Most people make money from their job working for someone else, and that is it. This is an extremely precarious situation, because if the job goes away, it takes away 100% of their income. The ideal situation is a number of different income sources that can all be ramped up, if necessary.
In this post, we are going to look at several different sources of income.
Job
This is where most people make their money. They work for an employer that pays them for their time. An advantage of this type of income is that the employee doesn’t have to know much about running other parts of the business. They can concentrate on their portion of their job. A janitor at Google doesn’t have to understand how search engines work, how to sell their Apps solution to large business, or how to run payroll.
Of course, the downside of this arrangement is that businesses will only pay you a portion of the total value you bring. So a highly motivated person can make a lot more money per hour working for themselves–if other people are willing to pay them directly for their skills.
Side Business
I know some people who start a side business to bring in some extra cash and give them something different to do when they are off work. I knew a materials management worker who had a side business washing windows. He could make a few hundred dollars with a couple hours worth of work and enjoyed the chance to do some work outside during the summers.
The problem with a side business is that there is a certain amount of overhead effort that is going to go into the business regardless of the size of the business. If your business requires a lot of effort just to be at the point that you can perform your business function it might scale down very well.
Side Jobs
Similar to a side business, a side job is something you can do without requiring a lot of business setup. The person who occasionally sets up computers for others is a good example of this. Other example is someone who does calligraphy or occasional proof-reading.
Side jobs can become full-fledged side businesses if you want to invest the time and resources in them, and many can become full-time jobs if they are successful.
Consulting
Consulting is an occupation in which you go into other companies and offer your expertise–usually for a limited period of time or to solve a particular issue. The company that is hiring you gets the advantage of very specific expertise without having to hire a high-level employee with that skill set.
The problem with trying to do consulting on the side is that your day job will likely interfere with the schedule on which potential clients would like to hire you. Still, consulting can be a great way to bring in additional cash when you start your own business. I have seen a lot of start-ups that pay the bills with consulting while they build a product that they want to use as their main income.
Services
Services can cover a wide range of things–many that would also fall under side businesses and side jobs. Here are some ideas of services that can bring in additional income:
- Proofreading
- Ghost writing
- Creating resumes
- Hosting websites
- Dog walking
- Lawn service
- House cleaning
- Website and Graphic Design
- Virtual Assistant Service
A portion of my business focuses on hosting email for small- to medium-sized companies where reliable email access and high delivery rates are very important.
Online Sales
The Internet has opened up the market place so an individual can easily sell items all over the country or world. Ebay is probably one of the easiest examples of this. It provides value by connecting buyers and sellers. A big advantage of selling items online is that you can often do it on the side in the evenings and weekends without it interfering with your day job. There are sites that have grown up around selling specific types of items. Etsy focuses on a lot of handmade-type items. Amazon makes it easy to sell used books. E-Junkie offers a service that makes it easy to sell digital content (which is what we use for some of our products). Some companies like Amazon will even warehouse your product for you and take care of shipping it to your customers.
Investments
Making money from your money is the ultimate income diversification. Many people don’t learn much about investing because they don’t feel they have enough money to invest. This is unfortunate because you can make money with even modest amounts, and the effort required once you understand what you are doing can be minimal. Many employees have some type of retirement account through their job, and often employers will match a percentage of what you invest. Knowing how to best put that money to work will benefit you over your entire lifetime.
Conclusion
You don’t need to rush out and try to create a source of income from everything mentioned in this article. However, there is great value in being aware of different opportunities and looking for one or two ways you can protect yourself against the loss of your primary job. In particular, if you can find something you enjoy and turn it into a secondary source of income, you can give yourself a lot of flexibility in the future, regardless of what happens in the job market.
It’s prudent to have a source of income outside of your current job. For one thing, it adds to what you already get from your job, allowing you a few more luxuries than what your current employment can afford you. Secondly, it might be a good venue to exercise your passion. Thirdly, it sharpens your other skills and adds to your learnings. There are a lot of benefits to it, more than just the obvious monetary gains.
P.S. A small business would be a good start. You don’t have to invest too much in it. Just a little time and maybe a little capital is enough.
Personally, self-employment is the only way forward for me – I can’t bear to work for other people. My main aim is to reach a normal full-time wage with my own projects – a dream which is on it’s way. :)
An old farmer once told me, “nobody is self-employed.” He said if I don’t feed those cows I get no milk and if I don’t delivery fresh milk I can’t sell it to anyone. If I don’t sell it at a good price and deliver it on time my customers will go away. If I don’t pay my farm hands I can’t get anything done and the place goes to hell. So I work for the customer, my employees, the cows, and the clock. At any point we work for everyone and everyone is our boss.
Saying you won’t work for someone else is just not reality.
Scott, on the other hand, you can argue that everybody is in fact self-employed. This mindset makes a lot of sense. Even if you seemingly work for someone else, you still work primarily for yourself. You have your own company with one employee — you — and you’re in the business of selling your employee’s labor for profit.