Firstly, let’s define the difference between a side hustle and part time job. Guillebeau defines them as:
A side hustle is a money making project you start on the side, usually while still working a day job. It’s a way to create additional income without taking the risk of going full-throttle into the working world for yourself.
Whereas a part time or second (or even third) job:
Doesn’t provide the same level of autonomy and mastery. Part time jobs are subject to other people’s conditions.
For example, driving for Uber as a supplementary or secondary source of income is a part time job. Uber controls the working conditions and guidelines in which these drivers (agents) operate. Therefore changes from the mothership affect each individual driver. Part time job ≠ side hustle.
Secondly, side hustles are a great way to start to reinventing yourself, as it cushions out a level of risk and builds confidence. Building momentum through action creates motivation in a positive loop.
Taking Side Hustles’ 27 days of lessons, I’ve distilled 10 steps you can follow to make additional cash:
Step #1: Determine Your Goal and Understand the 3 Elements of a Great Idea
Determine what your side hustle goal aims to achieve:
- Extra cash for a specific purpose: paying off a loan, big ticket item, vacation or emergency fund.
- Creating sustainable ongoing cash flow to improve your quality of life
- Eventually replace or exceed your current income.
Next, understand that ideas need 3 elements:
- Feasible: Can be achieved in a relatively short period of time and earns money.
- Profitable: Requires a clear (not too vague) target market, and can be articulated simply in a sentence or two. If your idea is too broad or convoluted, it’s unlikely to be profitable.
- Persuasive: Is something customers will say “F*ck yes” to now. Persuasive ideas solve a problem that can be executed without too much effort.
Step #2: Brainstorm, Brainstorm, Brainstorm
Hustles fall into two types of categories: products or services. A third category is defined as decoding or improving an existing process. I.e. something else already exists but you make it a hell of a lot times better. Making something a hell of a lot times better means bringing an existing idea to the next level.
Returning to the Uber example, a starter idea would be to drive for Uber. A next level idea would be to take your experience as an Uber driver and coach or mentor other drivers. While brainstorming it’s important to get a breadth of as many ideas as possible. Fine tuning comes next…
Step #3: Weigh Pros and Cons, and everyones favourite…Number Crunching
Pros and cons can be delved into through 2 methods: brainstorming and research. Research doesn’t need to be detailed data analytics. Things to look for include:
- Initial set up costs – I.e for Reintention I looked at basic web hosting, design and support costs
- Potential obstacles or limitations that may stand in your way of set up
- Best and worst case scenarios if the side hustle is successful or not
Without owning a degree in accountancy, establish your income and expenses to determine simple profit:
EXPECTED INCOME – EXPECTED EXPENSES = NET PROFIT
Don’t forget to keep in mind ongoing costs such as fees, automation or maintenance costs. For me it’s the ongoing costs of my automation or marketing tools such as Quuupromote.
If you’re considering running a class, profit projections may be on a number of variables such as cost per class x # of students that sign up. You could have fixed fee + cost plus for bonuses or extra features (think of any subscription service). Pricing models do vary, don’t be afraid to sketch out a few options.
Step #4: Select an Idea and Strategy
After assessing the 3 elements of an idea being feasible, profitable and persuasive, honing in on a great idea has 2 additional components: efficiency and motivation.
- Efficiency: How quickly is the execution?
- Motivation: How excited are you about the idea?
Rank your idea along these 5 criteria with high, medium and low indicators:
The next part of this step is to ask:
- Does this already exist in the market or is there something similar?
- How will my idea be better or different?
If you can already see a similar product/service that is doing well in the market, see how you can improve on the strategy that already exists.
Step #5: Understand Your Customer and Story
Gauging the size of market, appetite or demand can be explored further through customer discovery. What problem are you solving and who wants your stuff? Creating a customer persona gains a grasp who you’re targeting. After establishing the “who”, its time to transform the idea into an offer.
Offers have 3 aspects:
- Promise: Focus on the benefit people will gain
- Pitch: The fundamentals of what people need to know; and should be relevant to the idea’s persuasiveness
- Price: The cost for the idea, but also what they need to to get it. There should be a clear call to action.
Writing a good story around your idea should follow the 3Ps but also be personal, purposeful and evoke positive emotions. Stats used in your call to action elicit social proof. Make sure your customer is central the story and are inspired by the core of your mission.
In this article by Startup Grind; “People don’t just buy products, people buy better versions of themselves”.
Step #6: Establish Side Hustle Fundamentals
In this step, Guillebeau recommends the following as part of a “Side Hustle” toolkit, but I’ve added some of my own:
- Get a separate side hustle bank account (doesn’t have to be a business account) and corresponding cards (debit and/or credit)
- Pay for as much as you can upfront
- Set aside a part of the hustle income for taxes
- Prompt invoicing – fast in fast out, don’t linger on money that’s yours!
- Have written agreements for all work
- Set up or investigate basic legal structures or accounting systems (my recommendation would be to get help if this isn’t your strong area)
- Find a dedicated work space
- Ensure you set some income received for yourself
- Schedule, diarise and automate everything you can (having an organised calendar is a must)
Step #7: Back to the Numbers
In order to make a profit, employ cost-plus pricing which means you charge more for than the cost to make or provide a product or service. Costs should be based on projected volumes of things sold. Obviously higher price items will sell less volume and vice versa.
For a both products and services, consider both minimum profit and hourly rates (for services) you’re willing to charge. Remember, profit must be built into the hustle from the beginning – there’s no point operating at a loss!
Think of these pricing considerations:
- Recurring costs such as paid upgrades or subscriptions, pricing tiers (basic, pro, expert)
- Don’t stray too far from market prices
The next part of this step is to determine your payment structures. Paypal and Shopify are two examples from many. It’s important to decide on your payment schedule too. Are you going to have all payment upfront, all payment afterwards or part payment before commencing?
Step #8 Define the Workflow
When defining your hustle’s workflow, map out the customer journey touch points it generally is the chronology of what tasks need to be executed. Considerations include:
- How will customers learn about your offer?
- What happens after someone buys or signs up for what you’re offering
- What needs to happen after they pay?
The most important part of the customer journey is the 20% value they receive. Focus on the important stuff! To achieve the book recommends:
- Underpromise and overdeliver (this usually involves meeting unmet needs)
- Provide high positive results with the purchase and customer experience
- Commit to a schedule and gradually pursue incremental revenue (only after you have a few runs on the board!)
Step #9: Launch!
It’s so easy to get caught up in perfection, however side hustling is all about prototyping and that “done is better than perfect”. Examples of this include establishing Facebook and landing pages before building a full fledge website. Reintention was hideous for months, until I gradually iterated to what it is currently (and it’s still WIP…)
The second pillar of launch is marketing. This involves understanding customer’s motivational triggers: are they driven by emotional, social, function or personal jobs? What is the job to be done? People are looking for holes, not drills. Lead marketing efforts with the benefits and how having your product/ service will enrich someone’s life.
Third, test, test, test! Test the things that matter most: your product/service (your idea), your offer (how its presented) the price (how much it costs). Ways to attract more customers is to use scarcity and urgency:
- Discounts and flash sales
- Buy one Get X Free
- Limited spots or time only
- Freebies, samples, trials
- Money back guarentees
Guidelines for making these incentives fool-proof include:
- Announcing incentives in advance
- The incentives must provide significant value for customers
- Make the incentive something to be excited about!
- Test all parts of the incentive to ensure it works (subscription, email confirmation, goodies received)
- When the incentive ends, it really ends (otherwise you’ll lose credibility)
Step #10: Measure & Pivot
The crux of this step is “Is it working, if not, what can I do to make it work?” Based on previous steps, this should be obvious due to measuring profit, growth (new clients, prospects and sales) and time spent. The power within iteration is that you can pivot or change things that aren’t working and keep those that are. Considerations in this include:
- What’s working well and how can this be developed further?
- What can be automated our outsourced?
- How to increase the quantity of sales or price of the offer for this hustle?
You want customers who return. Those some businesses exist as a one-time basis, the bottom tiers of the marketing funnel: revenue, retention and referral are crucial in continued growth.