(Third in a series of 4 for National Small Business Month)
If you consume business news with any regularity, you’ve probably heard about the gig economy and side hustles. The terms are not completely interchangeable but close enough for conversation’s sake: Gigs and side hustles in today’s vernacular represent various types of freelance assignments or small projects conducted outside of one’s regular job or perhaps in lieu of steady employment.
One thing gigs and side hustles are not, however, is businesses, at least not by default. They may certainly be self-employment – what is commonly dubbed 1099 work, in honor of the IRS form used to track non-employer-based earnings – but self-employment is not automatically a business.This matters on multiple levels. For one thing, many (probably most) business owners have overcome ridiculous obstacles to create and operate companies that do more than simply deliver money to their bank accounts – which is the primary purpose of most side hustles. Business owners’ economic impacts are also much different than those of giggers, which is another reason it’s irksome when imprecise writers and economists lump the two together in one giant “non-employed” category.
That assessment probably sounds harsh, which is not at all the way I feel. In addition to running a business myself, I’m a gigger from way back. I’d contend that most business starters are, since the need to self-support while growing a company is pretty much universal. But I never confused my weekends delivering telephone books with running a distribution business, any more than I thought I was in the catering industry when I hired out to hand-wash crystal stemware after weddings.
Which brings me to another concern about calling side hustles a business: By conflating the two, entrepreneurial folks lose the benefits of both. The whole point of a business is to create an enterprise that amplifies effort so that hard work now will pay off later – either in cash or passive income, or both.
Conversely, side hustles are about the here-and-now, not delayed gratification. They’re meant to be no-strings-attached opportunities to earn the cash you need for the moment, however long that moment may be. Hence, they can be long-term projects, one-day assignments, or 20-minute opportunities to run an errand for cash. The beauty of a side hustle is its low-investment / quick-pay nature. Just do the thing, collect your money and mosey on down the road.
Ample resources exist on the internet describing different ways to gig and hustle, and there are plenty of apps and web sites that can to help you find customers. But what if you want your side hustle to grow into a business? I love that idea. Trying out your business idea by doing some aspect of it on the side makes very good sense to me.
Still, it’s not a slam-dunk. To build a side hustle into a business, you’ll need to be clear-eyed about what the market is telling you. While it’s easy to shrug off the low pay offered by any particular gig, that won’t be a sustainable model for a business that needs to support you, and possibly others as well.
Following are five starter steps to help you envision the transition from gigger to business owner.
1. Experiment with your service or product. If you want to open a pet sitting business, for example, use gigs with a pet vacation service to learn what delights the customer.
2. Track your data. You can’t find your market if you don’t learn from your data. Are the clothes you’re selling online most popular with a certain demographic? Do they order more during particular months?
3. Learn how to scale. To scale a business means finding ways to expand an idea or process so it can be grown or replicated. Not to scale means you can’t pass the work to someone else, while reaping the benefits of their labor.
4. Stay legal. Some people see gigging as an opportunity to earn cash under the table. For a business starter, however, numbers are lifeblood. As an example, if you want to attract investors, you’ll need to show that you’ve been successful already. Tax returns or bank statements will provide that proof.
5. Pay attention to your feelings. Is this fun and interesting? Really? Because if it’s not, there’s no point in making it permanent. Keep gigging until you find something that meets this criteria.
Come back next week when I’ll wrap up this series of four articles for National Small Business Month with a look at business basics. Regardless of the form or style of self-employment you embrace, you’ll still need to run a tight enough ship to turn a profit.
Amy Lindgren owns Prototype Career Service, a career consulting firm in St. Paul. She can be reached at email@example.com or at 626 Armstrong Avenue, St. Paul, MN 55102.