Would you call someone who starts a side hustle an entrepreneur?
That’s the problem with side hustles. They usually start with “fun” and, from there, end up in “business.” As a result, the true nature of side hustles can confuse you.
Should you worry about side hustles the same way you worry about your day job? Or should you care nothing if a side hustle succeeds or fails?
Well, nobody likes to fail, but nobody wants the burden of worry, either. Do you see the problem?
As with anything in life, a side hustle is what you make of it. If you don’t want your side hustle to fail, you’re going to have to accept a little worry every now and then. If you don’t want to worry, you’re going to have to accept failure.
Which poison do you choose?
If you picked “I’d rather be a success than a failure,” then you may keep reading as the answer to the lead question will be revealed.
Not only the answer to “Would you call someone who starts a side hustle an entrepreneur?” but also the significance of that answer.
A side hustle is, by definition, a business. Therefore, a side hustler is an entrepreneur.
Entrepreneurs come in all shapes and sizes. They’re not all Bill Gates and Steve Jobs. Some are the kids selling lemonade on the corner of your subdivision (although, more likely, at that age, they’ve already got a monetized YouTube channel).
If you’re running a side hustle, you’re running a business. It’s not quite a startup venture, but it may turn into one. In the meantime, should you use the same success metrics for your nascent side hustle that you’d use for a startup business?
“To measure success in your full-time startup business, I think is very similar,” says Dielle Charon, who runs her own sales & money mindset coaching business in Raleigh, North Carolina. “What do you have as goals? Is it a monetary goal, a lifestyle goal, or even an impact-driven goal? No matter the side hustle or full-time job, you can set the pace of what success is to you, and that is your measure.”
Side hustles can be fun. They probably should be; otherwise, why start one? Still, they need to bring in enough money to at least pay for themselves, if not achieve some greater personal financial goal. To that extent, you’ll need to use the typical “numbers” to determine if your side hustle is a success.
But, while the system of measurement may be the same as those used for startup ventures, how you use them will differ for side hustles.
Success Metric #1: Profitability Priority
Here’s the biggest difference between a startup and a side hustle: you need to make a profit in a startup, but a side hustle is more forgiving.
“If you’re going full-time into a startup, it needs to at least cover your living expenses within a few months so you don’t burn through your savings or take on additional debt,” says Nick Loper, founder of Side Hustle Nation in Sammamish, Washington.
With a side hustle, you can actually use your day job to fund it for as long as you want.
Rafe Gomez of Montclair, New Jersey, knows this firsthand. He works a full-time job as the founder of VC Inc. Marketing. On the side, he started Danceteria REWIND. He says, “A full-time start-up business must be one that’s your primary endeavor and your chief revenue-generating vehicle. It’s the thing that occupies the bulk of your focus, energy, and efforts and hopefully generates enough income to pay your bills.”
Success Metric #2: Profitability Dimension
If “profitability priority” represents the biggest difference, “profitability dimension” stands out a magnitude larger. Why? Because a startup has the potential to reap much larger rewards than a side hustle.
You’re more accepting of smaller profits in a side hustle because the investment is much smaller. A startup, on the other hand, requires much larger profits to justify the much larger risks you’re taking.
“Success between a full-time startup is different to that of a success in a side hustle as a full-time startup should have some of the benefits of the side hustle, but the triggering factor here is profitability,” says Ali Smith, founder & multi-award winning dog trainer at Rebarkable.com in Westminster Maryland. “Because every entrepreneur has to make money, right? Otherwise, we’ll never be able to pay our bills.”
Success Metric #3: Growth Potential
In a similar vein, a startup has greater growth potential than a side hustle. You should include this in your expectations. For example, while you might demand a startup grow at 20% per year, you’ll accept a side hustle that grows are merely 5% annually.
“Measuring success in a full-time startup business often involves similar metrics to those used for a side hustle, but with a greater focus on growth and scalability,” says Pini Shemesh, co-founder & CEO at MyTower in Tel-Aviv, Israel. “In addition to revenue and profit, other common metrics for measuring success in a startup include:
- Customer acquisition: This measures how many new customers are being gained and how quickly the business is growing.
- Market share: This measures the business’s share of the market compared to competitors.
- Burn rate: This measures how quickly the business is using up its available funds and how much runway it has before it runs out of money.
- Valuation: This measures the current market value of the business, which can be a good indicator of future potential.”
Success Metric #4: Planning Rigor
You don’t simply grow in a vacuum. Growth requires planning. The more growth you expect, the more planning you’ll have to do. And the more planning you do, the more complicated that planning becomes.
“Measuring the success of a full-time startup business will still include the key performance indicators, but additional metrics tools are needed such as SWOT analysis, brainstorming, financial analysis, market research, trend analysis, and more,” says Sacha Walton, business strategist and CEO at SWI Management in Hampton, Virginia. “For example, establishing benchmarks to evaluate the systems and performance when determining if a business is meeting its overall goals. Strategic business plans are excellent for reviewing quarterly and annual success. Most small businesses and side hustles do not utilize the full capability of a business plan. It is an important metric to use, which in turn helps to build additional measuring resources.”
Success Metric #5: Exit Strategy
Finally comes the end. If you’re having fun doing a low-key side hustle, do you want it to end? Probably not. You might even keep operating it into retirement as long as you can handle whatever level of stress it brings.
The same can’t be said for a startup. After all, retirement entails moving away from your full-time business. The exit strategy for a startup entails far greater intricacy than quitting a side hustle.
“A full-time business gets measured differently than a startup,” says Christopher Mitra, executive leadership coach at An Inspired Life in Kamloops, British Columbia. “Entrepreneurs want to maximize sales and build a company, with many having a long-term exit strategy. There is a need to develop a solid business plan that looks at the market, competitors, growth and revenue/expense projections. Unlike a side hustle, the more work you put into your research and your planning, the higher the likelihood of success.”
Yes, your side hustle is a business. And, yes, you measure its success the same way you’d measure the success of a full-time startup business.
But it is the magnitude of those measurements that differ. Expectations for side hustles are much lower.
That’s why it’s important they have a much higher “fun” factor in a side hustle compared to your day job.
Unlike a full-time startup, you won’t find true side hustle success in the numbers but in your own lifetime dream.
Are you interested in getting more information on side hustle success? Here’s a free checklist to help you determine if your side hustle idea is in the sweet spot for success.