- When choosing a side hustle, you will save yourself time and frustration by using a system to accurately evaluate the costs and benefits of each side hustle you're considering.
- Get clarity. Indecision stops most people from starting a side hustle.
- Choosing a side hustle is not like choosing a job. A boss might care about your skills, education, and background, but you are not trying to impress a boss. You are the boss.
What is a Good Side Hustle?
A good side hustle is one you can't stop thinking about. It excites you and makes you a better person. Whether it's learning a new skill, developing a new habit or overcoming a fear, your side hustle should challenge you.
And it will change you.
But it's not a marriage, and it's not a job. A good side hustle also gives you the freedom to fail, to try new things, and change direction if it's not working out.
Of course, a good side hustle is also one that makes you money.
How Do You Figure Out What Your Side Hustle Should Be?
There are a few ways you can choose a side hustle, and you've probably come across obvious suggestions like these:
- Choose a side hustle you’re passionate about, or one you think you'll enjoy.
- Choose a side hustle based on your skills and experience.
These are legitimate considerations. And of course, they're a good place to start. But you already know that.
You don't need anyone to tell you a side hustle you enjoy is better than one you don't. That's easy.
The hard part is identifying what you enjoy (which is why I said above, a good side hustle is something you can't stop thinking about).
I could give you a list of side hustles to choose from, and if that's what you're looking for, you will find more than 200 of them here…
… but a list on it's own won't help you narrow down your decision. In fact, it might make it tougher.
What you need is a method of breaking down each side hustle into specific components as shown on the template below.
It's an approach that provides you with an apples-to-apples comparison.
This example compares driving for Uber vs. Buying and Selling, looking at various costs and benefits, such as budget, effort, and so on…
You can download this template here (no email required)
What Stops You From Starting?
The purpose of a logical system like this is clarity.
What stops most people from starting their side hustle is fear of the unknown, overwhelm, uncertainty, and perfectionism; a need for their stars to align.
Anything you can do to eliminate those obstacles is huge. Clarity will help you choose what it is you want to do so you can just do it.
Choosing a Side Hustle: A Cost-Benefit Analysis
I mentioned above that a side hustle is not like a job, and that's true. But there are a few similarities.
One of those similarities is the “give and take” relationship you have with your job. And like most jobs, you probably give a lot more to it than it gives to you.
When choosing a side hustle, your goal should be to correct that imbalance. Your side hustle should give back to you as much as, or more than, you give to it.
Think of it as a negotiation. A Cost-Benefit Analysis…
- What YOU give the side hustle (The Cost).
- What the SIDE HUSTLE gives to you (The Benefits).
When making these kinds of decisions, we intuitively go through this same “give-and-take” negotiation in our heads, and that's fine for simple decisions.
But for complex decisions like choosing a side hustle, it becomes frustrating when we don't use a logical system with a proper cost-benefit analysis.
We end up choosing what “feels” right even if it's not, and then rationalize our decision later.
The goal here is not to remove emotion from your decision, even if that were possible. The goal is to paint a complete picture of the choices in front of you so that your feelings about it are more accurate.
Next, identify all of the costs and benefits within each category, not just the financial costs…
COST (What YOU can give to your side hustle):
BENEFITS (What your SIDE HUSTLE can give to you):
- ROI Potential
- ROI Velocity
- Passive Income Potential
To see what this looks like when applied to an actual side hustle, here is an example…
Side Hustle Example: Buying and Selling
|Budget:||$100 or Less|
|Skill:||Low – Medium|
|ROI Potential:||Medium – High|
|ROI Velocity:||1 – 6+ Months|
|Scalablity:||Medium – High|
|Passive Income Potential:||Low|
For the most part, these metrics above are self-explanatory, but let's go through them one by one to see how they apply to this particular example (buying and selling)…
The Cost: What YOU Give To Your Side Hustle
Your costs are not limited to money. They also include your efforts, as well as the skills you bring to the table (or the effort you put into learning new skills).
How far outside your comfort zone are you willing to go, because that's also a cost… along with the level of risk you'll tolerate.
But of course, you can't ignore money either…
Using our example, you can start a buy and sell gig on a relatively low budget, a hundred bucks or less. You can even find stuff to sell for free.
It's a great gig to start if you're on a tight budget which is good because your budget will likely dictate everything else.
For example, flipping houses might sound like fun, but if all you have is a hundred bucks in your pocket (excluding borrowed money or a partner), then flipping houses is not an option. At least not yet.
The great thing about a side hustle is that you can progressively move up. You can turn a hundred bucks into a thousand with one side hustle, and then a thousand into several thousand with another side hustle.
Eventually, you'll have the money and experience to do what you really want.
The time and effort required to buy and sell, relative to other side hustles, is medium (when using the template you can also give it a numerical value when comparing side hustles). It's not manual labor, and you're not “on the clock”.
It's not effortless either.
Buying and selling require research as well as time searching for the right deals. You might also be driving around to flea markets, thrift stores, etc.
You probably have a good idea of how much time and effort you're willing to put in, but it can be hard to know for certain when you don't have clarity.
When you ALSO look at things like the level of discomfort, as well as the potential ROI (return on investment) and ROI Velocity (how quickly you will make money), you'll have a much better idea if the time and effort is actually worth it.
What you're willing to do might change.
The skill level required to buy and sell stuff ranges from low to medium depending on what you're selling.
If you're selling collectibles like sports cards for example, a certain level of skill is required. You may already have that skill, in which case, this section won't hold the same weight for you as it would for someone else.
However, if you were just starting out and knew very little about sports cards, acquiring this skill would factor heavily into your decision.
If you were seasonal selling though, like buying bikes and lawn toys in the fall to sell at a higher price in the spring, the level of skill required would be low.
The risk of losing all your money buying and selling is low. You might not make as much as you hope, and you might even lose some money… but the risk of losing everything is low.
With some side hustles though, you may be taking a bigger chance. Day trading for example or spending a few thousand on a course when you're uncertain if there'll be work when you finish.
With online marketplaces like Craiglist and Facebook, buying and selling is a lot easier today than it used to be. You can do most of it from home and for most people, it won't put them too far out of their comfort zone.
Some side hustles like those that require high-pressure selling, or where the risk of confrontation with others is high, the discomfort level might be very high.
Or it might be physical discomfort. Mowing lawns and landscaping is good for people in tiptop condition who love the summer heat, but for others, sweating all day pulling weeds is torture.
If you thrive in environments that others find uncomfortable, this might be an area you're not too concerned about.
On the other hand, if you're someone who avoids uncomfortable situations at all costs, a side hustle that rates high on the discomfort meter may not be for you.
The Benefits: What Your SIDE HUSTLE Gives You
If you know what you're doing, the potential ROI (return on investment) when buying and selling is medium to high. It's not uncommon to double your money.
The key word here is potential. If you were just starting out, it might take time to learn where the best deals are and which products have the highest profits.
You would also learn different strategies like buying clearance items off-season and selling them when they're in season.
Whichever side hustle you're considering, it's extremely important to assess your ROI potential, and to a certain degree depending on the gig… it will be subjective.
For example, if you already own a car and you like driving… you might consider Uber to be a high ROI hustle. The start-up costs are low, you like doing it anyway, so you can make decent money without extending yourself.
On the other hand, if you don't have a car and you absolutely hate driving, you might consider it a low ROI relative to the time, money, and effort you must put in.
ROI Velocity is the speed at which you'll see a return on your investment.
Buying and selling is relatively quick. You can flip products and see a return within a month or less. If you're buying and selling seasonally, you might be looking at six months or more.
Some side hustles have painfully slow ROI Velocities. Building affiliate websites for example can take a year or more before you make any money.
But they rank high on some of the other metrics.
The ROI Potential is very high relative to the cost. A website that takes a few hundred bucks to build over a couple of years (not including your time) can be worth five or six figures a year or town down the road.
If you need money immediately, ROI Velocity will be an important metric to consider. If you value something else more, like passive income potential or avoiding discomfort, you might be willing to sacrifice on ROI Velocity.
How scalable is your side hustle and does it matter to you?
For smaller side hustles like babysitting or doing online surveys, it might only be a short-term thing to earn a few extra bucks. Scaling it to something isn't important.
Buying and selling can be both, a significant hustle or something small. It can be something you do once or twice to make some pocket change, and it can also be a full-time business.
At scale, buying and selling could include private label products such as supplements or clothing. You can hire a team to manage it and start your own YouTube channel to promote it (although in most cases, the YouTube Channel comes first and you monetize it later with the merchandise).
You can also scale your buying and selling business to more expensive items like vehicles and real estate. If you specialize in a specific product category like furniture or collectibles, you might even open a store.
Scalability is certainly something you want to consider if you're planning long-term.
How sustainable is your side hustle?
Buying and selling might be the oldest side hustle there is. People have been trading for hundreds of thousands of years and it's unlikely they're going to stop any time soon.
Its sustainability is very high. You probably won't have to worry about it dying out or becoming obsolete.
On the other hand, there are some side hustles to watch out for. Some that might not be sustainable, like driving for example. Every day we get closer to a world where vehicles drive themselves.
Freelance transcribers and writers must keep an eye on artificial intelligence as computers are threatening their jobs.
Before you invest your time and money into a side hustle, you'll want to assess its sustainability.
Passive Income Potential
The potential for passive income through buying and selling is low. That's because you can only sell a physical product once. To make another sale, you must go through the same process over and over again.
However, if you were selling digital products such as software, courses, e-books, subscriptions, or memberships… the passive income potential would be high.
The reason digital products are popular is that they are created once and then sold multiple times. You don't have to manufacture, package, and ship every copy.
Another side hustle with high passive income potential is building a suite in your basement and renting it out. Once it's built, you can collect rent every month for years with relatively little maintenance.
If building long-term wealth through your side hustle is what you want, you can't overlook passive income potential.
Here are some more examples comparing side hustles using a proper cost-benefit analysis…
Side Hustle Example: Investing in ART Shares
|Budget:||$100 – $500|
|Skill:||Medium – High|
|ROI Potential:||High – Very High|
|ROI Velocity:||5 – 10+ Years|
|Passive Income Potential:||High|
There is a lot to like with this example (investing in art shares). The Budget is relatively small, and the Effort, as well as Discomfort, are low.
The ROI Potential is very high, as is the Passive Income Potential. It sounds great, however…
… you can't overlook the Risk and ROI Velocity.
With exceptionally rare luck, you might strike it rich… but more than likely you'll be sitting on your investment for many years before you see a return on your investment if you see one at all.
Here's another example…
Side Hustle Example: Driving for UBER
|Budget:||$100 – $500|
|Skill:||Low – Medium|
|Discomfort:||Medium – High|
|ROI Velocity:||1 – 2 weeks|
|Passive Income Potential:||Low|
With this side hustle, the metrics above are more subjective and personal. For example, the $100 – $500 budget for fees, background checks, etc. assumes you already own a car.
If you have to buy or lease one, your ROI potential might be low.
This risk is also low, but only if you live in a safe city with light traffic.
If you live in a dangerous city with heavy traffic, your risk could be high and you'd have to rate it accordingly.
In my case, I drove for Uber a few years ago and the ROI was high.
I already owned my car, and where I lived, the airport was far enough out of town that most trips paid very well. That allowed me to ONLY do airport trips which gave me several hours per day (between riders) to build my online business.
Because of my situation, the ROI driving for Uber turned into six figures and it's still climbing.
Your situation might be different but remember… your objective is the same; to find a side hustle where your benefits outweigh your costs.
Grab the Side Hustle Comparison Template HERE (no email or opt-in required… just click and save 😉)