Every once in a while, you might find yourself dreaming of working for yourself, either as a full-fledged entrepreneur, or by testing the waters with a side hustle.
Plenty of people have second jobs, or “gigs” to generate passive or active income. In October 2016, a McKinsey survey found 20 percent to 30 percent (162 million individuals in total) of the working population in the U.S. and Europe acted as independent workers.
The first step to starting a side hustle
Simply starting the work is the hardest. To a degree, humans prefer routine over chaos, and the task of starting your own business is daunting. Even the decision to become a freelancer can be a difficult one to make, due to a fear of rejection or loss of time and money.
If you’re unsure whether your investment of time and energy is worthwhile, consider a small test job. If you want to start a business, do a few freelance projects in your free time; if you want to freelance, do some work for the professional connections you already have and ask for honest feedback.
Then, listen to that honest feedback. If you already have confirmation of skill from friends and family, work for strangers, who are likely to be more critical.
Stress and instability
One of the biggest challenges to maintaining a side hustle is the stress and instability. You will be completely at the whim of the market.
When you work a traditional payroll job, you’re paid an hourly wage or on salary, with consistent work flow. As a freelancer or business owner, there’s no fallback work. You perform the work you receive, but if no one wants your services, you have no work. You can’t sort the stockroom to keep busy and still get paid.
This instability and constant precariousness in terms of available work leads to stress. To counteract stress, independent workers have a tendency to emphasize productivity. For those new to freelance work, productivity can be a guiding light when stress and instability seem too great.
The eternal struggle to maintain high productivity might leech into all aspects of the your life. Due to the grounding principles laid out in the Harvard Business Review article linked above, the work quickly becomes your identity.
A failure at work becomes a failure in life, because there is no formal structure to delineate professional and personal life. Maintaining a separation (even if informally) is extremely important to avoid burnout and depression.
Fear of loss and separation of funds
For those who fall into the “out of necessity” category in the McKinsey study, financial loss is a major driver of stress for freelancers. But even for the preferred categories, it is important to separate personal assets and business assets. This is especially true for those involved in businesses with two-way cash flows; those who need money to run the business.
Freelance writers, for example, may be largely compensated for their time only. There are few expenses related directly to their business.
On the other hand, an Uber or Lyft driver must pay for gas and car maintenance. Without cash outflows, they simply have no business (a car doesn’t move without gas or considerable amounts of electricity).
Fear of loss might paralyze someone interested in independent work. After all, losing your life savings after 10 years of hard, corporate-based work, with nobody to blame but yourself, is an extremely distressing possibility. The thought might even prevent some from embarking on the path in the first place.
Working as a solopreneur or starting your own business has plenty of positives, like the freedom to choose your projects and clients, along with the possibility of better pay (if there is a strong market). It’s important to avoid the pitfalls, though. Do not dive headfirst into the fray: keep your day job until you can ascertain your abilities in the independent marketplace. You might need to develop particular skills or hone your craft further before anyone will pay for your services.