Profit from your side job: 7 ways to succeed in the gig economy and make real money
Think it’s impossible to make a healthy income from your side-sharing gig? Many entrepreneurs entering the gig economy hope to make at least a few extra bucks to supplement their day job salary, but find it challenging to forge an actual living from renting their pad, driving people to the airport or selling artisan items online.
In fact, approximately 85% of gig workers make less than $500 a month, according to a new analysis by financial analyst company, Earnest. Examining data for more than two years, Earnest scrutinized pay periods per side gig worker at companies like Airbnb, Lyft, Etsy, TaskRabbit and more. Most made less than $500 a month, but Airbnb hosts seemed to do the best, averaging $924 a month.
One example of someone killing it on Airbnb is Tamela Ekstrom-Derian, owner of Haven Real Estate + Design, and her graphic designer husband Evan. The couple said they make well over $1,000 per month with their Airbnb. And no, their house isn’t situated on a beach or in a trendy Manhattan neighborhood, but in Ferndale, Michigan, a quirky suburb of Detroit. Built in 1928, the three-bedroom storybook stone cottage attracts tourists, visitors who want to move to the area, as well as corporate executives and even filmmakers.
“Today we have an engineering company that has three employees meeting on our huge covered, stone porch,” Derian said in a phone interview. “It’s raining outside, however they are covered and are drinking coffee and eating scones and working on a project.”
So how can you maximize your side hustle to make your dream of being an independent business owner come true? Side-sharing gig workers and companies share their secrets.
Offer something unique
So what’s the magic behind Derian’s Airbnb game? There isn’t a single potion, but one key differentiator is how the couple strategically designed the rental’s interior not only to reflect the character and grit of Detroit, but also to showcase the couple’s artistic flair and personal artwork throughout the property. Derian also credits her success to making smart upgrades like adding a king-sized bed in one of the guest rooms.
Kasia Wisniewski, an Etsy seller and owner of the 3-D printed jewelry design company Collected Edition, says uniqueness is key to her business strategy as well. “You won’t find anything I create anywhere else, which really differentiates my business from the rest. I use no premade components and design my pieces from the ground up,” she said in a phone interview.
What started as a side gig four years ago is now Wisniewski’s full-time job. And she’s not alone: 33% of Etsy sellers are able to make their creative business a full-time job, an Etsy spokesperson shared in an email.
Go the extra mile on customer service
Rather than just picking up people in your car or listing your products or home online, optimize what makes your offer amazing. For Ekstrom-Derian, as an Airbnb host that means offering local tours for a true insider peek into what it’s like to live in metro Detroit. “I customize the tour to the visitor’s interests and what they are looking for in a neighborhood and house style,” she said.
Ride-hail drivers, on the other hand, can raise their ratings and stand out from others by refraining from playing music, using their navigation system like a pro and having a backup plan in the event they run into traffic. The Rideshare Guy blog notes that showing knowledge of the city and creating a calm, peaceful environment can lead to a winning strategy.
Calculate the upfront — and ongoing — costs of your side gig
Like any small business owner, you will most likely eat the costs to provide your wares. From wear and tear on your vehicle to purchasing materials to create your designs, most side-gig workers have some form of cash outlay that consumes part of the profits. So it’s crucial to do the math on those costs in advance and figure out a plan for how you’ll cover them before your side job starts turning a profit.
Each side gig has its own unique set of expenses, with most not being a one-time charge. For instance, Airbnb hosts need to consider tax implications, insurance, cleaning, service fees, maintenance and upkeep charges, the Washington Post says. Rideshare drivers, on the other hand, should be aware of how driving those extra miles impacts the wear and tear on their vehicle, not to mention gas. Expect gas to suck up 10% to 15% of your earnings, Ridesharingdriver.com says.
Whether your funding comes from savings or extra earnings from your main job, you need cash set aside for these expenses or you’ll wind up in debt.
Snap up freebies and incentives from gig economy companies
One way to help your cash flow is by taking advantage of any resources offered by your gig economy company like Fiverr, Uber or TaskRabbit. For instance, Lyft drivers can make more money when they drive during Power Zones, certain times of day when drivers can make more cash per ride. Lyft also offers a Driver Console, which allow drivers to spot high-demand areas, track their earnings and identify promotions and events in their area.
For handyman locator service TaskRabbit, each member of the community can optimize their profile through their own unique URL. “This personal website gives them an opportunity to list all their skills and rates, along with client reviews and task-completed counts,” Kathryn Kelly from TaskRabbit said in an email. Taskers, as workers are called, can share the URL to promote their personal brand.
Some side-gig companies even offer ways to lower your expenses. For instance, Etsy offers 30% off shipping costs for USPS, FedEx, and Canada Post. Ask your company how they can provide cost relief.
Find synergy between your day job and your side hustle
Some successful professionals find a way to weave their “day job” into their side hustle. For example, driving for a ridesharing company could allow you to network when appropriate.
While driving for Uber, Dar Sandler was also building a fintech company and used time in the car to make connections. “It’s a great way to network, especially if you’re in Boston or New York where you’re driving people with a little bit more wealth and status,” he told Fortune. “Although the irony is that a lot of times they view you as just a driver.”
As a realtor, Ekstrom-Derian found Airbnb to be a great way to procure clients. “I sort of backed into this and the idea only came to me when a friend moved back from China and rented our house while she and her husband looked for a new home,” she said. “A few more people ended up renting our house while house hunting and the idea came to me to offer my re-location services to Airbnb clients.”
Market on social media for free
When you’re building your business, it’s important to keep your costs to a minimum. So take advantage of social media to amplify your returns.
Instagram is a smart choice if you are displaying a product, but also consider Facebook, Twitter and LinkedIn, especially if you offer a professional service. Be consistent about posting to create groundswell and momentum.
To get the best returns on your digital marketing efforts, consider taking a crash course on search engine optimization (SEO). Even if your gig is selling T-shirts, you’ll still want to optimize your online storefront (beyond your gig’s site) to rank higher in online searches. You can even teach yourself for free using this guide from Moz.
Know when to pivot your business plan
The key to business success is understanding when something isn’t working and honing in on what is. As a gig economy worker, it’s important to be open to constructive criticism from your customer base and make adjustments.
For Airbnb hosts, that can mean changing the minimum stay requirements. Although a longer-term rental is more favorable, Ekstrom-Derian recently started allowing for one-night stays to accommodate demand and remain competitive. “We have to tweak our offering every once in a while, which meant allowing for single-night reservations,” Ekstrom-Derian said.
Jewelry designer Wisniewski listens to her customers as well. For example, a custom-designed bracelet featured on her Instagram page generated such a strong response that she plans to start offering it as part of her fall line.
Bottom line: You can turn your dream of being an independent business owner into a full-time reality. But like most business owners, you’ll have to be prepared to dedicate the time, creativity and money to make it work.
Sign up for the Payoff — your weekly crash course on how to live your best financial life. Additionally, for all your burning money questions, check out Mic’s credit, savings, career, investing and health care hubs for more information — that pays off.