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Tip: If you’re going to start a side hustle, try to find a way that it overlaps and provides benefit with something you are already doing. Isolated projects tend to fail.
On a recent trip to Seattle I talked to my Uber driver between SeaTac and downtown Seattle. The conversation ranged from travel, our favorite islands in Hawaii, his love for music and gadgets, what he does for work, and why he’s driving for Uber on the side.
He has a solid career working downtown for the City of Seattle and Uber allows him to earn a little extra on the side driving a couple mornings a week. It’s fantastic that services like Airbnb and Uber allow those on with a set salary to earn more on the side.
So what was he spending this extra money on? Well, he loves gadgets and wants two things:
- To replace a broken speaker in his home theatre system.
- To buy a DJI Mavic drone.
Those are both super fun purchases and it’s great he’s able to work extra to make those happen. But it reminded me of why most people don’t build wealth: increased earnings never go into wealth.
All across society extra money—whether from a raise or working extra—disappears into lifestyle inflation or temporary purchases, when it could be put to work so much more effectively.
The drone would be really fun, but there are so many small parts and fancy electronics that it’s bound to break after a couple years—and that’s if you don’t fly it into a tree before then.
If you want to build wealth that thousand dollars should be spent on new skills or invested in the stock market, retirement accounts, or another business, rather than burned on the latest gadget.
- New Skills
- Invested in Stock Market
- Invested in Retirement Accounts
- Invested in a New Business
while income increases as you move up any one ladder, it often decreases when you jump between ladders. Sometimes that drop may be only for a few months, other times it could be a few years. Let me give you an extreme example.
In 2013 I earned over $250,000 from selling books and courses on design. My income head been steadily increasing for the last few years and I was damn proud of my blog and business. But then I decided to make the leap and switch from selling ebooks to starting a software company—one of the most difficult rungs on the product ladder.
My income immediately and substantially dropped as I focused on ConvertKit. So how long do you think it took to set a new one year income record? A year? Two years?
Nope. I didn’t earn over $250,000 in a year again until…2018. 5 years later!
You can start your blog while still helping freelance clients. Build the habit of writing while you still have your full-time job. Or do what I did and use book and course revenue to help fund building a software company.
A side project is an incredible way to bridge the gap and cover the dip as you move between ladders. Just one note: I said, “a side project” not “side projects.”
That next endeavor that you launch, whether it’s creating handcrafted products for the farmers market, starting a new coffee shop, if you share your story and give people a way to follow your journey, they will. Some will buy your products, others will tell their friends, and still more will cheer you on.
- Have a goal. The goal could be to make your first sale at a farmers market, write a book, renovate an airbnb, pay off your debt, landing your first four design clients, or just about anything else. The point is for it to be clear who you are and what you are trying to accomplish.
- Document your progress. This next step is a little harder—not because it’s difficult to document progress, but because it’s difficult to do consistently. Choose a cadence and write updates reminding people of what you are trying to accomplish and sharing your progress, learnings, and challenges on that journey. That could be through a monthly blog post or even just through more regular Instagram posts.
- Ask for help. Finally, understand that everyone wants to help, so let them! If you need advice on how to price your products or how to setup your business, just ask. If someone in your small audience doesn’t know, they most likely know someone who does. Throughout my journey I’ve been blown away by how many people step up with advice, introductions, and support whenever I’ve asked.
The most common linear growth that I see in my work is in selling digital products: as traffic increases, so do sales. It isn’t exponential because traffic is still the bottleneck, but each new blog post or search engine ranking brings a few hundred more people to the site each month. Over time that drives more sales and income increases.
Exponential growth comes from when each sale of a product truly makes the next sale come more easily. It requires a product that you can sell repeatedly (whether physical or digital) that can be created at a large scale. Meaning you can’t be selling your time.
Meaning you can’t be selling your time.
Exponential growth often starts slowly, taking months or years to reach any kind of meaningful revenue. But fast forward a few years or a decade and the growth can be absolutely astounding.
Software companies, marketplaces, and large e-commerce companies have an incredibly high ceiling and can grow insanely fast in their prime. But that usually takes time, significant skill, and meaningful capital.
I had to learn to write a sales page, code apps, market products, and launch into the iOS app ecosystem...Over the years I’ve done so many different things, but each one was a step towards learning the skills required to earn a living and build wealth.
- Most important skill acquired: the courage to knock on a stranger’s door and sell them something.
- Most important skill acquired: how to work very fast.
- Most important skill acquired: how to find, work with, and charge clients.
- Most important skill acquired: an introduction to leading a team.
- Most important skill acquired: building a product and selling into an existing marketplace.
- Most important skill acquired: how to build an audience.
- Most important skill acquired: how to work relentlessly on one idea for long enough to reach its full potential.
But the real magic came with what they did next. Instead of pursuing normal jobs a family would pull together all the money they could (from their own savings and from extended family) and use it as a down payment on a small motel. The family would then move into it and run it full time. Spending their days and weekends working the front desk, cleaning rooms, and making beds.
Over time as it grew into a meaningful business they would have some free capital to pay forward to another relative who would do the same thing.
By 2003, when the article was written, Indian immigrants owned half of all the motels in the United States. Not only were they continue to earn great revenue from each booking, but the land has appreciated over the decades to become incredibly valuable, making these families rich.
- Rallied together to make one family succeed, and in doing so raised the tide for everyone.
- Never paid back the money, but instead paid it forward to the next family member to create opportunity for them.
- Always poured the money into the next revenue generating asset (another motel) rather than inflating their lifestyle.
The company transitioned into different, more affordable hooks, rolling out the CandyShop line [polyresin plastic hooks] in 2015 and the Odyssey [nickel-pewter] a year and a half later. At this point, Furls had 5 employees and was making $400,000 in monthly revenue.
He rejected a strategic narcissism approach instead, outsourcing himself and continuing to let others run the business.
You can decide if he was right or not: Furls is now sold in at least 70 countries and Harrison only works 3-5 hours a week but racks up $9 million a year in revenue with some nice margins.
- Don't chase growth. Profitability is everything
- Add some bling to the boring
- Know, and play to, your strengths
- Ditch strategic narcissism and delegate
That’s why I’m a huge proponent of buying, instead of building, cash-flowing businesses. I prefer ‘boring’ businesses precisely because many of these businesses are owned by a generation uncomfortable with Ecommerce, Google Analytics, the gig economy, and gives you the ultimate leverage to scale. I call that the “fax machine test.” If the company has a fax machine, doesn’t have a website, still uses handwritten notes, and not a CRM, I get all hot and bothered.
Crochet is an industry with a dedicated and passionate hobbyist population. Chances are though, it hadn’t seen any innovation in the products in years. Lots of furls that looked more like dental torture devices as opposed to fun collector's items.
Harrison describes himself as a ‘maker’. He dropped out of college because it wasn’t a place that he believed would leverage his strengths. He took his artistic skill with wood, but he didn’t decide to make a traditional wooden project. Crochet hooks have, for decades, been made from metal and have been viewed almost solely as a tool; a means to an end. Harrison made them out of wood, built them beautifully, and treats them as an end in themselves.
Imagine you are on an island with other people, each of whom has the exact same skills as you. To succeed, maybe even to thrive, then find an island where the inhabitants can’t perform your skills or perform them less competently than you. Look to stack skills on top of each other to make your strengths and competitive advantages even stronger.
→ Buy a boring business that has no or terrible marketing and amplify its earnings.
→ Use that skillset to help a laundromat show up at the top of a google search.
→ Bring your art into the eCommerce space, or turn a ‘boring’ object that is considered every day into a luxury product.