Transcript of the recording:
Newer and older generations are scrapping for cash left and right.
Side income or ‘side hustles’ are usually a great way to supplement your additional income but most of the YouTube content or blog articles I read glorify the side hustle business.
I have been in business (in different areas) for almost two decades and experimented a lot with those so-called hustles.
I made my list of SOME of the worst side hustles a beginner can start.
Emphasizing BEGINNERS because seasoned people with more commercial or business acumen MIGHT be able to succeed.
Number #1 Dropshipping
In the golden years of e-commerce, I ran a dropship store myself. And it was profitable. Insanely profitable for 2 years straight until… it didn’t.
What those YouTube gurus fail to mention is that it takes a lot of work.
A LOT. They only mention the upsides and make it look so easy to ‘make a quick $500 per day’. Except: they only count gross sales and never reveal real numbers after taxes, sales, and net earnings.
A few years ago I wanted to test dropshipping again. Not to make money but to stress test the competition. And it was brutal.
In fact, I netted negative, and here is why:
- The cost of running a dropship store has significantly increased
- The cost of running Facebook or IG ads has increased due to the competition and COVID.
- When the costs increase but the margins of the product are the same, you earn less than before
- Lots of suppliers disappear and so do the products after putting in SEO efforts
- Catching traffic through Pinterest is a hell of a lot harder than before
- You will need to put in hundreds of hours to create an e-commerce that people trust
If you are a beginner then dropshipping is NOT the way to increase your income unless you racked up enough experience in the field.
If you decide to continue, expect to spend around 3-5K USD in total costs and see it as a long-term growth project.
Number #2: Day Trading
Okay, this one is a bit special to me. I have been a day trader myself for almost two decades. I had my fair share of swings, gone broke a few times in my earlier days and it’s a rollercoaster of emotions.
Don’t get me wrong. I LOVE day trading and it helps me boost my financial liquidity or wealth. But this is NOT an endeavor I would ever recommend for beginners.
Day Trading requires:
- Financial Acumen
- Hundreds of hours of study
- Being obsessed with financial markets
- Have a strong mental game
- Expect losses every single day of the week
Beginners often fall into the same trap. They see a few ‘Forex gurus’ on YouTube making it look so damn easy but none of them proved how successful they are.
What’s ironic is that those same people sell courses when their track record is hidden or unknown.
If you want to pursue a day trading career, then tread carefully and expect your first capital to be your education.
It’s inevitable that one way or another you will give it back to the markets. So don’t get blinded by those YT videos showing nothing but profits.
The chances are that they are either fake or legit day traders who put in thousands of sweat, blood, and tears in their study and capacity.
Day Trading is volatile, high risk and if you’re strapped for cash, then this mindset will play into making the wrong decisions.
Number #3 House Flipping
A while back one of my friends had extra cash to spare and approached me with the idea of flipping houses.
She explained to me why she decided to go that route and I put her to the test.
3 questions in and she already felt discouraged by the idea.
It seems easy. But here are some of the downsides of house flipping:
- Inexperienced people don’t know how flawed the house is
- There are often more unexpected costs than we anticipate
- There is no guarantee you can sell the house for a higher valuation
- An empty house costs money in case you can’t sell it
- Finding the right contractors to fix the home is a tough job and can be a hit-or-miss
- Real estate markets shift along with the economic sentiment
- It’s too high risk to commit a huge portion of cash to brick-and-mortar
If anything you would need a much larger bankroll than just buying one house to flip to reduce the risk and variance coming your way.
In theory, it looks good in its merits but will often fail in its execution for newbies.
Number #4 POD – Print On Demand
POD is BRUTAL. Just like dropshipping.
I’ve seen some of those TikTok Vids popping up about how easy it is to flip up a design in Canva and then throw it on a t-shirt or hoodie.
Yes. That might be true but here are some of the downfalls:
- You don’t control the quality and are at the mercy of the supplier
- The margins are utterly slim and one refund or return can kill your profit
- It’s clothing and apparel and they have the highest return rate in e-commerce
- The competition is way too high
- Your offerings are very limited to what your supplier has to offer
- The only way to fast-track sales is through ads, which can be expensive
- You would need a real designer to craft unique designs outside of those free apps like Canva
Again, this model is great if you have enough experience in commercial acumen or affinity with e-commerce. But not recommended for beginners.
I would do POD if I were a successful influencer building a brand via Twitch, YT or IG but not just randomly create a store.
Final Note
I strongly believe that you should avoid them when starting.
Most of them require a huge luck factor or a bigger wallet than anticipated. They are all high-risk and high-variance side hustles.
What looks simple on the outside might not be as easy on the inside. I don’t get why lots of bloggers or influencers call these ‘side hustles’ when some of them require full-time attention.
I think there are better ways to get a side income when you’re inexperienced with a lot less risk.