Podcast: Two Cents' Worth
Two Cents’ Worth: a side hustle story
In February this year, Keith Hofer was running a successful small business in Hamilton, called Cut Shop, manufacturing kitchens, wardrobes, garage shelving, that sort of thing.
And then, on March 25, New Zealand went into Level 4 lockdown and suddenly... Hofer didn’t have a business any more. Just a load of machines with nothing to cut, and a load of overheads with no money coming in to pay them.
And he’s thinking: “Damn, I gotta get some money in. How the heck can we get some cash flow in?”
That’s when he came up with a side hustle.
Hofer figured everyone was stuck at home and lots of people were having to figure out how to work from their bedroom, or their living room.
So... they would need desks. But desks that were "super quick, super easy to put together", because in lockdown people can't nip out to the hardware store for the tools they need.
It took him a couple of weeks, but Hofer came up with a design, a prototype, and even a cool lockdown play-on-words name for his side hustle: Board at Home. And then he was ready.
“When I actually cut my first one out out of the actual pine and I put it together I was like, man, that is awesome,” he says. “And that was like 45 seconds and I've got a desk and it looks cool."
Better still Hofer's foldable desk side hustle, plus work he did cutting plastic protective screens for shops, brought in enough revenue to keep the business afloat during lockdown.
Hofer’s one of a growing number of entrepreneurs with side hustles. Even celebrities are getting in on the action, like Rihanna, with her make up range, or rapper Drake and his OVO clothing store.
And actually, many of our best-known brands began life as side hustles - Spanx, Twitter, even Apple.
The Finder product comparison site recently released a survey, which showed 41 percent of millennials have a side hustle.
“A lot of those people are boosting their income by taking on a side hustle. The most popular ones are selling things online through platforms like Trade Me or Facebook Marketplace,” says Kevin McHugh, Finder’s head of publishing in New Zealand.
But even GenXers and Baby Boomers are getting in on the action, with 31 percent and 26 percent respectively having a side hustle.
Is a side hustle just a part-time job?
Not exactly. A big part of it is to do with the internet. It’s not that side hustles have to be internet-based; lots of them aren’t. But side hustles are often internet-enabled.
For example, the Uber platform makes it far easier to be a taxi driver in your off-time. And Airbnb means you can rent out rooms, when you probably wouldn’t if you had to advertise in the paper or put a sign in the window.
Meanwhile, there are dozens of cheap and easy ways to sell stuff online.
The babysitting and the cleaning probably count as part time jobs. But the clothes, that’s a side hustle.
Maia is a regular teenager, but having a side hustle has already got her thinking about things like pricing strategies, customer preferences, and the demographics of her market.
“It's definitely teaching me about profit margins and catering to your audience and things like that,” says Maia. “Mostly I sell each item for $15 to $25. You don't want to make it too expensive because most people are quite young, and the reason they're buying is because they want to get clothes cheaper.
“I definitely keep in mind the demographic and what sort of things people would want and the style that Designer Wardrobe customers have.”
Maia raised about $600 in spending money for her family trip to Japan. But when she got there, pre-coronavirus, she didn’t just go on a shopping spree for herself. Instead she kept part of that money to buy cheap clothes in Japanese thrift stores. Then when she got back to New Zealand she sold them.
“It's really easy to do, you don't have to go out and work for hours and hours. You just upload the clothes from your bedroom and get a good amount of money.”
Side hustle motivation
While side hustles are often about making extra money on the side, McHugh says for some it’s a way to explore a passion.
"It might be playing in a band or crafting things and selling them online, but I think it's really important for millennials, because it's at that period in their lives where they're discovering what they want to do, and they're less tied down to one particular career path.”
TVNZ’s One News politics producer Jessica Roden fits into this category with her side hustle, The Naked Pantry
Roden loves her job working in the press gallery: “It's a really incredible honour to work in there.”
But she’s also pretty passionate about the problem of waste.
“Probably two years ago, I got quite interested in zero waste and just trying to reduce my own packaging, particularly single use plastic. And I found it was quite difficult.
“So, about a year ago, I started thinking whether there was a way I could make it easier for myself and for other people. And then about six months ago, I actually started working on my business.”
The Naked Pantry delivers groceries, but with no throw-away packaging. You order online, Roden gets the food delivered from local suppliers to a warehouse she rents, and she and her boyfriend Sean do the deliveries on Saturdays.
The products arrive with her customers in jars, glass bottles or cotton bags - and the customers give them back when they are done, so they can be re-used.
It’s a lot of work.
“I think I've probably tried to talk myself out of it a little bit. I already have a good job. I already have a really busy job. I don't have a lot of extra time,” Roden says.
“But I guess when it's something you're passionate about you make time for it and you make it a priority. It does require some sacrifices, but I was passionate enough about it that it was worth those sacrifices.”
Roden works on her side hustle before work, in the evenings and at weekends. And running a side hustle has got her into a few awkward situations, like the time her milk supplier called as she was waiting for a press conference with (now former) National Party leader Simon Bridges to begin.
“I had to say, 'I'm really sorry, I've got to go' and was really abrupt with it,” she says. “But most people now know that I'm a journalist as well. So they often ask 'Is now a good time to call or are you about to interview the Prime Minister?' and kind of make a joke about it.”
Side hustle dilemmas
It's not just employees that find there are positives and negatives about side hustles. It can be good - and bad - for employers too.
The Henley Business School in the UK released a research paper back in 2018. It found side hustles were generating about NZ$140 billion a year for the UK economy. That was roughly 3.6 percent of GDP.
It also said people with side hustles made, on average, 20 percent of their income from their side hustle.
Dr Naeema Pasha, who co-authored the paper, says having an employee with a side hustle can be a good thing. She uses the example of someone working in financial services who might be a yoga teacher on the side.
“You've got somebody who's thinking creatively, perhaps working with different group of people, they can start collecting ideas and actually come back into the workplace and that experience can enhance their work,” she says.
And people with side hustles often have good motivation and skills, which only helps with performance and productivity.
"You probably have a better sense of wellbeing, because you feel you're doing something purposeful. The employer is getting a motivated employee who's doing creative things, fulfilling different ambitions they have.”
On the downside, there can be issues with trust when an employee has a side hustle.
Pasha says misusing work resources - the printer, photocopier, even the company database - to build your side hustle is “crossing some boundaries over trust”.
But in reality, the Henley research showed employees tend to be pretty trustworthy when it comes to their side hustles.
“As human beings and as workers, on the whole we tend to be quite loyal and we want to do the right thing,” Pasha says. “So while a few workers might misuse that trust every now and again, our research showed mostly it worked well."
But what if your employer is only using their day job as a way to earn enough money until they can afford to launch their side hustle full time?
That’s just the risk you’ve got to take, according to Pasha. The worker-employer relationship involves a psychological contract. "So you give something and you expect something back.”
But whereas in the old days that psychological contract often involved a job for life on one side and exclusive loyalty on the other, that’s not the case these days.
And post-Covid-19, things are even more uncertain.
“One of the reasons people take up side hustles, in addition to the passion side of things, is because it gives them another form of income. So from that perspective, we will probably a rise in people doing side hustles, because it's seen as security.”
Side hustle pitfalls
If you are seriously considering a side hustle, remember that you will still need to pay tax and you might even need to think about ACC and GST too.
And sometimes you are going to find yourself really busy, for limited returns. Keith Hofer found this out the hard way, as he looked back over his time in lockdown.
“I have been extremely busy and to be honest, coming into this week, I said to my wife: 'Man, I would have liked to have a break like everybody else.' But sometimes being the owner of the business means you have to get creative.
“And every dollar counts.”
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