Business leaders and entrepreneurs tend to be sociable, well-connected types. As they meet new people and learn more about what makes others successful, chances are strong they will encounter multiple opportunities to start some form of side hustle. For many, the appeal of generating additional revenue and expanding a business portfolio might prove tempting.
However, even the savviest people can be temporarily lulled into an unrealistic assessment of business opportunities or lose sight of the truth that what works well for one individual might be a poor fit for someone with a different temperament.
When considering new ventures, it always pays to slow down long enough to take in the bigger picture.
The Four Primary Criteria for Evaluating a Possible Side Gig
Entrepreneurs absolutely hate to let a great opportunity pass them by, but more than one has been tripped up by allowing a sense of urgency to rule the day. The best approach is to refrain from snap decisions and construct a consistent grid for evaluating every opportunity as it comes up.
The four most important variables to consider when evaluating specific types of side gigs are:
Assume you’ll encounter some bumps along the way. Conservatively speaking, how profitable is this potential side hustle likely to be?
Remember when you taught your kid that a crafting business that costs $10 of materials to make something that sells for $11 after an hour of work wasn’t going to make them rich? Now turn around and apply that simple ROI principle to the side hustle you’re considering. Unless you truly love what you’d be doing, perhaps the venture is going to be unprofitable for you and therefore not worth your time.
Some side gigs are more flexible than others. If you choose to drive for a ridesharing service, for example, you can start and quit driving whenever you feel like it. Many other side gigs allow you to work the hours that are best for you and your personal schedule. But if you want to start up a house-sitting business, you could well end up at the mercy of other people’s schedules. Generally, the more flexible the situation is, the more likely you can stick with it.
3. Number of Lifestyle Changes Required
In some cases, you might be able to get paid for doing something you were going to do anyway. For example, if you’re acting as a caregiver for a parent or loved one, you can get paid for your services through CDPAP with few changes to your current schedule. On the other hand, if you start a new part-time job from scratch, your entire schedule may need to be adjusted.
4. Effect on Overall Satisfaction
There’s a personal preference component to consider as well. Side hustles aren’t just about the money or the experience. If you genuinely enjoy what you’re doing in a side gig, the money may not matter to you. It might help you to assign a dollar value to the effect your new side hustle has on your peace of mind.
With these four criteria in mind, consider both the pros and cons listed below.
The Benefits of Side Gigs
While the benefits of side gigs will vary from person to person, there are five things that almost always rise to the surface in the decision-making process.
Of course, you open up the potential to make extra money. While it’s true that some side gigs bring in barely enough money to be considered profitable, it’s also possible to find some that pay more than $25 an hour.
Training and New Skills
In many cases, a side gig also gives you an opportunity to receive training and take on new skills. For example, you might learn more about photography and design as part-time side gigs and then use those skills to advance in your full-time design career.
Potential for a New Business
If you’re successful with a side hustle, you might be able to turn it into a full-time business. Several people have turned side gigs into lucrative careers.
A Backup Plan
You might have ambitious goals for the future of your full-time career, but there’s no guarantee it will pan out the way you think. Your side gig can serve as a useful backup plan, serving as an extra source of income if you lose your job…and perhaps a potential alternative path forward.
Networking and Socialization
In many side gigs, you’ll get the chance to interact with a wide variety of different people. You’ll learn new perspectives and flesh out your professional network at the same time.
The Downsides of Side Gigs
Consider what makes you tick before you embark on any sort of side hustle. There are at least four potential downsides associated with side gigs.
Some people find it difficult to split their focus between multiple priorities. If you’re spending too much time on a side gig, your full-time career might suffer. Your relationships both at work and home might decline as well.
Extra Time Demands
It can take a lot of time to work side gigs, especially if you’re building a small business from the ground up. You can count on spending several extra hours every week, minimum — and sometimes even more.
Low Return on Investment
If you’re new to the side hustle game, you can count on certain gigs paying almost nothing, at least to start. Low profitability can make it barely worth pursuing and be incredibly frustrating if your main goal is to build wealth.
If you’re taking on a part-time job in addition to your full-time career, you’re going to be more stressed than usual. That can take a heavy toll on you and your relationships — and perhaps even have physical health consequences.
Side gigs can be a great way to compliment your current career and build wealth faster — or they might be a stressful addition to an already stressful life. Consider your options carefully. Do your research before jumping in. Your goal should be to make the best-informed decision for your situation.