side hustle2

The Importance of the Side Hustle

Adam Business, Personal Finance 14 Comments

I’ve been a bit MIA from the blogosphere lately. The month’s worth of content I had written ahead of time has dwindled to about zero, my comments, guest posts, and what not have been on a very low level. Have I given up on the blog? Absolutely not!

Rather I’ve been working on my 2nd side hustle. One that is very different from the blog in pretty much every way. After being inspired by some other parts on the blogosphere, I launched my first Amazon FBA business. It was many many months in the making, with a lot of time, research, trial and error, but we are up and running. In the near future, I’m going to do my best to deep dive in to what I’ve learned and how we started, but today, I wanted to discuss a bit why I’ve chosen to work so hard on our side hustles.

Diversification & Safety

Got a paycheck each week? Good. It’s how most of us get by. But it has it’s weaknesses. Just as you shouldn’t put all your eggs in one basket in terms of your portfolio, same goes for your job. The more income streams you have, the better off you are. There’s no single problem that can destroy your cash flow stream.

So long as your company, industry, boss, or any other random problem can stop that paycheck in it’s tracks, you don’t have your freedom.

YOUR PAYCHECK IS NOT SAFE.

I live in Houston. In the past 6 months the oil industry has lost 200,000 jobs. Thousands of smart, hardworking, good people have lost their jobs, regardless of where they went to school, how many times they’ve been promoted, or how good their performance ratings have been.

This affects me as well. While I don’t expect to be laid off, it could happen any day. If it does, am I as diversified as I want to be? Absolutely not. I haven’t managed to recreate my paycheck from my side hustles. It’s certainly a top goal of mine, but we’re not there yet. However I would be a lot better off than average joe. I’ve got a decent chunk of savings, a small but growing amount of dividends coming in, a bit of blog income, and a growing source of cash flow from my Amazon FBA business. Between them all it’s not enough to live on yet, but it’s extremely diversified and growing. In addition, were I to be laid off, I think I would have the time to focus and a lot of these efforts would scale quickly because I’ve already built the foundation.

Let me repeat: YOUR PAYCHECK IS NOT SAFE

As I recently mentioned in my newsletter, the dentist who killed Cecil, regardless of your opinion of him, has had his life ruined. I’m sure someone who is used to success through all that school and has built a successful practice, never imagined their multi-hundred thousand dollar business being destroyed overnight.

If that dentist had 6 figures in diversified dividend income or apartment complex rents, then he could hunker down and wait out the storm. Same for rents from houses and apartments, or income from some other combination of side businesses (a blog perhaps?).  Ideally the answer is all of the above. Own an apartment building. Keep a diversified portfolio of dividend paying stocks. Buy a laundromat or build a blog.

Nobody at Hershey or Exxon is going to cut off your dividends because they don’t like hunting. If you structure it correctly, those protesters outside your office will continue to use your laundromat or liquor store or buy products from your website without ever knowing these are your assets. You can remain anonymous, which can sometimes be worth it’s weight in gold. Stealth wealth is often the name of the game.

Each new layer you add is a redundancy in your life. A way to sleep easier and breathe deeper.

Scalability

How scalable is paycheck? For most people, the answer is “not very”. Unless your on the executive track (in which case you probably don’t need this blog), your getting raises from 5 – 10% a year at the absolute best (maybe 20% upon the occasional promotion). This means that your path is going to be the slow path to financial freedom. There’s nothing wrong with this. It’s what the bulk of financial freedom community are doing. You’ll get there, it just may not be as quick as you would like.

A business is different. It allows you to take your human capital and leverage it. If you have a blog, you can reach millions. People like Pat Flynn, Ramit Sethi and others have shown that 1 person with a blog can build a scalable, meaningful business with a 7 figure income.

It doesn’t have to be a blog. We could name big names, like Bill Gates, Mark Cuban, or others on the Forbes 500. Those people are hard to relate to. It could also just be the local guy owns a few dozen laundromats in the area. He’s taking it easy, working 20-30 hours per week and managing his business. Same goes for the person who owns your local liquor stores or apartment buildings.

In addition, you can’t sell your paycheck at a multiple. A $1MM business is worth $5-10MM upon being sold. Can you do that with your job? Hell no. Once you’ve built an asset, it can be so much more. That’s how the rich get richer.

Satisfaction

There is a percentage of the workforce that genuinely loves or at least enjoys what they do. I think that label may apply to a lot of people in the medical field, teachers (maybe), and a variety of people across cube nation and other areas of life. However, I think that’s the minority. Most people range somewhere between dislike to mild indifference in their work.

Your side hustle can be different. It can be whatever you want it to be. You can create your passion project, work on your dream, or just focus on building a sustainable business that you can be proud of. There’s something immensely satisfying about building something of your own. Creating a business. Building a brand. Nurturing a community. There’s very little in the business world more satisfying.

Conclusion

Go find a side hustle (or 2). Don’t wait. Get started. Protect your wealth, your family and your cash flow. Create something you can be proud and maybe get rich in the process.


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Comments 14

  1. Dominic @ Gen Y Finance Guy

    Dude, loved todays post!

    Great job on building a solid foundation of diversification. All those little streams add up and probability says the more of those streams you build, the higher chance you have for a stream to turn into a gushing river.

    Cheers

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      Adam

      Thanks man. Had somebody ask me why I don’t relax more in my free time. Big part of the answer is my personality, but I thought this post explained a lot of their question.

  2. Thomas @ i need money ASAP!

    Love the side hustle. I started about 2 years ago now. I’ve been a bit lucky in that my 2nd project now brings in about $1,500 a month. Not enough to live on yet but it’s an awesome safety net. Good luck with your second project. Hopefully it goes well!

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      Adam

      $1,500 is awesome!I always like to think of my side hustles in terms of the stock I would need to own to get the same amount in dividends. That’s a $600k in stock you didn’t need to buy (at 3%) to get that cash flow.

      I hadn’t checked out your income reports before. You are killing the game!

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      Adam

      Most products on Amazon are sold 3rd party. If you see something on there, unless it specifically says “sold by amazon” it’s from somebody else.

      FBA is essentially shipping your product in volume to an amazon warehouse and then for a fee they handle all the inventory, distribution, shipping and logistics. I don’t have to box up and send out 20 packages a day.

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  4. Laura Beth @ How To Get Rich Slowly

    Hi Adam,

    I am really impressed by your tenacity and persistence in really all of your ventures. I cannot imagine myself starting a third. The blog takes so much of my time that I can hardly think of doing anything else! Hats off to you for understanding the importance of diversifying your income streams.

    I am curious about how you started the Amazon FBA and would love to read a post on that. Best of luck to you!

    Laura Beth

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      Adam

      I enjoy the blog but at least so far it’s not bringing in any real income for the huge amount of time I put in. It’s been really nice to switch gears a bit and do something with a much more immediate feedback loop and cash flow.

  5. Brian Robben

    Your scalability section is the main reason why I decided to start a blog. At this point I’m only making a couple of dollars a day, but the ability to scale and build more products is something I can’t do at my current job. Time to put my head down and hustle on my side project.

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