As a married couple, one of the most rewarding accomplishments of starting our side hustles was the ability to eventually step away from our 9-to-5 jobs. Now we get to focus on things that are important to us, such as spending time with our kids, traveling and giving back.
Craig and I had several of our own side gigs prior to meeting each other. But we started our first business together in 2006, when we merged our two side hustles into one company, Tandem Consulting.
Today, Tandem generates $3 million in annual revenue.
We like to tell people that our financial success all started with side hustles. The money we earned from Tandem, combined with our savings and previous side hustle earnings, allowed us to branch out and work on several other projects, including a real estate investing firm and a nonprofit, Tandem Giving Inc.
We currently have a total of eight income streams that altogether generate 7-figures a year. Two of them are passive income streams through our rental properties in Wisconsin. Most recently, we co-wrote a book called "So You Want to Start a Side Hustle."
A lot of people, especially younger folks, often ask us about what to know before turning their side hustles into a full-time business. Here are five mistakes we learned the hard way:
In the early stages, we were woefully unprepared for the craziness that ensued when we really got into the thick of juggling our full-time jobs and fast-growing side gigs.
And since we saw our side hustles as an extension of who we are, we struggled to manage our time effectively. But eventually, what we found most helpful in boosting productivity was automating certain tasks and hiring people who could duplicate our efforts.
When deciding whether or not a task needs to be done by you, someone else, or anyone at all, ask yourself:
- Is this task important to you, your side hustle, or your values? If not, can you just not do it?
- If this task needs to be done, can you delegate it?
- If not, how and when can you complete this task in the most time-efficient way? When is the deadline?
- As you continue to perform this task, can you drop, automate or delegate it in the future?
We know several people who have attempted to start an online coaching business. The mindset went something like this: find 20 clients, charge each client $4,000 per year, and make $80,000 in profit.
No problem, right? Wrong.
You need to think about how you'll find those clients. Will you have a website? If so, how much will it cost, and how will you maintain it? Will you have marketing, branding, travel or other costs to account for? Will you get certified? Who will handle your accounting, bookkeeping and legal contracts? What if a customer doesn't pay you?
With every business we worked on, these were all things we had to plan for. The sales you make are not the same as your profits (and $80,000 is not what you end up taking home).
Once you create "enough" revenue, you don't necessarily have to reinvest all your profits into generating more sales.
Let's say you start a side hustle in the landscaping industry. Eventually, you grow it to a full-fledged business that generates $600,000 in annual revenue, with $130,000 in net profit — assuming you don't take a salary.
You could then take a year or two to sharpen your systems, secure your client base, get lean by paying off any debt, and transfer your skills and management to a few employees. You can later promote your key understudy to run your business at $60,000 per year, and keep $70,000 per year for yourself — all while doing minimal work.
If you have a humble personal budget and manage your finances well, you might be able to live off less than $70,000 per year. Over time, you can build up some savings and start or invest in another business.
Additionally, at some point, you could choose to cash out and sell the business or assets.
Once your business is successful, customers will pay for perceived value. And oftentimes, if something has low costs, people may value it less.
Don't be afraid to revisit your pricing structure regularly. With basic inflation and an ever-changing and dynamic economy, you should be dynamic in your pricing as well.
Side hustlers often fall short in adopting a hardcore ownership mentality. Since most of them began as employees, it's common to default to the employee scripting.
Some of the biggest shifts a side hustler must work hard to make are:
- Predictability and stability vs. variability: When you normally work for two weeks and get paid for two weeks, things are predictable. You have a salary, benefits and usually a set schedule. But as an entrepreneur, you may work your guts out, have an unpredictable schedule for years and be underpaid.
- Being the smartest vs. finding those smarter: Employees typically aspire to be the smartest person in the room, or see those who are smarter as their competition. But when you start your own business, surrounding yourself with those who are smarter than you becomes an asset.
- Being parented vs. self-parenting: Elon Musk once responded to a question about what words of encouragement he'd give an entrepreneur. "If you need words of encouragement, don't do it," he said. Move past needing hand-holding, a syllabus, or someone to micromanage you.
Not all side hustles will be successful, but the advice we always give is to embrace the power of failing forward. When you accept blunders as being inevitable, and you are still willing to walk the path, you'll be stronger, smarter and better at everything you do.
Carrie Bohlig and Craig Clickner are entrepreneurs and the co-authors of "So You Want to Start a Side Hustle: Build a Business that Empowers You to Live Your Life, Your Way."