I have lumped these two together because they have a lot in common. Examples include life coaches, designers and writers. First and foremost, these side hustles allow you to capitalize on existing skills. As a result, you more likely to have an existing network of people who are familiar with your work. This gives you a potential customer base to launch your business to. Since you have experience, you don’t have to buy any additional equipment and it does not require a substantial investment. It can also be a faster way to generate income, depending on how you bill your clients. It also has high income potential, depending on what you can command for your services. Depending on the type of service you offer, these opportunities are often location independent, but not always. The overhead cost tends to be low since you can often work from home and already possess the basic necessities. On the flip side, you are exchanging time for money. Therefore, you don’t make money unless you are actually working. Another downside is that you are always looking for new clients or your may easily max out. So when you can’t take on anymore clients, you’ve reached an income cap.
Examples of this may be a blog, podcast, infopreneur, or fulfillment-based product business (like a Teepublic). Similar to freelancing and coaching, online businesses tend to have low start up costs and low overhead. These businesses are often location independent, so you manage them from anywhere in the world if you have access to the internet. Also, you don’t have to be available during specific hours, which means you can work on you business at 3am if that is your preference. One of the biggest perks about an online business is the potential to earn passive income. In episode 58, I talk about the difference between active and passive income. Passive income is the goal for every entrepreneur, because you can make money while sleeping. But this option also comes with its own set of cons. Attracting customers for an online business is harder because often times you are starting from scratch and seeking out strangers. You are not relying on your network and even if you could, it probably is not large enough to garner the revenue you desire. While we have learned a lot about the internet, there is still a learning curve because it continues to evolve. As a result, you must stay current on technology and software in an effort to remain relevant.
Service Based Business
Examples of these business include stylists, personal care and skilled trades. Similar to freelancing/coaching you are using a set of skills that you have honed over a number of years. As a result, you will likely have a network of people that you can use to launch your business. If you are a people person, this gives you an opportunity to interact with clients face to face. Depending on how you bill your clients, you may elect to get paid once the service has been rendered. In some cases, you may get paid in cash. This is a great perk, because the likelihood of a bounced check is eliminated and returns are unlikely. You set the prices and if you are good enough, you may be able to command more than your peers. However, there is a downside to this side hustle. It requires you to trade time for money. If you don’t work, you don’t make money. It may require you to travel to the client or to your office. If a client cancels at the last minute, you then have to pack up and head back home. Whether or not people keep their appointments may largely depend on the weather or other external events. You are continuously looking to grow your client based, but once you max out you cap the amount of money that you can earn. These types of businesses may require special equipment that you either have to purchase or maintain. In some cases, you may need to rent space to service your customers. All of this increases the cost of overhead.
Product Based Business
Examples of this business model includes food, hand-made crafts and amazon/ebay. If you are utilizing a specific talent or skill that you have, this could be a fulfilling option for you. Again, you will probably have an existing fanbase that you can target to help you launch your business. Another great option for these types of businesses, is that you can sell online and offline. However, this probably where many of the perks end. When you have a product business, one of the biggest aspects is getting the product to the customers. This may involve shipping, delivery or transporting the items yourself. You have to buy materials and/or inventory. As a result, there is a delay with making a profit. Because of these factors, the start up cost for this type of side hustle tends to be more than others. You have to manage inventory and as a result, your business is location dependant. It is also affected by weather and other local events. While you may have an existing fanbase, you must be constantly attracting new customers in order to cover your expenses.
Last, but not least, I am going to talk about multi-level marketing. Now I did a pretty detailed breakdown of this business model on this back in episode 56. Therefore, I will hit the highlights here. The biggest challenge with this business model is that it has a bad rep that you will have to overcome before you can get your first recruit or sale. The good thing is that you should have a mentor or upline who can give you guidance on how to deal with common mlm objections. This is probably one of the best features of this business model. MLMs really focus on training and mentorship to help you succeed. However, in order for this type of business model to work, you will need a large network. If you don’t have one already, you will need to build one. For most companies, the profit from the sales will not be enough to live off of, so you will need to put a heavy emphasis on recruiting and building a distribution network. If you are a people person and enjoy the face to face interactions, this may be ideal for you. Unfortunately, you don’t have an ownership stake in your business unless you reach a certain level within the organization and this may differ by company.
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