As investing royalty Warren Buffett suggests, everyone should strive to develop multiple streams of income. For those of us who rely on just the income from our careers, and considering many of us live pay check to pay check, we are one redundancy from catastrophe.
The purpose of this blog post will be to explore some of the many ways you can look to generate some additional income that you can use to build an emergency fund, invest into the stock market, fund any life experiences such as travelling, and to provide some additional security against the loss of any primary income source.
Service Businesses
This would be the traditional hustle of those in their teens to early adulthood where you have a lot of time to spare (though that is not to say those with a 9-5 job in the week, couldn’t use their weekend time to do this!)
Service businesses include traditional offerings such as washing cars, mowing lawns or power-washing driveways; there are many chores that time pressured adults would be grateful to outsource to you.
If these examples don’t appeal to you, then you just need to be creative!
Imagine, it’s the festive season, and soon homeowners will be decorating their houses with Christmas Lights – you could offer a service to put the lights up, with an upsell to remove them once the festive season is over.
Expanding on the festive theme, you could also offer a service to pick up the Christmas Trees that people want to throw away.
You can charge a fee to pick up the tree, but then could turn the trees into wood chippings which could then be sold on later for additional profit!
The downside of services businesses is that you have a limited amount of time, but while these businesses are not scalable as a one-person operation, they definitely could be expanded by hiring extra hands to help meet the demand from a wider set of customers.
Tutoring
If you have the aptitude for a particular subject, you could offer your services as a private tutor.
I have worked with many people that have offered their tutoring services to GCSE and A-Level students, but also to help with the 11+ exams that help young students get into selective schools.
There are many parents that will see this as a solid investment in their children’s future, so you can bet that the demand is very healthy!
One of the positives about this side hustle is that you can make this work around a day job too, with students typically looking for tutoring in the evening outside of school hours.
If you feel like you don’t have a particular aptitude for traditional school subjects, then you could take the TEFL course, and teach English as a foreign language.
There are people in many countries (e.g. China) that pay very well to practice their English with a native speaker – you just have to find them.
Dropshipping
At some point, you probably have stumbled on a video on YouTube that talks about the benefits of Dropshipping as a side hustle to earn some extra income. Some people will be initially sceptical, but it is a fantastic entry level business for anyone technologically savvy.
Dropshipping involves the sourcing of a manufacturer (usually in China), and then building a working relationship with them to get them to fulfil any orders for the products that they produce.
Where you can make your additional income here, is to sell such product using whichever platform you want (e.g. Shopify store with Oberlo, WordPress store with Woocommerce, directly on platforms such as eBay/Amazon).
The price that you charge the consumer will be greater than the cost associated with the manufacturer.
Let’s use an example:
You have found a supplier that produces high quality leather wallets, producing each wallet to order at a cost of £3 to you including delivery. You decide to list this product online at a cost of £10.
When a customer buys the wallet from you, they give you £10, you pay the supplier £3, the supplier sends the product directly to the consumer, and you pocket the £7 difference.
Dropshipping businesses come with the benefits of not needing to hold physical stock, and not having a significant initial outlay (as there is no need to bulk buy a product to sell); however, due to its low barrier to entry, many people can copy your business, and can whittle away that profit margin until it’s just not worthwhile to continue.
Dropshipping is the ideal starter business, because you can learn the key skills needed to succeed in business: marketing, branding, customer service, business relations, etc. that will be valuable if you decide to move into other business opportunities.
Despite the potential downsides, if you can find the right niche, then you can scale this business significantly and quickly!
Investing in a Personal Stocks/Funds Portfolio
When I say investing, I am not talking about gambling your savings into penny stocks, or random stocks in the market, I mean building a diversified portfolio that will continue to grow every year until you retire.
Whenever I talk to anyone about saving for their future, I always reference the incredible power of compound interest. Combine this with reinvested dividends, and you have a potent method to generate significant income for your future.
Let’s invest a hypothetical £200 a month each month into any of the low-cost index funds available on platforms such as Freetrade (Create an account using my link to get a free share worth up to £200!)
If you start this from the age of 25, and invest this same amount every month until retirement age (e.g. 67), with an assumed 7% yearly return, and 3% dividend yield (with reinvestments), then you will have £1.55m in your investment fund.
If you just want to live off of the dividends once you retire, then this will pay you £3,800 a month just for owning the stock!
One of the most powerful tools at your disposal in the UK is the Stocks & Shares ISA (or Roth IRA if you are in the USA), which will allow you to deposit up to £20,000 a year, and buy a set of shares, or funds.
Any capital gains, or dividends that you earn in your ISA, can be withdrawn completely tax free, or reinvested (without touching your £20,000 allowance!)
To me, this is one of the most important tools for future financial freedom that you can use, and my number one piece of advice is to ensure that you max out your ISA (Roth IRA in the US) allowance each year to benefit from this tax shield.
Earn Income from Real Estate
A traditional method to generate extra income is to invest in property.
There are many ways to earn a solid income from property; whether it is buy to let, or even flipping.
To start with a buy to let property, you need to have a solid deposit (usually 25%), and the ability to prove that the rental income from your property will be enough to cover the mortgage plus more.
Earning from property is usually measured in terms of it’s yield (i.e. income earned as a proportion of investment), but the fact that an asset is gradually being paid off is also something to consider.
Imagine having a 25 year buy to let mortgage slowly being paid off by tenants, and realising that by retirement, you could have a house fully paid for!
You can even reduce the amount of effort to look after the properties by finding management companies to take over the responsibility for the day-to-day requests (e.g. fixing broken appliances, drawing up rental contracts, finding new tenants, etc.)
Investors in property typically don’t let equity go untouched for 25 years though – traditionally, once enough equity is built up in a property, landlords usually refinance the loan to take out equity, and put it into additional rental properties.
You can see how the number of properties can increase exponentially!
If you have time to spare, you can also look at finding run down properties, renovating them, and flipping them later for a profit, but this is a bit more time consuming than being a landlord (especially if you find a management company to look after your properties!)
Creating your Own Product
If you are happy to have your own stock, you can go one step further than the dropshipping business I mentioned above, and find a supplier for your own products.
The reason many can be put off by this particular method, is that you need a significant up-front investment; however, the payoff can be far greater – the greater the risk, the greater the reward!
There are two common ways you could do this:
One is to create your own design for a novel product, and then either find manufacturers to produce it for you, or to produce it yourself.
This is the process I followed when I created my original watch brand “Karlson Laith”. It was an incredibly rewarding process, as my product was unique, and I received many compliments on the design, and still do even to this day with the old stock that I still wear!
A major issue that I had was that my designs were stolen by an Indonesian company, and no number of cease and desist letters stopped them from selling the designs I worked on for a year. This took my enthusiasm away pretty quickly, and I slowly liquidated the business.
However, another more common method is Amazon FBA. This involves finding a product that is already made by a supplier, putting your company logo on the product, and then shipping it to Amazon. Your listings will be live on Amazon, reaching millions of buyers, and all of the customer services, deliveries, warehouse storage, etc. are fulfilled by Amazon.
A lot of the success for your business comes down to how you manage the marketing – you can have a fantastic product, but if you cannot get it in front of the right people, then you won’t make sales!
Internet Influencer/Content Creator
We are truly in the age of the internet, and many internet personalities that have made careers on platforms such as YouTube, Vine, TikTok, Twitch, Instagram, are making a significant income online.
All you need to start is a video phone that you can record yourself doing something – when you build a following, then you can look at investing in more professional equipment!
Success online is by no means guaranteed (as with many businesses), but why should that put anyone off? Everyone who made it internet famous started from a similar place, but with persistence, hard work and creativity, have made themselves an internet success!
The purpose of this blog post is to show the numerous potential ways to start up a side hustle and generate a second income – it just takes a bit of creativity and thought!
