When I was in graduate school many, many beards ago, I built up a pretty decent little side hustle that was bringing in over $3,000 per month. I was able to build up to that level of income fairly quickly, too, starting with a few hundred dollars in profit the first month and reliably pulling in $3,000 per month six months later. Then, I built a very expensive information product with a short shelf life, but with the potential to double those monthly earnings for a very, very long time. However, within one year I had set fire to the entire business, burning up several grand a month in income. I have absolutely zero regrets.
Today’s post is about the differences between building wealth and building a job. I don’t mind working. I love to create jobs for myself that I enjoy. That’s the whole point. But you have to be very careful with the projects that you take on, because they can easily become time- and energy-sinks if you’re not careful. Your time may be way more valuable than the money.
Creating jobs instead of side hustles
J. Money at BudgetsareSexy.com talks about his 8 big fails over 8 years of blogging. The one fail I can relate to the most is number six, where J talks about realizing when change is necessary:
This happened in the early stages of Rockstar Finance. I loved the idea and people seemed to be enjoying it from the start (the whole concept btw is like the Drudge Report, only for $$$ articles (so basically a curation site)), but at some point it had consumed me and I thought about selling it. Even though it wasn’t (and still isn’t, to be honest) making that much money.
I floated it around a few people I trusted to gauge interest, and I’ll never forget what one of my friends told me within seconds of hearing this,
“You know what you did right? You created a job for yourself.”
J’s site by its very design takes a lot of time every single day in order to prosper. What’s worse is that if he ever stops that work, the site just dies. It’s different with a blog where you build content. If it gets big enough, you can slack. Eventually, if you just stop writing altogether, the search engines will still bring new eyeballs to that content, and you can still make money in a very passive way.
There are some types of hustles we create for ourselves, though, that require constant feeding. You can make money wearing a cow suit in your spare time, but the moment you stop, the income stops flowing.
This is fine if you’re building money for a particular purpose, and if you really can’t do something more lucrative with that time. Or, maybe you just really love dancing around on the side of the road dressed as the statue of liberty. It’s better than watching TV or wasting your time reading silly little blogs about beards and money.
But, if you can make more money doing something else, then maybe you should. Or, if you can find something you’re more passionate about, even if it earns less, go that route. Don’t create a job for yourself that you don’t enjoy.
All of us do this from time to time in our careers. More recently, I created a new program at my university. It’s probably going to be a very big deal with a lot of students enrolling. This will all make my bosses very pleased with me. However, I also created one hell of a all-consuming job for myself. What’s worse is that I don’t even like administrative stuff like this. I created a job, and I don’t even get paid more for it. Dumb.
Building my online empire
Now let me tell you about the little online empire I built and why I decided to blow it up. You can guess from the long lead-in that it has something to do with creating a job for myself that I hated.
I sold a product on eBay that I sourced from a dropshipping company. I placed the listings on eBay, someone would buy the item and pay me, and then I would pay the dropshipping company to send the item to the buyer. The difference in cost was my profit.
I did choose a particular type of item I knew a lot about and that I really was passionate about. That helped. I’m not going to get too specific, because there’s still plenty of stuff on the web connecting my real name to that little venture.
I got really good at listing items, too. I learned about having good ad copy, and that being the lowest priced item is not actually the best way to go. I got so good at it, that I could sell exactly the same product for 20% more than my competitors. I know it was the same product, too, since they were getting it from exactly the same place.
After a short while, I started buying in bulk from the supplier and branding these items. This allowed me to sell even higher above market price because my items were branded (literally a $0.01 sticker stuck on the thing), and I could promise ridiculously fast shipping, since I actually now controlled the shipping.
Looking back over my old files, I had revenues over $100,000 at the peak. I was generating over $1 million in sales per year (or I would have if the business lasted that long).
That sounds impressive, but it only worked out to about a $30,000 per year annual profit, which is roughly a 3% profit margin. So you know, it is VERY hard to make a large profit margin on eBay selling an actual, tangible product that many, many other people are selling.
This side hustle is too much work!
When you make $100,000 in sales selling an item with a $40 price tag, you end up selling to a LOT of people. One of the big lessons I learned from this experience is that most people are awesome, but some people just SUCK! Maybe 5% of the people on this planet suck, but those 5% of the people will monopolize your time.
In the beginning, my little side hustle was kinda fun. I enjoy writing interesting ad copy and doing A/B experiments to measure effectiveness. Learning how to sell a block of ice in Alaska for 20% more in the middle of an ice market with thousands of other sellers is a neat challenge.
Once the business got big and was making real sales, though, all of my time was now focused on customer service, procurement issues, shipping problems, etc. That stuff sucks.
Basically, I had created a retail job for myself. And one that didn’t pay very well per hour. Hell, I could have just gotten a job at Walmart and been better off.
I’m resourceful, though. I had a brilliant idea that would take this job I had created and turn it into a passive money making machine.
This side hustle is WAY too much work!
I wrote a book on how to sell this particular item on eBay. I packaged this book with a data CD that contained all of the ad copy, images, etc. that made my listings and business successful. I build a little page that sold this book and charged between $99 to $197 for the “course.” The price got steeper with the number sold. I warned this would happen on the site. Of course no one believes this, thinking it’s just a marketing ploy. But I was serious.
That little eBay course sold over 100 copies. I probably ended up netting about $12,000 from that little book that I wrote over a two week period. I sold out in about 3-4 months.
Here was the genius behind the book, though. The entire thing was built as an advertisement for the new dropshipping company that I created.
I really did give away all of my secrets. Because of that, my actual eBay business dried up. I expected that. The plan, though, was that I was creating an army of sellers that would do the front-end customer service work while I sat back and profited.
You can probably guess that it didn’t work out that way.
My total sales went up, while my profit margin went down. That’s fine, so long as the amount of work doesn’t scale with the sales. I was pretty sure I would have less customer service to deal with because I had fewer total customers.
I was wrong.
Now, I had to deal constantly with PayPal disputes, bigger supplier problems, shortages on supplies, and other headaches. I was doing even more work than I was before, and making about the same total amount of money.
The book was a smart idea. That think took very little time and sold fast, putting real money in my pocket. I couldn’t just keep selling the book, though, because with too many people all doing the same thing, no one will be able to sell anything.
I shut the entire business down
A few things happened that led me to shut everything down. First, I got caught up in a huge PayPal dispute and lost a lot of money. Second, my school work really started suffering.
When you work with a dropshipper, you never really know what their inventory is at any given moment. So you put up your listing, sell the item, and then go ask the droppshipper to send it on its way. Of course, that item may be out of stock because of a fire on the boat from China, or poor supply management. Whatever. This leads to long shipping times, which really, really pisses off eBay customers.
Also, your stuff gets broken during shipping. The end customer gets mad at the eBayer, and then the eBayer gets mad at the dropshipper, even though it’s usually UPS’s fault.
I had one customer that had about 100 orders to date. He got pissed over ONE order that got screwed up and filed a PayPal dispute on ALL the orders he ever had made.
Interesting fact about PayPal: they fucking suck balls.
I had plenty of evidence that we shipped every item with full tracking information showing pick-up and delivery. However, since none of the delivery addresses was to the address for the payment (the whole idea behind dropshipping!), then they sided with the complainant.
I was out of the money AND the items. After this, I seriously re-evaluated my relationship with PayPal.
I was also going through graduate school at the time. My course work was slipping big time because I was spending so much time on the business that I had no time to focus on my studies. I went to class, but that was about it. I almost failed out of graduate school that semester
So, I made the painful decision to shut down the business. I needed the time to focus on my studies, and I couldn’t open myself up to the losses that were possible with PayPal.
Drop the job to create a career
I dropped the job that I didn’t even like to focus on building the career that I now love.
I did graduate Evil Doctor Beard School and went on to build a very good career. I now make 3 times more money per year doing something that I really enjoy.
Also, I have no desire to get back into that kind of business again. I know I hate it, and I know it will suck time from the things I enjoy. Our retirement plan doesn’t require extra money, anyway.
It is nice knowing that I have the skills to build a business online that can support my family in a very short amount of time. That’s kind of like a little emergency fund of its own. But if I don’t need to, then I’m not going to.
As I mentioned before, I’m facing a same issue right now with that university program I told you about. If I play my cards right with that, I could be in an administrative position in a year or two making well over 6 figures.
However, I know I would hate it, because I’m really not having fun right now running this thing. It was fun to build, but sucks to keep going.
Build wealth not jobs with your side hustle
I’ve learned that if I stick with what I’m passionate about, the rewards will come immediately with respect to personal fulfillment, and eventually with respect to monetary compensation.
I’m focused first on building wealth with the money I earn right now. If you look at your own finances, and you read this blog among others, you’ll find that you can easily save 50% of your current income without much sacrifice at all. That savings rate will build huge wealth over a very short period of time.
Once you’ve built wealth, you’ll never have the need for a “job” again in your life. Sure, you’ll work. But it won’t be a job.
So here is my summary: be careful not to start filling your life with little jobs that drain your life-energy. Figure out what you’re really passionate about and build a side hustle around that. If you can make your passion your main income producer, then even better.