Essays

31 Days to Financial Independence (Day 21): Starting a Side Business

“31 Days to Financial Independence” is an ongoing series that appears every Thursday on The Simple Dollar. You might want to start this series from the beginning!

Last time, we examined strategies you might want to use if you’re looking to move on to a better job. Today, we’re going to to take a different approach to income generation and look at some strategies for starting a side gig.

So, what’s a “side gig”? A side gig simply refers to anything you do outside of your main job in order to earn some additional money that’s self-funded (meaning you don’t have to take out debt for it and already have the gear you need or can buy it out of pocket) and won’t require employees, at least not at first. Usually, it’s in reference to a microbusiness, where you’re making something and/or selling something. This can take a lot of forms, from starting a Youtube channel to engaging in freelancing parallel to your career, from repairing smartphones to building wooden Adirondack deck chairs, from making jewelry to sell on Etsy to mowing lawns.

The key to a successful side gig is to find something that you enjoy doing that you can turn into profitability or else find something that other people hate doing that you don’t mind doing so that they’ll pay you for it. For example, in the first category, you might make a Youtube channel about your hobby, or in the second category, you might mow lawns. It also needs to be something that isn’t so time-consuming that you can’t do it in your spare time.

In my own experience, building a side gig was a fundamental part of achieving financial and professional success. The Simple Dollar started as a side gig for me, one that grew into a full time job over a series of years, and it helped both with our financial turnaround but also with our life flexibility.

Let’s get to it!

Exercise #21 – Building a Side Gig

Most of the strategies in this article seek to tease out some of those ideas from your own life and then how to turn that idea into something that actually makes money along with a few basic tips on keeping your money straight.

Identify your personal skills and passions. People pay money for skills. They also pay money for passion. That’s what people like to spend their money on. People want things that are done with skill. People enjoy things that are produced with passion and care. People put up their money for things that they want and enjoy.

Thus, if you want to make money, one great way to start is with things you’re passionate about and things with which you have skill.

To start, make a list of all of the skills you have: things you can do well that elude others, either through natural talent or through training. Maybe you’re good at photography or line drawing. Maybe you’re really good at poker. Perhaps you can play the piano, or you’re a wizard at Adobe Illustrator. Perhaps you’re good at making videos, or maybe you can write reasonably good prose in large volumes quickly (that’s something I can do!). Maybe you’re a borderline golf pro. Figure out the things you’re notably good at.

Then, figure out things that you’re really passionate about. What do you love doing or learning about? Perhaps you’re passionate about science fiction books. Maybe you’re really into binge-watching shows on Netflix. Maybe your passion is board games. Think of things that you truly love, that you’re opinionated about, that you think about all the time.

Those two lists are things that you can draw upon to form a side gig. The best ones, I’ve found, come when you combine a skill that you have – say, video making – with a passion that you have – say, science fiction. That means you’re in a place to create something with skill that you’re passionate about, and you’ll almost always find fans who will buy into what you’re doing when you combine the two.

If you don’t have a skill that matches up well with a passion, you can always focus on learning a skill. Video making is a great skill to learn, for example. Starting a side gig can be a wonderful incentive for learning a skill.

Identify things you don’t mind doing that other people hate doing. If you’re struggling with the previous list, switch your focus to considering things that you don’t mind doing that other people seem to loathe doing. House cleaning. Lawn mowing and other yard work. Laundry. Moving stuff. Walking dogs. Those are all tasks that people don’t enjoy doing and will often pay others to do.

Think about things that others complain about all the time that you really don’t mind doing and you’re probably pretty close to the source of a side gig for yourself. People will always pay to offload a task that they don’t enjoy.

From those lists, identify two or three ideas that might work for you. At this point, you should have a bunch of skills, passions, and tasks you don’t mind tackling written down. Now is the time to start filtering all of those ideas.

The first step here is to start mining those skills, passions, and tasks for potential side gig ideas. Just look at those things and ask yourself what you could do with them to make money, especially when you can combine a skill and a passion.

For example, if you wrote down that you’re skilled at Adobe Illustrator and that you’re passionate about board games, perhaps you could find someone with an interesting prototype for a game and turn it into something beautiful that you could publish together. If you’re passionate about chess and interested in learning videography, perhaps you could start a Youtube channel where you teach basic chess or else analyze matches in a way that a layperson could understand. If you’re passionate about board games and skilled at writing quickly, maybe you could start a blog about board game reviews. Add those things to your list.

You might have freelancing opportunities related to each of your skills as well. You might have the opportunity to directly sell your creative works or offer consulting.

Maybe you don’t mind doing laundry and others hate it; you could start a “laundry service at your door” business. If you like mowing, maybe you could start a lawn care business. Almost everything that other people dislike doing that you don’t mind is a great basis or a business.

Hopefully, you’ll come up with a list of several ideas for businesses during this process. If you did, spend some time whittling that list down to the two or three that intrigue you the most. You should strive to end with your three best ideas for a side gig.

Develop a real business plan for each idea. Take each of those three ideas and flesh them out into a business plan. This seems like a painful formal process to many, but there’s a very good reason for making a business plan: it helps you see the potential problems in your idea before you start running with it, which means you can think of ways to get around those problems so that you’re more likely to have success right off the bat.

I highly suggest following the recommendations for writing a business plan from the Small Business Administration. You can skip over the parts about funding – a side gig should be self-funded, as noted above – but take the other parts seriously. Unless you’re doing this just for kicks, you’re going to want to have a side gig that will succeed and walking through the steps of writing a business plan for each of your ideas will pretty quickly help you figure out the problems and benefits for each of your ideas.

I did this with The Simple Dollar (back then, I used a business plan book from the library rather than these great SBA resources that exist today) and with many other small businesses I’ve dabbled in. The process of writing such a plan has almost always helped me see obstacles and helped me figure out how to deal with them before they become disasters that I’ve invested many hours in. I’ve walked away from many ideas after writing a business plan, and for good reason – they would have turned into black holes of time and money, slurping away all of those resources and giving me little in return.

Once you’ve written up a business plan using these ideas, pass them around to some trusted family members or friends or mentors. Send each one to a few people and get their feedback. Send them to people you trust and whose advice you trust and take their comments seriously. They might be really negative on an idea that you think is great, but rather than just brushing it off as “jealousy” or something, stop and listen to what they’re saying. Often, the good people in your life are critical of something you’re doing for a reason – they may be seeing something you’re not seeing due to your own blind spots.

Often, this can turn into a feedback cycle, where people give you comments, you improve the business plan, and then you send it to people for a second reading or to new people for a fresh reading. The goal is to develop a plan as well as you can so that you have a strong plan going forward when you start.

Choose the one that makes the most sense. Once you’ve written up a few plans, passed them around to people for comments, and made some changes to each one, read each one of them again and make a decision on which one to follow up on.

Most of the time, you’ll already know in your gut which one you should choose, but if you’re still uncertain, my general suggestion is to choose the one that you think you could sustain over the longest period of time. If you’re thinking that a particular idea sounds profitable but that you can see it becoming misery in a few months or a year, skip that one. You don’t want to invest the time and effort into building something up only to find yourself hating it down the road.

Wall off blocks of time to devote to your business. Once you’ve got a business plan in place, wall off some blocks of time during your typical week to devote solely to this business. This is your time to work on your side gig – make it as uninterruptible as your main job.

Unless the tasks for this side gig require long blocks of time – meaning that the weekend is the best time for it – it’s usually better to devote a block of time most days to the business. Plan for it every day unless there is a mitigating reason not to, like a particular meeting you have on Tuesdays or something like that. Put this in your calendar. Make it a real thing.

31 Days to Financial Independence
Day 1: The Shallows and the Deep
Day 2: Direction in the Deep End
Day 3: Finding Meaning
Day 4: Your True Hourly Wage
Day 5: A Living Budget
Day 6: The Big Boost
Day 7: Minimizing Debt
Day 8: Trim Housing Costs
Day 9: Trim Transportation Costs
Day 10: Trim Utilities Spending
Day 11: Trim Food Spending
Day 12: Trim Insurance Spending
Day 13: Cut Health Care Spending
Day 14: Cut Entertainment Spending
Day 15: Cut Apparel Spending
Day 16: Cut Education Spending
Day 17: Integrating Cost Cutting Measures
Day 18: Earning More at Your Job
Day 19: Getting Promoted at Work
Day 20: Finding a Better Job
Day 21: Starting a Side Business
Day 22: Avoiding Lifestyle Inflation
Day 23: Investing for Retirement