?
This is the amount the average side hustler brings in each year according to a study conducted by Bankrate.com. Some reading this will scoff at $8k and say something along the lines of, “That’s all?!” For others it will make a tremendous difference in terms of moving the needle toward meeting their financial expenses and/or goals.
Regardless of where your sentiments fall along this spectrum, there is a “cost” associated with earning that $8k. That is why it is critically important to weigh the costs in all its forms, and manage them to ensure your side hustle is a success – on multiple levels.
Define Success
You might not feel it necessary to answer this question if you are well entrenched in your side hustle business, but the truth is that it is just as important to ask the following questions at the start of an endeavor as it is further down the road:
- How do you define success in terms of money? What’s the target amount you want your business to earn this year; next year, etc. What’s the amount of money it needs to earn to prove its viability?
- How do you define success in terms of time? It takes time to run your business. And, it is important to remember that “time” has several components to it: time to create; time to deliver; time to market. It is said that the average hustler spends approximately 3-5 hours per week on their business; what’s your expectation concerning your return on investment on your twenty hours per month?
- What’s the purpose of your side hustle? If it’s financial, is it to accelerate paying off debt, to fund extras, build wealth, or a combination of these and other end-goals. Is it to build/enhance your skills, or expand your network? Is it to eventually morph this venture into a full-time business?
The clearer you are about how you define success, the better able you will be to measure and monitor your return on investment as measured by money, satisfaction and progress/growth.
And the sooner you consider what success* looks like, the better. While I don’t have statistical proof, I do have enough anecdotal examples as evidence to show that for many side hustlers, defining success is an after-thought – if it is considered at all. In part because the side hustle is usually started in the spirit of “let’s give this a try.” (*I’d even suggest that this isn’t a one-and-done exercise. Because how you define success today may be different in the future as your circumstances and desires evolve.)
Follow These Metrics
In your full-time job, there are likely some metrics against which your performance is measured. This performance influences whether you get a promotion, raise or both. The metrics may be different, but the same spirit should be applied to your side hustle: you need to have metrics that you are measuring and tracking.
Here are few, listed in no particular order:
Return on hours spent
How much (and what) are you getting back from the time you’re spending on your side hustle? If you’re averaging the typical 3-5 hours per week, what days of the week and at what times of those days are you “spending” those hours? Are you scheduling time on your calendar for your “create, deliver, and marketing” activities? And what’s the “feedback” you are looking for to say, “yes, I’m spending the right amount of time in total, and on these specific activities.”
You don’t have less time available to you because of your side hustle. Because of your side hustle you have less time to do other things. So, you want to make sure you’re cool with the trade-off you’re making.
Return on money
Because it is the source of the money you need to make extra money, I like to remind people that their full-time job is an “investor.” And all investors have parameters or limits.
In this case, what is your cap in terms of how much you’ll invest in your side hustle? If your investment takes the form of debt (using credit cards or another type of credit line), have you set a limit or maximum dollar amount? How about the limits when it comes to your current cashflow; what parameters have you set for how much and for how long?
In a counter-intuitive way, creating caps in terms of the dollar amount (debt or cash) and your time-line is critical to setting yourself up for success.
Because as you’re tracking your numbers, you can’t help but review and perhaps modify your business model and systems. And not just the “systems” of your side hustle, but also the systems of how you are integrating your side hustle with your full-time job and other aspects of your life.
When you embrace the fact that your full-time job is an investor in your side hustle, it is easy to view the above metrics not as “nice-to-know,” but “need-to-know.”
And don’t forget…
In addition to the metrics of time and money, it helps to have side hustle goals in the form of the number of clients/customers you want, as well as your monthly/annual revenue.
In addition to the metrics of time and money, it helps to have an idea of the conditions or circumstances that will cause you to walk away from your side hustle – either to try something else…or not. Similarly, it helps to know what are the clues that will tell when/if it is time to shift this into a full-time venture.
Regardless of your motivation for having a side hustle, this should go without saying: Stay great at your full-time job!
Make sure you’re not doing anything that creates a conflict of interest. Make sure you don’t give the powers that be a reason to question your commitment.
And here’s another thing to keep in mind whether your side hustle brings in the average $8,000, something less or significantly more: Every business needs to generate a profit (more years than not)…including side hustles. So, make sure you’re setting it up and managing it not simply to make money, but to be profitable in so doing.
Because being profitable and cashflow positive…that’s the bottom line.
