Surveys suggest that as many as 45% of American workers have a side hustle. Among them, according to a 2019 Bankrate survey, 30% say they need the side hustle to cover their expenses, while 34% use it to generate disposable income.
Millennials are more likely to have a side hustle than older workers, and people earning higher incomes are more likely to have a side hustle. It often takes some capital to start a business, even a job on the side. The “gig economy” has enabled many more people to pursue a side hustle as a viable opportunity.
What exactly are we talking about? A side hustle is work someone does outside of his or her full-time job to earn extra money. It’s typically not part-time employment, though. People with side hustles tend to generate income doing activities they are passionate about via freelancing, contracting, on-call work or even starting their own part-time business. Think running a seasonal baked-goods booth at the holiday mart, sharing your handiwork crafts via Etsy or even helping a company with its digital marketing content.
People can make a surprising amount of money through their side hustles. The average income is more than $1,000 per month, but the majority of side hustles generate less than $500 per month. There is a wide range of outcomes—and objectives run the gamut from a temporary source of fun or funding, to working on a hobby, or even to an exploration into something that could be bigger.
If you are so inclined, when should you turn a side hustle into a full-time gig?
There are no hard-and-fast rules, but here are some guidelines as to when to pull the trigger:
◗ It does or could generate enough profit. It seems obvious, but you need to pay attention to the profit. If the side hustle is not generating a profit, that should be the first focus. If so, can that profit replace your full-time job? If you were to put more effort into the side hustle, could the profit be increased enough to do that?
It is not infrequent that people with side hustles think their business is making money, but they don’t factor in their own time and opportunity costs. Make sure to invest your time where you can get the biggest payoff—whether that is financial or through intrinsic rewards. That might be a side hustle, or it might be by investing more effort at your employer.
◗ It can secure investor funding. If your side hustle is growing rapidly, it might become a fundable startup. Consider if it’s time to actively seek investment. Here are some key factors investors are looking for: a reasonably large market, a strong product that can differentiate itself and a team that can make the product successful. Ben Pidgeon, executive director at VisionTech Partners, wrote a piece on how to know if your side hustle is fundable. You can find it at http://bit.ly/31kQgWy.
◗ Working on it full time would spark growth. Once you have paying customers, you likely need a dedicated resource to service them. You can’t disappoint your customers! Growing a business takes work. You can get it started on a part-time basis, but it will likely need your attention full time to really take off. When your full-time job interferes with getting necessary work done on the startup, it’s time to make a switch.
You should not feel pressure to make your side hustle into something more. We will never turn our pirate ventriloquism juggling act into a full-time gig (as if it would support us, anyway). But if you have the itch to try converting your side hustle to your main gig, this might give you some more insight to know when—or if—the time is right.•
Todd Saxton is associate professor of strategy and entrepreneurship and M. Kim Saxton is clinical professor of marketing at the IU Kelley School of Business at IUPUI. The Saxtons are co-authors of “The Titanic Effect: Successfully Navigating the Uncertainties that Sink Most Startups.”