The Importance of Side Hustle Diversification
It can be easy to be blinded by a really successful side hustle that seems to make money for you on demand with ease. I’ve been in this position multiple times in the past and found myself lulled into a false sense of security. However, if you have not diversified your side hustles, you could be setting yourself up for trouble in the future. You don’t want to have all of your eggs in the same basket.
Markets change over time. Supply and demand changes. Even competition will change and often grow over time. Something that used to work great a few years ago may be a complete failure today. Sometimes side hustles are even partially controlled by third-party companies that can decide overnight to shut you down without reason. I’ve experienced all of these things and more with my own side hustles and businesses. As a result, I want to pass along my knowledge to help you diversify your side gig jobs so you can be more resilient.
Why Diversify?
Before I actually talk to you about some of my tips and strategies for diversification, let me explain why this is necessary. Business and especially the internet can be fickle industries. New companies enter the market and technologies revolutionize changes in the industry, often at a rapid pace.
A side hustle, especially one that runs online, will often have multiple points of failure. Think of the side hustle like a table standing on legs. You chop off any one of those legs, and the table collapses. The same thing can happen with an online side hustle, unfortunately.
Many online businesses can take years to build to their full glory. There’s nothing worse than spending all of that time and often money to pursue something only to have it disappear overnight. This can actually happen with an online side hustle, so you really need to be aware of this fact so you can take some precautions to protect yourself.
Third-Party Company Dependence
One of the biggest warnings I can give you concerning diversification is to be wary when your business depends on a third-party company. When you base a side hustle on a Facebook group or a YouTube channel, you’re putting your entire business in the hands of another company.
This dependence could be major or minor. If your hustle involves creating YouTube videos, you’re 100% dependent on that company to allow you to remain in business. However, if you run your own e-commerce website, you may only depend on a payment system, like PayPal. That can be a much more minor dependence since you can always switch payment systems if you run into problems with one.
Each company can have their own rules and terms that you’ll need to follow to avoid running into problems with them. However, in the modern days of social media, you can sometimes do everything right and still have all of your hard work taken away from you at a moment’s notice. Other users and even your direct competitors can sometimes engage in unethical campaigns to try to get your account banned. Unfortunately, this strategy will often work if they try hard enough and have others to help them.
I would recommend never running a side hustle where you are 100% dependent on another company. I’ve seen someone spend three years doing that. They built a business that grossed about $300k per year, and it all disappeared in a moment when their competition banned together and reported their channel in very large numbers. Absolutely no rules were violated and no chance to appeal the decision has ever been available. If you do have a business depending on another company, diversify as much as possible. For example, a YouTube channel could still build their own website to post videos, so they wouldn’t be completely out of business if their account was shut down without notice.
Traffic Diversification
How you gain traffic to build your audience and/or drive sales can make or break your success. This is another area where you want to diversify as much as possible to get the best results. If you do too much work to diversify your traffic, you may just end up with a lot more traffic than you started with, so this is often a win-win strategy.
Traffic sources can also be shut off without notice. This can be especially true with search engines, like Google. If you violate their rules or try to cheat their search algorithm, your site can be removed from search results. However, it’s also possible for this to happen without you doing anything wrong. Google is on an endless quest to provide the best possible results when someone uses their search engine, so they will always make changes to their algorithm to refine their results. Sometimes you can end up on the wrong side of one of these changes and your traffic levels can plummet overnight.
If you have a website for your side hustle, you could get your traffic from a social media presence. Even if your business is based on the website itself, if all of your traffic originates from a single source, you’re still exposing yourself to that one potential point of failure.
Instead of focusing on gaining all of your traffic from one single source, spread out your efforts over multiple potential sources of clicks. Advertising, search engines and a wide variety of social media can all be used together to drive traffic. This ensures that if any one source goes away, your overall traffic and revenue won’t take a massive hit.
Diversify Your Revenue
It can also be really important to diversify your revenue. This can be accomplished in many different ways and can depend on your business to determine what will work best. If you’re directly selling products or services to customers, you can diversify by using more than one payment platform to protect against one of them closing your account or suspending sales.
An e-commerce vendor can run their own website to make sales, but they can also spread out their business to other marketplaces online. EBay, Etsy and Amazon can be used by most e-commerce side hustles to set up your own listings and even a store on those sites. By having a presence in multiple locations, you’re more likely to increase your overall sales. You’re also protecting yourself from problems that could occur from a single revenue source.
You can even apply diversification to your methods of earning money from your side hustle. A website that only makes money from displaying Google ads can branch out by adding affiliate product links or even selling your own goods and services. Any extra options you can provide for yourself will not only isolate you from problems from a single revenue source. It can also end up boosting your overall earnings too, so this is yet another win-win strategy to use.
Multiple Side Hustles
Sometimes changes in buying habits and within your industry can cause side hustles to decline over time. It’s possible to pivot some of these businesses to keep up with industry changes, but there are other instances where there isn’t much you can do because fads come and go. A business that sold fidget spinners 5 years ago may have made quite a bit of money in a relatively short period of time, but those good times likely didn’t last. For this reason, it can sometimes be unwise to throw all of your eggs into a single side hustle.
By diversifying and branching out into multiple side hustles, you can increase your odds of being able to survive major shifts in the industry. One business may die off, but another could continue to flourish. By having more than one option, you can not only increase your revenue but also protect yourself from the potential of a full business collapse.
Before you decide to start more than one side hustle, consider your time availability first. Do you really have the spare time in your current schedule to add even more work that will be necessary for a second business? You do not want to take away time from your existing activities to start something new or else you could see a decline with the business you’ve already built.
One of my personal favorite strategies that allows me to run multiple businesses involves passive income. I’ll have one or maybe two businesses that I will actively spend my time working on each week. There’s no limit on how many more businesses I can create beyond those initial one or two. However, it’s very important that all additional side hustles are passive income. It could be a hands-off investment like dividend stocks or even a hosted ASIC bitcoin miner. As long as you don’t have to devote any or much time to it each week, it’s a good choice. You could even have non-passive income businesses that are 100% run by your employees.