As Americans struggle with covering everyday expenses, a side gig can seem like a promising second income source. However, not all side hustles are equal in terms of earnings, skill requirements, flexibility and commitment.
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In an interview with GoBankingRates, Paula Pant, host of the “Afford Anything” podcast, discussed three categories of side gigs and their long-term scalability. Here’s what they involve and how to tell which might be the best fit.
Doing Gig Economy Work
The first bucket of side gigs is working for popular gig work apps. Examples include earning cash by delivering orders for Instacart or Shipt, working as a Lyft or Uber driver or signing up with Rover or Wag! to take care of other people’s pets.
Such side gigs can be appealing since they’re very flexible and easy to get started with. They usually don’t require a special skill or educational credential, and side hustlers have control over when and how often they work. So, if fitting work into a busy schedule is a priority, gig economy work might be the right choice.
However, Pant said these side gigs are best suited for short-term money needs, such as emergency bills or big purchases, rather than a serious source of ongoing income. While the money may suffice for college students with limited bills, other gig workers will likely find the hourly pay potential limiting.
“So it’s a stepping stone, it’s a band-aid, it’s a temporary measure, but it’s not where I want you to stay long-term,” Pant said.
Pant also wrote on her “Afford Anything” blog that these gigs aren’t ideal for building customer relationships and often require providing the platform with a cut of earnings.
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Trading Skills for Cash
Leveraging adjacent skills to connect with potential customers can be a more rewarding alternative to gig economy work. It allows workers to set their own higher rates, find unlimited customers and expand service offerings rather than stay stuck with what a particular platform has.
Pant once mentored a woman who was a bartender and server. Since this woman was good at art and an animal lover, Pant advised her to do free sketches of dogs at a dog park, where she could connect with pet owners and offer to walk or sit for their pets. Eventually, the woman could move from walking dogs to landing art and costuming jobs.
According to Pant, the relationships formed are what help with earning more money for skills. As happy customers spread the word, the side gig can provide more opportunities to develop a sustainable income source.
“Rich people have word-of-mouth referrals,” Pant said.
Offering services independently does take more work than signing up for gig work apps with existing customers. It requires having in-demand skills to market and spending time networking with others who need services. Ultimately, this type of side gig is best for people who have the time, skills and willingness to put in a long-term effort for extra money.
Making Products to Sell
The third type of side gig involves creating products to sell. Compared to offering services that require trading limited time for earnings, this is a more scalable option that allows potentially putting the time and money into making something once and then selling it unlimited times to earn passive income.
Pant gave product examples such as paper planning calendars, windshield wiper repair kits and online training courses. The digital or physical product offered doesn’t necessarily have to be something innovative but rather an in-demand thing that fulfills customers’ needs.
Niching down to a particular location or industry will be helpful for attracting customers most likely to buy the products.
“There’s that expression, ‘The riches are in the niches,'” said Pant. “The more that you can tailor that particular product to a very specific audience sub-segment, the better.”
It’s also possible to turn existing services into products. Pant worked as a freelance writer before she started a content management agency. While she hired others to do the writing, she helped various businesses with their content calendars and editorial calendars.
Out of the three types of side gigs, this one requires the most investment upfront to understand the market’s needs and develop and market the right product. Running this side gig will also involve ongoing work distributing products and possibly updating offerings based on changing customer needs.
However, hard work and dedication could lead to a full-time income for those who are creative, market savvy and interested in establishing a long-term business.
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This article originally appeared on GOBankingRates.com: Finance Influencer Paula Pant: Side Gigs Come in 3 Buckets — Which One Is Best for You?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
