More entrepreneurial Aussies than ever are starting side hustles to plug the income gap.
The combined impact of high inflation and rising mortgage repayments is playing havoc with the household budget of average Aussie families. There are two solutions: cut your expenses or boost your income.
It seems boosting income is the answer for many with a record number of people — 947,300 — holding down multiple jobs in March, compared to just over 13 million single jobholders.
This was up 2.1 per cent from December when there were 927,900 multiple jobholders, according to new data from the Australian Bureau of Statistics. Overall, 6.6 per cent of all working Australians have multiple jobs — 7.7 per cent of women and 5.7 per cent of men.
Australians have always been entrepreneurial. From the Hills Hoist and Victa lawnmower to ultrasound, cochlear implants, wireless internet and black box flight recorder, Australians have been building great businesses from scratch.
But it seems that entrepreneurial spirit is getting even more passionate as average Aussies are increasingly starting money-making ventures on the side to plug the income gap.
Side-hustles are also called “moonlighting”: operating a part-time business while holding down a full-time job. And technology is helping in a big way.
The extra income side hustles bring in is invaluable in balancing the family budget, but the process also provides a great training ground to establish a full-time business in the future.
Starting a business part-time is the first and most secure route to turning that dream of becoming your own boss into a reality. It means entrepreneurs can get a taste without the sink-or-swim risks of diving in with big upfront costs to sustain.
In effect, moonlighting in a part-time venture is providing the business with seed funding to get started.
The secret is to become a time-management expert. Family life can suffer and the risk of divorce increases. Weigh up these sacrifices before making your decision.
Simple side-hustle rules
Talk to the family: Discuss the idea with them and explain the pressures it will create on family life and free time. Get them involved.
Be a time manager: Take advantage of every minute of the day. Use lunch hours and free time to work on the business but do it in a disciplined way.
Confine business to one room: If your side job means working from home, try to limit office equipment and storage to one room, or you’ll be constantly in turmoil and unable to escape the pressures.
Don’t let the day job slip: Your performance at your full-time job is critical. It must not deteriorate. Remember, the job is providing financial security to try a new business.
Don’t make business calls during your day job: The risk is you will get fired.
Never compete with the boss: Apart from being unethical, you can be accused of fraud by pinching ideas and systems. Start a totally different type of side business or one in a completely separate niche.
Don’t use company equipment: Unless you have permission from your employer and offer to pay for anything used, do not use the boss’s photocopier or PCs for your business.
Once you’ve set the rules, it’s then about turning that idea into a reality. Again, take it one step at a time.
1. Stop talking about it
People who talk a lot about their ideas before acting are usually the ones who don’t do anything. Just give it a go.
2. Think through the angles
Look at the idea through an investor’s eyes. Who’s the target market? What problem is being solved? Are there resources you need to get it off the ground? What does the business roughly look like?
3. Test it
Ask a sample of your target market whether they would pay for the privilege of your product or service. Whether people will pay for it is the real test.
4. Assess feedback
After testing, respond to the feedback by making changes to the business plan, product and plan of attack.
5. Find some support
Business partners are a hugely beneficial source of support, from acting as sounding boards to proving your product to others. Forge a support network of entrepreneurs who will help you along the way. Pick their brains and learn from their successes and failures.
6. Figure out finances
Look at all the options — self-funding, family loans, bank borrowing, government grants, credit cards or even angel investors.
7. Make minimum product
Get the minimum viable product together and get it to market. If there’s appetite for the basic version of whatever it is, you can improve on it in the next batch.
Growing a side hustle is the ultimate act of investing in yourself, but starting anything new requires a huge time commitment. You need to weigh up the sacrifices before making your decision.
Retail sales trend down
In the first week of the month all eyes were on the Reserve Bank board meeting at which it was decided the official interest rate should be kept on hold for a second consecutive month at 4.1 per cent.
This time last week I said the latest retail figures would swing the RBA vote.
If retail sales slowed, the RBA was likely to keep rates on hold as it showed Aussie consumers were tightening their belts and cutting spending.
If retail sales rose strongly, it would show the economy was still hot and rates would rise again.
Thankfully, those retail sales started to trend down.
That weakness in retail sales and falling inflation offset the continuing strong job market which, along with the recent lift in the minimum wage, is underpinning continuing high inflation.
In the RBA’s statement attached to the rate decision, it was pointed out that inflation was declining, but is still too high at 6 per cent, and the prices of many services were rising briskly.
It was also made clear that services price inflation had been surprisingly persistent overseas and the same could occur in Australia.
The RBA expects the CPI to continue to decline and be about 3.5 per cent by the end of 2024, and within the 2-3 per cent target in late 2025.
Basically, the two biggest issues for the RBA are the steep rises in housing rents and wage increases.
“At the aggregate level, wages growth is still consistent with the inflation target, provided that productivity growth picks up,” it said.
As for the future, the RBA’s forward guidance remained unchanged in August, and it is pretty much the same as it has been since May.
“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable time frame,” it said.
But the qualifying sentence has been slighted altered to, “but that will depend upon the data and the evolving assessment of risks”.
So, it is still very willing to lift rates if the economic figures take a turn for the worse.
Between now and the September 6 RBA board meeting we’ll see the June quarter Wage Price Index and next month’s CPI result.
These are two big economic data signals that we need to watch and which I’ll keep you up to date on.
But after the decision to keep rates on hold, the big banks are now forecasting that this is the peak of the rate cycle.
* Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions