How to hustle

chapelle_wu

Hi everyone,

here’s a post that I wrote about a year ago that I haven’t published until now.  It started when a friend of mine was talking to me about side hustles, and they didn’t seem to know some things that I thought were common knowledge.  Hopefully, some of you will find this helpful.

How To Hustle

1. Time

Trading time for money is generally the worst way that you can hustle.  The single biggest problem is that you have a finite quantity of time (because, you know, you’ll die) and any monetary growth will be linear.  For example, if you get paid 10 dollars an hour, in 10 hours you’ll have $100, and in 10,000 hours, you’ll be paid $100,000.  If you’re hustling in this way, the only thing that you can do is aim to increase the per hour payment that you receive for your task.

Pros:

  • Hourly payment is one of the most accepted way that businesses pay their employees, therefore it’s much easier to sell your work in this way vs. any other options.
  • It’s an extremely stable and predictable way to make income, so it’s pretty easy to plan for things like things like bills, taxes, and the expenses of life.

Cons:

  • You’re trading time for money, so the only way you can increase your pay is to increase your hourly wage or salary.

 

Arbitrage

Wikipedia defines arbitrage as “the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices”.  Essentially, you’re trying to buy low and sell high.

This was and occasionally still is my preferred way of hustling, primarily with used bicycles, which is a passion of mine. The most profitable verticals in arbitrage are the ones where market prices are not very clear.  When you’re dealing with items that have set prices (i.e. in a store, in a marketplace where there’s instant price information), I find that the product price is generally inelastic, meaning that the price doesn’t really go up or down very much.

While “technically” the easiest way to hustle (just buy low, sell high), it suffers from a few big problems.  Being an arbitrager is a full contact sport.  There are generally a large amount of people competing for the same pool of undervalued goods and trying to attract the market of those who over value them.  This makes it extremely unstable and subject to a tremendous amount of human factors.  It’s very common to sell a high amount of your product one day and then sell nothing another day.  The reciprocal is also true, where you’re able to find products under the market price and then varying factors lead to the market price going down or your product price going down, leading to shrinking margins.

Pros:

  • The easiest way to hustle, by far.
  • If you’re a domain expert in what you’re selling, it’s very easy to spot undervalued items to profit off of.

 Cons:

  • Extremely competitive.  Like, super competitive.
  • Requires domain expertise, which takes time.
  • Very unstable source of income.

 

Service

Service hustles are the easiest hustles to start.  Service hustles basically mean that you do something for a price.  Now, there is some overlap between service and time hustles, however the main goal of a service hustle is to price your service with a lump sum payment.  A good example would be saying “I’ll mow your entire lawn for 20 dollars” vs. “I’ll mow your lawn for 10 dollars an hour, and it’s approximately 2 hours worth of work”.  The reason you want to do this is because if you’re motivated and good at your craft, you’ll be able to complete the service quicker than originally expected, thereby increasing your margin.  In the previous example, if you were to mow the lawn in 1 hour 30 minutes instead of 2 hours, you would earn $5 extra in the first payment structure vs. an hourly structure.

A funny example increasing your margin as a service is that in the lawn care hustle, the key is to get as many clients that live side by side as you possibly can, and then mow across ALL the lawns at once, which is significantly faster.  Pretty genius. The hard part of service hustles is that they require the MOST IMPORTANT SKILL YOU CAN POSSIBLY HAVE IN YOUR PROFESSIONAL CAREER, which is the ability to get and maintain clients.  Most people can do what you can do service wise, however, it’s the ability to get people to pay you money for the service that’s really key.  If you can make it work, expect bank.

Pros:

  • The easiest to start.
  • The better you become at your service, the larger your margins get.

Cons:

  • It’s hard to get clients, but it’s a great thing when you have them.
  • You have to be very good at estimating the time required for a task, because if you don’t do it correctly your margins could shrink to the point where you lose money.

Goods

At its core, the goods hustle is basically the selling of a product.  This hustle is one of the more difficult ones, but has the most ways to increase your profit margins.  In this hustle, your main goal is to convince your customer that your good has no other alternative and is completely unique.  Apple’s message to the consumer about the iPhone is that there’s no other phone on the market that uses iOS as an operating system and there’s no other phone that’s made by Apple.  It’s an original.  In reality, the smartphone market is a crowded and dense place, made up of phones by multiple manufacturers (HTC, Samsung, etc.) and multiple operating systems (Android, iOS, Blackberry, Windows Phone).

All the branding and messaging that exists with goods is to differentiate your product so your customer can’t accurately compare what the price of the good really should be.  You can say that the grape colour Nike Air Jordan 5 that I bought for $225 dollars is expensive, but you can’t say that it’s expensive relative to a Reebok shoe because that products are so vastly different, it’s not really a logical thought in the mind of the customer.

Let me reiterate – your number 1 goal is to make your product so unique that it’s difficult to compare to any other product, regardless if that difference really exists. Personally, I haven’t really experimented with this hustle that much at all, just because it doesn’t really quite interest me.

Pros:

  • Margins on goods can be completely out of this world depending on how good you are at convincing other people that your product is different.

Cons:

  • Branding and marketing is one of the hardest things in the world.
  • It takes some amount of investment to make any product.
  • You might have to deal with inventory issues (theft, excess stock, damage, etc.) that take away from the bottom line.

Information

Information hustles basically consist of getting paid to give someone knowledge of something that you have to someone that does not.  Tim Ferris has a great antidote in almost all his 4-hour series of books about how he charged $50 to a large group of people on how to increase their reading speed, there by leading him to ball out of control in about an hour. Things like teaching, tutoring or consulting are all examples of information hustles.  Information hustles are great because there usually a knowledge monopoly which keeps prices high in whichever field requires a consultant.

The main difference between information and service hustles is that someone is paying you for what they can’t do, not what they don’t want to do.  For example, being a lawyer would be a information hustle because the client can’t perform the job himself, unless they themselves are a lawyer. Information hustles usually require experience and research, so those lacking those things will find it extremely hard to execute on these services.

Pros:

  • You generally aren’t selling a physical product, which means you don’t have to worry about all the inventory problems that come with arbitrage or selling goods.
  • There are natural monopolies that make your information naturally valuable.

Cons:

  • It’s difficult to get to the stage where you know more than most people, and even more difficult to get to the stage where people will pay you.
  • Client issues from service hustles still apply here.

 

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