It seems like everyone has a side hustle these days. But is it right for you? Entrepeneur Kara Perez explains what Grownups need before taking the plunge.
Who are you working for? For Millennials, more and more the answer is themselves. I’m a Millennial and an entrepreneur, and I’m far from alone.
Millennials entered the job force as it underwent a dramatic shift from salaried jobs to freelancer positions, and we’ve watched our economy transform into a “gig economy” in just a few years. The idea of spending 40 years at the same company, at a job that has a salary and benefits, is a foreign one to our generation. We’re entrepreneurs, and we’re doing it pretty well.
Millennials Have Ideas and Drive
The truth of it all is that the changing face of jobs in the US means that Millennials can’t follow the same career paths that our parents and grandparents took. More and more of the job creation that’s happening is part-time or temporary, which means that benefits are not part of the equation. That, combined with the fact that most Millennials carry some kind of debt, means we often turn to starting our own companies as a way to stabilize our finances. A study from the Center For Generational Kinetics shows that “61% of Millennials believe that the best job security comes from owning your own business rather than being employed by others, compared to 36% of Boomers and 40% of Gen Xers.”
Plus, there’s the fact that more than 1/3 of us already have more than one job. We work side hustles to do everything from pay down debt to test the waters for launching our own business. I know several friends who hold 9-5 jobs and then come home to put in some hours on their own businesses.
For Millennials, becoming an entrepreneur feels like the right path for a number of reasons.
- It makes us feel in control of our money; there’s no limit to what you can earn when you’re the boss. When you work for someone else, there is usually a hard salary cap.
- It offers us the chance to pursue what we love. Many studies show that we’re a generation that’s interested in doing and supporting work that creates social good.
- Jobs don’t exist as they used to. We need to adapt to survive.
Since there’s no more road map for what a job or a career should look like anymore, and since the landscape of what work is continues to change at a rapid pace, it makes a lot of sense that we want to carve out our own jobs. If we want starting a business to be a way to create stability though, we have to go about it smartly.
Should You Make The Leap To Entrepreneurship?
Feeling like you’re ready to become an entrepreneur? If you already have these three things in place, you might be ready to take the leap.
You’ve got the desire
If your full time job isn’t the field you want to be in long term, starting a side hustle might be a good move for you. If you’re like my friends and head home to operate your side project after you finish up at your job, consider turning that into your full time gig.
Create a business plan and calculate how much going full time would cost to get started, as well as how much you estimate you’ll make. Passion is something all small business owners share, and it’s a powerful tool.
You’ve got the money
Starting a small business takes more than just a great idea. There’s no guarantee you’ll succeed, so make sure to have a lot of savings before you quit your full time job. Conventional personal finance wisdom says to have 3-6 months living expenses saved in an emergency fund.
For entrepreneurs, beef that up to a full year. Starting your own business comes with not only start up costs, but earning time lost. You’ll spend a lot of time setting up systems and creating for free in the beginning, so you need a way to make sure rent still gets paid.
You’re filling a need
Are you creating an in-demand business? Do you already have clients or customers? Starting a business is more than just following your passion. You have to know that you’re solving a problem that enough people have and enough people will pay for to make sure you stay in business.
Explore your passion before you go all in. If you want to start a jewelry business, pop up at a craft market before forming your own LLC, just to get a feel for the market. If you want to open an auto body shop, do research on what you’ll pay for rent vs what you can charge for services.
If you already have clients and customers, now is the time to go for it! As you start off you know that you have some money coming in, which takes the pressure off your emergency fund. It also means that you’re doing something right already, so lean into that!
Carving out your own path is a rewarding and demanding route to go. But if you feel up for the challenge and sure of your offerings, becoming an entrepreneur could be the right path for you.
Kara Perez is a freelance personal finance writer living in Austin, Texas. She is passionate about helping people become financially literate and telling people’s money stories.
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While Society of Grownups hopes the information is useful, it’s only intended to provide general education. It’s not legal, tax, or investment advice, and may not apply or be useful to your specific financial situation. If you need recommendations geared to your personal financial situation, schedule time with a financial planner.