How To Build A Side Hustle That Actually Works (Step-By-Step Guide)

Most side hustles fail, and it's not because of your idea. It's not because of your marketing strategy. It's not because of the color of the buy button on your landing page. Okay? It's something a lot more fundamental than that. Today, I'm going to share with you 3 specific conditions you need to have to make sure your side hustle succeeds. I have Nicole Baldino, who's my co-founder, the executive producer of the show, and she'll be helping me with Q&A Wednesday.

I'm excited to be here. Today's question comes from Mandeep. Mandeep asks, I've been trying to build a side hustle for over a year and I keep starting and stopping. I have the idea, I have the motivation at the beginning, but something always gets in the way and I never get any real traction. What am I doing wrong? Okay, Omar Zenhom, before you answer this question, I want to name something because I think most people listening to this are probably thinking or have felt the same guilt of starting something and then stopping, or maybe even that embarrassment of having announced it to people and then stopping. And maybe there's a confusion as to why this is happening. So I I guess the real question is, is this a Mandeep problem or is this just how side hustles work?

I think it's a structural problem. I don't think it's a Mandeep problem. I think a lot of people, they think that building a side hustle and growing a side hustle and working on it is easier than it is. You need to create a structure, a framework, an environment, an environment that's gonna allow you to be successful with the limited amount of time you have. And we're gonna talk about how much time you should spend on a side hustle, so that you have some leverage, you have some traction, have some success.

Like a schedule as well?

Yeah, we're going to talk about all of that. But the point that you just made about people failing and then trying again and picking up where they left off, the bottom line is, is that you got to get serious about if this is a priority or not. You know, often people's side hustle is their Plan B. What I want to encourage everybody who's watching and listening is you want to make your side hustle, not even call it a side hustle, your business. Even though it's part-time right now, is your plan A and your current job is plan B, right? That is what you're gonna be doing for the long term. And the reason why I say this is because things will come up, right? Game night's gonna come up, you know, a friend's gonna call you up just visiting out of town and you're gonna always kind of sacrifice the side hustle or not do what you're supposed to be doing because it's not plan A, it's plan B. So we're going to talk about prioritizing, how to make it a priority, how to create boundaries so that you can be able to turn that side hustle into your full-time thing eventually.

I feel like we need to rename side hustle.

Yeah, well, I'm going to talk about that too. I mean, like, the language does matter. I mean, I, I, we were going to talk about the idea of validation, the point of the side hustle in the first place, but let's not get ahead of ourselves.

All right, so does that mean then side hustles are impossible? Do you have to quit your job?

They're not impossible. Um, I side hustled for over a decade. Before I went into full-time entrepreneurship. And I do believe that side hustles have a lot of merit. But today I'm going to share 3 conditions I believe that you have to fulfill in order for you to have any kind of traction or any kind of success with a side hustle. This is just from my own experience. But I also want to say that side hustles are great for learning. All right. When you're starting this path in entrepreneurship, you have to learn business. You have to learn how to find your voice, how to find the right product for your audience, how to build an audience, how to market, how to sell, how to do finance. How to make a hire. These are all moments of learning. And side hustling is a good environment, a safe environment to learn that. You can make some mistakes and it's not a catastrophe because you still have your paycheck. And I learned a lot of things through mistakes through my side hustling days. So you could also see this as a training ground for you to learn business.

Mm, I love that. Because it's like, yes, you have to have the structure, the schedule, you have to treat it as a priority. But at the same time, keep in mind that, okay, there's still this safe zone of I'm learning and it's my opportunity to learn now before things get really serious and it's my full-time gig.

Yeah, I mean, the stakes are a little bit lower because your income is not dependent on it. But at the same time, you want to put some pressure on yourself and some accountability, which we'll talk about in one of those three conditions I talked about earlier, because you want to make this your full-time thing. You don't want this to be a side hustle forever. I personally thought I side hustled for too long, and that's why I'm sharing today's lesson and today's, you know, answer to the question, because I think that that's my biggest regret is I didn't go into entrepreneurship full-time earlier.

How long did you side hustle for?

10 years.

Okay.

It's a long time. And I had a lot of failures in that time. And the internet was very young at the time. I started in 2000 and— one, when I started building businesses on the side. And then it took me about 11, 12 years till I had like a full-time business that allowed me to kind of go full-time, yeah.

Okay, so what are the conditions then? That accountability, that structure, the schedule, all of that.

So I've mentioned this before, but it's worth reiterating. My first condition with any side hustle is that you need to put in the right amount of time. You can't, just tell yourself, "I'm gonna do it whenever I'm free," or, "When I have a couple hours on the weekend." No. In order for you to have any kind of traction and to be able to build something that actually makes you money and has the viability of making it your full-time thing, I believe you need to put in at least 15 hours a week. Now, that may sound like a lot because most people, you know, work 40 hours a week. Where are they gonna get another 15 hours? Well, this is what I did when I was side hustling and when I was in my full-time teaching gig. I took Tuesdays and Thursdays after work. I would leave work and I would go into a coworking space. And at that coworking space, I would do about 3 hours. So 3 hours on Tuesday and 3 hours on Thursday. That's 6 hours. And then on Saturday, I did like 9 hours, a long day. So it was like 15 hours. Yes, that meant I only had 1 day off for the weekend. But I was willing to sacrifice that 1 day a week plus those evenings for my future. And I was having fun. I enjoyed it. I learned the— I love the challenges and I learned so much in the process. And I met so many interesting people at close coworking spaces. But that's the first criteria is you need to block out this time. You got to see this as like a part-time job. Like you can't just like quit on this job or not show up. You can't flake. That's why I like this idea of having dedicated time on your calendar and a place to go. And if you don't want to go to a coworking space or maybe you can't afford one right now, you can go to the library. Public library is a very quiet, nice space with good internet. You can go to there. You can go to a café if you know, if it's open or a place that you can just get some work done. But the point I'm trying to make is that you have to see like you're clocking into your business.

I think the only thing I would say there is if anyone's feeling like 15 hours is a lot, we know that some people have multiple jobs, family obligations. There might be a bit of resistance or pushback. So maybe like whatever's realistic for someone to like be be honest and say, okay, I can carve out 5 hours for sure. That's not going to be too unrealistic. I think the point you're making is whether it's 15 or 5 hours, it's that you're committed to those hours and that you set it aside and you stick to that commitment.

I don't agree with that. I just think that 5 hours is not enough. I don't— 5 hours is just not enough for you to have a sustainable business. What do I mean by that? Because If I put 5 hours a week versus 15 hours a week, it's going to take you 3 times longer to see any results. And I would even argue it's going to take even longer because you don't have the power of momentum and compound interest of that time. So I really believe that willpower and, you know, the desire to succeed, you just— it's not unlimited. You can't just be like, okay, I'm going to wait 7 years for the side hustle to work out because I'm putting in 5 hours a week. You know, with 15 hours a week, you could start seeing some traction within the first few months. And that's really important in the beginning. I really believe that even the tiniest wins in the beginning give you that motivation to keep going, to recommit, to, to spend more time, to spend more effort, to spend more money. You're going to spend money in this business. In my honest opinion is that if you only have 5 hours a week, then you need to carve out some time somewhere. You need to figure out how you can cut out maybe some things that maybe you enjoy, like watching movies or Netflix or maybe time with friends, or even if it's just a season, even if it's just like, I'm gonna— for the next 3 months, I'm gonna put 15 hours— you're gonna see some results that are gonna make you feel like those sacrifices weren't huge. Like, well, I'm willing to sacrifice for these wins, and you'll get the traction.

Okay, I asked the question, you've pushed back. That's good. And that's obviously you're speaking from experience. I know it's from experience. So sorry, 5 hours ain't gonna cut it. Okay, that's—

no, that's fine.

We need to— no, that's That's what the honest truth is. That's awesome. All right, so what's the next condition?

I just wanna piggyback on that. If you feel like, "Oh, I don't have that many hours, Omar.

What am I gonna do with this situation?" I'm really trying to think like someone's really resisting. They're gonna come up with all the excuses.

Which is great. And I think that they need to audit their time. You really do need to be honest with yourself and look at your calendar. If you don't have a calendar, a lot of people don't run their life on a calendar like we do. Ask yourself, what are you doing every hour of the day? Whether it's before you go to work in the morning, what time do you get up? After work, on the weekends, on holidays, on, you know, extended weekends, whatever it might be. Like, audit every single hour of your day and figure out, can I put in an hour here? Can I put 60 minutes concentrated? Is there a way for me to do some of my work or do some of my research while I'm doing something else? Like, I'm working out, maybe I could talk to ChatGPT while I'm on the treadmill.

Yes.

There are ways to optimize this. Don't just dismiss the fact that I don't have the time. If you need something, if you have to make something happen, you will make time. This is my point. And for me, I made the time. You think I wanted to do that after work? No, I was dead tired. I was a chair department at a university and I was going at work and it was dark and I was going home and it was dark. So like, my point is, is that the reason why I did it is because I wanted to get out of that situation. I wanted this future. I wanted to be an entrepreneur. I wanted to build a successful business. I was so hungry for it. I didn't want to lose. To use. So I wanted to optimize my schedule and optimize my life to help me be as successful as possible.

I love the passion. And I think that first point, audit your time, that's a great step before any of this. If you're considering it, that's a great exercise to do. Let's get into condition number 2 then.

Before I get to condition number 2, I just want to add this thing. When you put in those hours in your schedule, whatever it's like, like I did 3 hours after work and on the weekend, these time blocks where you're working on your business are sacred. You cannot be flexible with these hours. What does that mean? If this is a commitment you have to go to, like you have to go or you're going to be arrested. All right. That serious. Okay. What would you do in that situation? Well, you're going to tell the people around you. You're going to tell your family, you're going to tell your friends, you're going to tell people that you're going to see on a regular basis, hey, I cannot do anything during this time. Do not schedule a dinner, a night out, movie time. If there's responsibilities I need to do, pick up kids, go to the, you know, to get some groceries, I have to work around this time. This is just like you going to a job where you can't, you can't just say, hey, I can't go to work. No, you have to go to these hours. They're non-negotiable and you will be tested.

Okay.

There will be times where people are going to be like, hey, oh, you know, Aunt Mildred is coming in from town and she only has these two nights and we have to have dinner. What are you going to do when now that's when the rubber meets the road, when Mildred's in, Aunt Mildred's in and she wants to have dinner and she's going to feel so upset if you don't go. And it's time for you to work on your business that night, right? Are you going to sacrifice it? Are you going to tell Aunt Mildred, can I come a little later because this time I'm busy, or can you— can we do breakfast instead? Is your business a priority? That's where the rubber meets the road.

Love it. Okay, so audit the time and then also get people on board.

Yeah.

And communicate as passionately as you have how serious you are about this business. Yeah, for sure. That makes total sense. Makes total sense.

Okay. Condition number 2. We're done with condition number 1. Condition number 2 is high profit margins. This is very important because you have limited time. So you need to maximize how much money you keep with your business. A profit margin is basically the profit you make in your business. And I believe that when you're side hustling, your profit margins should be at least 50%. That means if you make revenue of, let's say, $1,000, that your profit is at least $500 because you're going to need that profit to grow your business because there's only so much you can do in 15 hours. Eventually you need to hire somebody. You need to get some part-time help. You might use one of our sponsors like Upwork, right? And the reason why I use— I mentioned Upwork as our sponsors because we've been using it for over a decade. I used it when I was side hustling where I couldn't afford a full-time hire. And you're going to need to reinvest. So this is why you need to make a certain profit margin that makes it sustainable for your business. Otherwise, it's not going to make sense for you. And let me give you some math. I wrote down this math so I don't mess it up. Let's say, for example, your profit margins are 20% and you want to make $2,000 a month. Let's say that's your goal for your side hustle. In order for you to make $2,000 a month with 20% profit margin, that means you need to make $10,000 in revenue. Okay? That might mean having like more than a few clients, 5, 6, 7 clients, whatever your business is, whatever your product is, but you need to make $10,000 in revenue to make $2,000 in profit. But if your profit margin is, let's say, more than 50%, let's say it's 80%. Let's just aim for something that's really good. If you want to make $2,000 a month, all you need to make in revenue is $2,500. Mm. That's how math is mathing. Okay? That's how it works. And this is why this is so important because that means you only need a client or two to make your goal. And the more money you keep, like I mentioned, the more money that you get to reward yourself for your hard work, but also reinvest in your business.

A 50% profit margin. That's generally considered quite high, isn't it? So you are really saying this, at that early stage of a side hustle versus like, okay, once I've fully launched my business, maybe those profit margins might fluctuate. But the other question that I have for you is how do I know if I'm starting out that I'm going to even achieve those profit margins? Is there a way I can test it?

100%. I mean, everything when it comes to margins can be researched before you even sell a certain product. So for example, if I'm in the t-shirt business and I'm selling graphic tees, I can find out how much it's going to cost me to make this t-shirt. How much does it cost me to make 1 t-shirt versus 10 t-shirts versus 1,000 t-shirts versus 10,000 t-shirts? You know, volume, there's discounts, but you're going to understand what your profit margin is going to be. And you have to include all the expenses that you have in order for you to deliver this t-shirt, whether it's the packaging and the delivery and the customer service and all that kind of stuff. You want to make sure that those margins are 50% or higher. Now, the reason why I say 50% or higher, by the way, It depends on the market. 50% is not a lot in software. Like, there are software businesses that make 90%, 95%, 97% profit margins because at scale they do very well because they create a product once and then they resell it over and over again to allow people to have access to. A physical example of this is like a gym, right? The gym exists once and they just resell it over and over. Now, a gym has a capacity. They can't— it's not infinity. They can't have a million people in that gym. Because there's only a certain amount of people that can fit in the gym at a certain time. But the point is, is that you should know ahead of time by researching. Generally, physical products, physical products have lower margins because there is a physical cost to creating that product every time you have to sell that product. So, for example, if you're creating a pair of jeans or you're creating a car, for example, every time I sell that car, I need to create a car. Right? But for a book, for example, especially for like an ebook, it's created once, it's digital, and it lives in the cloud, and people can just download it and pay for it. And you don't need to recreate the book. A physical book is a different story. You need to reprint it. But the work involved of creating a book is done once.

Yes. And so it's pretty easy, I suppose, with a physical product to cost out everything and then figure out like, okay, what am I going to make? In addition to my time that I'm going to be spending. Right. And obviously if it's a digital item, if it's a digital product, then yeah, the profit margins are definitely going to be much higher there.

Yeah. And the other thing is that people sleep on services. Services are quote unquote, you know, they're not digital products, but they're not physical products either. You know, people spend a lot of money to get something done. When I was starting out, my first kind of full-time business was creating websites for our clients. Remember that? And I was building websites for bloggers and bloggers were the first influencers. But when I was creating these websites, I thought like I was charging a lot of money at $5,000. Then I met other people creating websites for $50,000 and $100,000. And then I read this article that, you know, I think some big Fortune 500 just did a rebrand and their website cost them like $1.5 million. I was like, what? $5,000 is nothing. So it's all relative. It depends on who you're offering this service to, their needs, their budget, all that kind of stuff, how price sensitive they are. So services are a great place for you to have a high margin business as well.

All right. That sounds good. So definitely consider your profit margin.

Exactly. And just to recap real quick, high margin businesses are like digital products, software, communities, online courses, coaching, all the things I just mentioned that scale very well. Low margin products are like things like food, physical products, things that have a cost involved every time you need to produce it. I just want to also mention one more thing that a lot of people are like, "Well, my dream is to do XYZ." Right? That's good. You should want to do XYZ. But I would encourage you to think a little bit broader. So, say, for example, your dream is to create healthy meals that get delivered to people at their door. Okay? That's a great idea and a good, a good dream to have, but I really would encourage you to think a little bit broader and think, hey, maybe I can be in the same space and start my first business so I can make some money and learn about business and scale in that space. But maybe I don't have to sell actual physical food. I can sell recipes, I could sell advice, I could create content around this area of eating healthy and become an authority there. And then once I build my audience and I'm— it's I get some traction and I maybe made some money through consulting or coaching, I can then use that momentum and that leverage and that audience I built to sell my meals. My point is, is that like, make it a little bit easy on yourself with a higher profit margin business, at least for your first business. Let's take a quick break from this convo just to let everybody know that we have an upcoming episode that I don't want them to miss. So please, please, please subscribe. This is for your benefit so that you don't miss this episode. You get the episode automatically. This episode is all about how to set your prices in your business so that you hit that million-dollar in revenue mark in your business. You want to make $1 million a year. How do you set your prices to get there and how to reverse engineer it? We recently recorded this episode and we can't wait to release it. It's coming out soon. Hit subscribe so you don't miss it. All right, let's move into condition number 3. And I actually think this is the most important condition.. And it's all about what's in your head. It's your mindset in building your side hustle. And we talked about, I really love this word because you really should be building something that will be your full-time thing. And you really should see this period where you're putting those 15 hours a week or more, if you have more time, as a chance for you to validate your business idea, a chance for you to get traction, a chance for you to get, you know, some sales and learn about your customer and see it as the beginning of your full-time business.

If you put yourself in your mind back when you started your side hustle, where was your thinking or how did you perceive like that those early days and where this was going?

Well, the reason why I share this advice is because at the start I wasn't thinking that way. I was thinking about I'd just like make a few bucks on the side. I was thinking, I'm not sure if I'm good at this business thing yet. Let me just experiment. And not really go all in. I was kind of dipping my toe into the pool.

Yeah.

And I felt that the side hustles or the businesses that actually did well or were the ones that I really had the vision for it being my only thing, like I'm going to quit my job for this business. Here's the reality, and we talk about this all the time. Part-time efforts will give you part-time results. I know that's harsh to hear, But you have to understand that whatever business you're building on the side right now, you are competing with people that are doing this full-time. People are putting in 40, 50, 60, 70, 80 hours a week into this thing. Building a team, growing it, scaling it, dumping money. Some people are getting funding. Like, you have to be real about this. Like, you can't make this a successful business that competes with these businesses forever if you're only putting 15 hours. That's just the reality of it. So you want to grow it to a point where you have validation. And a good way to validate, to say, hey, this actually has some legs, is to say, like, what's your goal with this business in terms of, like, revenue? How much money do you want to make? How much profit you want to make? So say, for example, like, this was, this is what I was doing. I thought, okay, I want to be able to keep $10,000 a month. In order for me to have $10,000 a month, in my bank every single month, they get deposited. How— what do I have to do? Well, if I have 50% margins, I need to make $20,000 a year. I'm sorry, $20,000 a month, right? That way I keep $10,000. So what does that mean? Well, it means that if I am putting in 15 hours, let's just call that half time of, of, of what a full-time effort would be. Like, full-time effort is 40 hours or so, but let's just be a little bit conservative and say that's half the time that I would spend in a normal business. Well, that means I need to make at least $10,000 in revenue with my 15 hours in order for it to equal $20,000 in revenue with 30, 40 hours. So if it hit that mark, I know, hey, there's a good chance if I put in all my time and all my effort, all my focus, all my attention, I'm going to be able to make this my full-time thing.

So you're looking for those early signs or setting those goals early on. Yeah, pretty quickly and consistently to get to give you the sense that, yes, I'm on the right track.

Yeah.

You don't want to be spending— I think we'll come back to Mandeep's question. How long do I want to be spending in this side hustle mode, starting and stopping and really giving myself the chance to get those wins, to know that I'm heading in the right direction? Would you say that's fair?

That is fair. And I I just saw it as like the finish line, like, like I'm going to get to quit my job once I hit this revenue mark, because then I know there's a good chance that I can be able to survive with that kind of revenue if I put in full-time effort.

Yeah.

I think one of the biggest myths inside hustles is this idea of like, I'm going to make some money on the side. They kind of see it as like a part-time job, like I'm putting in the X amount of hours, I'm going to get X amount of money and I'm just going to grow my side hustle. My whole thing is I just want to make an extra, you know, $1,500 a month. $2,000 a month, and I'll just do that and just continue to make that much money every single month. This is a big myth because that's just not how business works. Like, in business, you're either growing or you're dying. You can't just be like, hit a milestone and be like, okay, I'm just gonna maintain this milestone. That's just not how business works.

You're not training yourself for the reality, I suppose, because that could probably last for a little bit, but you're not training yourself for what the reality of full-time entrepreneurship and long-term businesses, how they actually operate, which is not this like, let's just stay at this level of profit or level of revenue. It's got to constantly be moving.

And yeah, you got to be moving forward. You got to be growing or unfortunately you're going to see your business start tanking. It's just there's no stasis in business. So you have to just think about, okay, once I hit a certain level, what's the next move? The next move is Putting in more time and making it your full-time thing. That's, that's the next move. And then after that, once it's your full-time thing and you're here at a certain level, like, well, this is all I can do by myself. And I have to start hiring. What happens when I hire 1 person, 2 people, 3 people, 4 people? What happens when I start leveraging with technology? What happens when I start building a media team around me so I can start leveraging media to grow my business? This is what I mean by like, you have to start scaling your business, start moving up the levels of business. You know, you just can't play the same level over and over in this game, right? You just can't do that and hit the reset button. You have to continue to grow or the business will collapse.

It's a harsh truth. But yeah, we've seen it.

It's a harsh truth. And you could see it really at the other side of the spectrum, like at scale, like companies like Amazon, for example, like they're mammoth companies, huge companies that have grown to monopolies, really. And the truth is, is that like Jeff Bezos really doesn't have a choice. Like he has to grow or he will die or his competition will get in alive. This has happened over and over again. You could see the story of Walmart. Walmart was like, was Amazon before Amazon. And Walmart ate everybody's lunch and closed down a bunch of stores in the US, like Caldor and Bradlees, and Kmart even really was affected by it. And that's because that's how competition works. That's how the marketplace works.

Got it. Okay, let's bring it home for Mandeep and for everyone else who's in this situation.

Yeah. So my honest advice, and I say honest advice because some of the stuff may not resonate with you, maybe you're like, "Oh, Omar Zenhom, I don't know if I could do this." This is what I know works. Okay? If you have a better solution, please share it with me. But these are the 3 conditions you need to have. Dedicate a minimum of 15 hours a week. Make those hours sacred. Make sure you have a place to go so that it's focused. Okay? The second condition is profit margins. You want to make sure your profit margin is at least 50%. For this business so that you could start to scale, grow, reinvest, and see enough traction for you to be able to want to quit your job and make it your full-time thing. And the third thing is, like I said, the mindset of your side hustle is just a validation stage. It's a stage for you to see yourself as like, hey, this is when I'm going to see if this business has traction. Eventually, this is going to be my full-time thing. This is not something I'm going to do forever. As a part-time gig for 15 hours. It's going to be the thing I do 100% of my hours.

I love that. And that speaks— that last point, the way you phrased it now, speaks to Mandeep, who's asking this question. And to me, the fact that he's asking this question after a year means that he hasn't given up. And I think one of the things we probably haven't talked about is that persistence— persistence is that thing that's going to carry you through the journey. It's going to be the raw material, the foundation that you'll need to keep going, whether your business changes or you pivot, and, you know, from all the lessons that you learn. So I just think that what we've been able to provide, um, is in answer to Mandeep's question, is the structure around it to how to think about, okay, this is my stage right now, these are the conditions that I need, um, and, and that persistence is is what's going to keep me going.

100%. And if I want to put this into one question for everybody who is watching and listening, the question is, do you really want this? Do you actually want to be a full-time business owner, to be an entrepreneur? Because if you do, you will find a way to make this happen. And you could think of countless examples in your own life. You know, there's people that go to night school so they can get their degree., and it's really tough, but they want that degree so they can get a better job. People want to be a parent. They have a child and they make time to take care of their child and change the diapers and feed them, you know, because this is a priority for them. So if this is a priority, you will make it happen. Only you can answer that question if it's a priority, if you actually want this.

And I feel like for Mandeep, since he sent in this question, I think he will make the time and this is a priority for him.

We believe in you, Mandeep.

We're wishing him the best. Well, loved your passion, loved all those conditions and those insights. And I'm here to, you know, ask the questions that you'd be asking Omar if you were right next to him. If you've got a question that you want Omar to answer, go to 100mba.net/q, submit your question, and Omar's going to pick it up. And we'll answer here on Q&A Wednesdays.

Yeah. And if you want to continue learning, we have a recent episode that we published where I share my whole story about quitting my job, and going full-time as an entrepreneur and starting a business. If you want to get into that episode, just scroll back on whatever platform you're on right now. Apple, Spotify, YouTube. It's called that, How to Quit Your Job and Start a Business. My Exact Blueprint. So go ahead, check it out. Thanks so much for being here today and being part of the show. We'll continue to publish these episodes to help you along your journey. Thanks for being here.

See you next time.