Hi, I currently have a side hustle going which requires around 15 hours work per month.
Financials (monthly)
- Revenue: $3,500
- Costs: $2,700
- Profit: $800
- Profit Margin: 23%
- Return: 30%
Unfortunately, scaling the business will not improve margins.
I'm now unsure whether it is worth continuing or stopping as the margin and return just doesn't feel enough to justify the opportunity cost. Especially during the ongoing recession where crypto, stocks and index funds are all so heavily discounted so I feel investing during a bear market would deliver a greater return than this side hustle over the long term.
For example (not saying this will happen but just as a hypothetical) buying Meta now would deliver a 250% return back to its all time high price whereas my side hustle is only a 30% return.. I feel I'm wasting money and not sure if I should continue or not.
What's everyone's thoughts?
Do you like this hustle, or is it a job.
I have a side hustle that pays nearly nothing. But I like the activity and do it entirely on my own time when I want. It’s helped me practice speaking skills if nothing else to improve on formal presentations.
Yeah that's a good point to think about, I don't mind it as it's pretty low maintenance and I can do it all from my personal laptop in my own time.
However, the only reason I'm doing it is because of the income, so I view this as an online business rather than a side hobby. But unsure if the return is worth it or if it's better to just invest it into the stock market.
This is the question, is it worth the effort? I am a skydive coach, when our DZ gets busy and even if I’m doing fun jumps I’ll help students. I love teaching/coaching. There have been times where I was out late and our school house called me early because there were a ton of students. I hop right up every time. The money is marginal, but I love doing it.
What is the side hustle? If you don't mind me asking.
Me?
I don’t want to say specifically as it’ll doxx me completely.
I have a nerdy hobby (think something like shuffleboard or archery) and there are monthly meetings/events for this hobby. I’m one of the registered ‘trainers’ for folks if they want to get started in said hobby. I do a presentation, demonstration, and instruct them how to begin.
It pays nearly nothing! But it’s something that I enjoy participating in and helping others learn. It’s not like working at a help desk where you’re approached by people angered by problems. You’re working with people who are out to have a good time in a leisurely hobby. Good times!
Are there fixed costs you’re not sharing? Seems like a no brainer. So long as you don’t despise the hobby, it’s a great way to churn a 30% return year over year.
Not to mention, who's to say you can't invest that side hustle money too? You mention markets being at a discount, so you'd effectively have more buying power and can DCA. Ladder your two ideas into one plan for max ROI. Otherwise I don't blame you for spending that side hustle cash on your favorite frivolities either and as they say, "Treat yo'self!"
This is a good idea I guess after every month I could invest the $800 profit into the stock market
Hire an employee to run it and reap the annuity steam
Thanks for the suggestion but unfortunately this wouldn't work, it's not profitable enough to hire someone, it would destroy my margins. Also, it's pretty easy work so I don't mind the 15 hours per month.
I was more thinking whether or not it's worth me spending $2,700 a month to run it, or if I should be investing that $2,700 into the stock market for a better return over the long term.
Your ROI (profit/invested capital) is 30%—this will be your long term return versus any other investment class. This is better than the long term annualized returns of the stock and bond market. Therefore, this is a good use of your money and time.
But over a 3 year period isn't it better to be in stocks for the total return? E.g. hypothetical in 2026 Meta returns to ATH that's 250% gain vs my business only delivering me 30%? Or am I thinking about this wrongly
Unless you’re a really good stock picker and you can construct an equity portfolio that will yield you ~30% annualized returns, you should continue to be in your business.
FYI, I would love to own that kind of business…Any chance you would put it up for sale?
ahh gotcha so I should be comparing it on an annualised return basis rather than total return?
Yeah I would be interested in selling it if there was a good offer but it operates in a pretty unique and niche sector so not sure if there would be any potential buyers out there, but I think if someone looked into it and saw the results they would love it so perhaps it might be worth me considering.
However, I'm confident it will generate more revenue and become a lot more profitable once we're out of this recession e.g. before the recession it was generating around $8k revenue with the same $2,700 cost so $5,300 profit per month for a business which pretty much runs itself apart from around 30 minutes per day of maintenance work. So feel if I was to sell it I'd get a much higher valuation if I wait until economy recovers.
How much do you think I would be able to get for something like this? I don't work in Technology IBD but I feel software companies with high margins are easily selling for 6-8x revenue. Assuming for FY23 I could get it to $50k per year that would be $300-400k. If I got an offer in that range I 100% would accept it.
I mean, what is your time worth? You need to factor that in to the ROI to compare to an alternative use of capital that wouldn't take time.
This poster is on to something. If I were you i'd go through the following checklist:
1.) is the $9,600 needed for living expenses or anything else critical; if yes keep at it if not on to number 2
2.) do you enjoy it? if no then stop, if yes on to number 3
3.) are you track for your career ambitions and/or can you make multiples of this in that career? If not on track and targeting high earning career then think time better spent there than at $53 per hour comp you're getting for this so stop the side hustle; if on track then go to number 4
4.) I wouldn't just focus on margin and rate of return- if you can earn 100% annual return on $50 (to use an extreme example) but that return falls dramatically as you move from $50 to $100 then that is far less attractive than being able to earn 15% per year on $1 mn (again to use an extreme), but point is to think about how much cash you can generate as well assuming time is not a constraint- if you made it this far i would put the earnings from the business into the market because while it is not needed for living, you enjoy it and don't have something better career wise to spend your time on (again assuming you have enough time for leisure)
Addendum: I would spend some time thinking about how big you can grow it and how long it will take and how much time to maintain there bc then you can rerun the analysis with the updated numbers for a future state. good luck
Why is everything margin? Look at the large cruise line companies… they’d KILL for 30% margin.
If you scale it, at 30% margin, you’ll still have 30% profit but on a X multiple scale. 30% of 1m is 300k profit
what is your side hustle ?
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