What’s the best way to turn your passion or hobby into a side hustle? And are the returns worth the risks?
It’s becoming increasingly popular to try to pocket some extra cash. In fact, a 2019 AMP study indicated that a whopping 67 per cent of Aussies were working on a side project. The study also found that money is the main thing holding people back from making their side project their main income.
“The research shows Australians want to achieve amazing things in the community, but money often prevents them from making a positive impact,” said AMP Foundation and Head of Sustainability, Helen Liondos.
Other factors that the study found were barriers to Australians turning their hobby into a side hustle included a lack of time, work commitments and gender (73 per cent of males are working on a side project versus 61 per cent of women).
In this week’s show, we investigated ways to break down these barriers and make some genuine inroads to turn your hobby into a side hustle.
Watch the segment, then read on for more tips:
Getting started
You’ve got a dream to start something of your own, but just where do you begin?
The first thing to consider is what you enjoy and what you’re good at. What do you currently like to spend your out of work time doing? It will be something that you wish you had more time to spend on, which is why turning a favourite hobby into a side hustle is so popular.
“Some of the most popular fields are those within the creative space,” says Cheryl Mack from innovation hub Stone & Chalk. “Things like woodworking, crafting – cards and paper, paint, art and graphic design as well.”
If you’re not creative, all is not lost. Other avenues might be things like becoming a weekend real estate agent or book keeper; virtual admin or design work; freelance writing or proof reading; digital marketing and social media management; photography; working as a delivery or people driver; renting out your car or turning your granny flat an Airbnb; starting a YouTube channel; becoming your neighbourhood’s handy person; or starting a food blog.
More ideas here: How to make money fast: 8 ways to earn extra cash
Consider your interests, strengths and weaknesses and plot out something that might work for you.
Make it bankable
Once you’ve landed on something you love doing that other people might want to pay for, you need to work out whether it’s actually worth your time. Can your interest or hobby actually be profitable?
“The best thing to look at is your costs versus your revenue,” says Mack.
Don’t forget to consider your time as one of your greatest costs. It’s something that many people forget to consider when they’re starting a side hustle. Spending five hours creating a product that you can feasibly only sell for $20 or less is never going to bring you in an income.
There are also many hidden costs in any venture to consider. This will vary depending on which hobby you’re side hustling, but keep an eye on things like insurance, taxes, travel, depreciation costs, marketing costs, unpaid admin time, postage, computer and other equipment costs and depreciation, wastage… all the things.
These costs can really add up, says Mack: “If you’re going to sell something to more than just your friends at a market, you start to need a website, then you have website hosting costs, then you start to need drop shipping, and then you have shipping costs… it adds up very quickly.
“What you need to do is think about all those logistics and account for that in your price upfront.”
Finding funding
Once you’ve worked out that turning your hobby into a side hustle is actually feasible, you then need the funds to kick things off. This is the part that can seem insurmountable to many, but it’s definitely achievable for most. Some avenues include:
1. Committing a portion of money from your full time job
This approach requires discipline, but it’s not much different from saving for a special holiday or purchase. Commit to putting X per cent of your income into your side hustle each month and stick with it. Doing up a budget will help you find the extra funds in your income to move over to your side project.
Try this: 10 killer budgeting strategies
2. Asking family and friends to help you
If you’ve done your sums right, this doesn’t have to feel like a cap-in-hand approach. Think of it more like asking your family and friends to invest in your new business. Once you’re turning a profit, you can pay them back (with interest). Remember to clearly outline in writing exactly what you’re asking for and what your family and friends will get in return. Importantly, be clear about when you’ll start to repay them their generous loan.
Last thing to note about the Bank of Family and Friends, it might actually be help you need from them in the form or time or skills, not money. So, consider other sources of monetary funding so you can keep this critical ‘we’d love to volunteer our time’ channel open.
3. Sell your stuff
You’re about to spend a lot of time on one of your hobbies, so there will be plenty of items hanging around that you’ll no longer have time for. That golf set – sell it. Unless your side hustle is as a golf coach, of course. Other things that are easy to sell include designer clothing, camping and hiking gear, sports equipment, books and collectables.
4. Apply for a loan or grant
A good option if you’re truly serious about transitioning your hobby into a side hustle and then your full time income. Do your sums, write up a business plan and apply for a personal loan, small business loan or even a small business grant.
Australian, state and local governments offer over 1,500 grants worth over $40 billion dollars annually to small businesses in every kind of sector. There’s no reason why one of those grants couldn’t fund your side hustle. You can do a search for grants that are relevant to your business at business. gov. au.
Something else to consider: The dos and don’ts of getting your credit score in shape
The burnout factor
A further cost of growing a side hustle is the burnout factor. Working 9-5 and then 5-9 and beyond is a real burden on your time and energy. You’ll be dedicating every spare moment to getting things up and running – sometimes for years and years. It’s a very hard slog for most, which is why starting a business just isn’t for everyone.
“Some people actually find that once they start to make money from their hobby, they actually lose passion for it,” cautions Mack. She advises considering how much you really want to turn your interest into a big business right up front. Just because you’re having fun doing your hobby as a side hustle, doesn’t mean you need to pursue it as a career.
“[You] might just find, no, I don’t want to earn money from this hobby,” she says. “I don’t want to go down that route.”
It can be especially stressful when you’re trying to start something while staying in your regular paid work. Keeping a balance between your ‘real job’ and your ‘future job’ is very tough indeed. Especially when it can take a long time to see any kind of financial return from your side hustle.
Of course, only you can assess whether the returns you’ll get from starting your own business are worth the risks. “It’s not worth the risk to quit their current job in order to follow [their hobby],” says Mack. “Because it is highly unlikely for most people that they’ll be able to turn that into more than what they currently have.”
This article contains general information only. It should not be relied on as finance or tax advice. You should obtain specific, independent professional advice from a registered tax agent or financial adviser in relation to your particular circumstances and issues.
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