This transcript was generated from the episode audio and may contain minor errors.
[Music]
Greetings, hello and welcome. This is "Side Hustle School." I am your host, Chris Guillebeau, bringing you today the weekly recap. Episode 414, looking back on this week. I wanna talk a bit about profit margins. In the episode a couple of days ago about the guy who does artificial flowers for weddings, I mentioned that once he acquires his inventory, he essentially has 100% profit margin.
At least compared to a traditional florist who has to actually go out and acquire these flowers over and over on a recurring basis. Now I want to delve into that a bit more just to talk about this question, what kind of profit margin should you have? Now of course the answer is it depends, but I think there's still some lessons you can take as you plan your next project. And speaking of next projects, I hope you're working on one. I hope you have a hustle.
I hope you have an idea at least. Or if not, if you're new to our community, I hope we can help you get an idea. Every day on the show I'm telling a different true story of someone who uses this process to create an income generating project for themselves. Now increasingly our stories are coming from listeners, which I think is fantastic. Of course we have lots of folks from outside the community too.
I think it's good to feature both groups. And before I talk more about profit margins, I actually wanna introduce you to a couple of people who have been part of Side Hustle Society. And I introduced this program about six weeks ago. It was something that all throughout 2017 people were asking for. A way, a means to connect with other listeners, other people who were starting Side Hustles, just to kind of share common struggles and challenges and to celebrate successes and to get feedback and advice and opinions from people.
Well, it took me a whole year, but I wanted to make sure it was absolutely right. So we just debuted it last month. We opened it for a week and then closed it. And pretty soon, I think in just about nine days from now, for those who are listening in real time, somewhere around February 27th, I believe, we're actually going to open that again. And if you didn't join the first time, I'd love for you to be part of it this time.
But for now, let me just actually introduce you to a few people who are part of it. We've had this online group, which is private. It's members only. And people can go and post their introduction of like who they are, what they're working on, what their idea is, if they have a website already. We've had a couple hundred introductions so far, people sharing all kinds of things.
So I actually went to some of them and said, "Hey, would you mind doing a little audio clip for me just so other people can hear what you're working on?" So here is a brief selection and I'll come back and share more afterwards. [Music]
Hello all, my name is Anthony Allen and I live down here in sunny San Jose, California. My full-time job is as a buyer of electronics for a smaller regional retail company. One of my side hobbies, I should actually say passions, has always been travel and photography. My side hustle is a deck of cards of major cities that will give you photography locations, tips and tricks on how to shoot those locations.
The website that I have is photohere.com. That's P-H-O-T-O-H-E-R-E.com. And we're hoping to launch, we as in me, to launch the Kickstarter campaign sometime in the summer. Thanks all and have a great day. - Hi, my name is Rachel Worsley.
I'm from Sydney, Australia. I'm creating a website called Law Study Hacks which is all about providing how-to guides for Australian law students. This is a problem that I've grappled with as a current law student and I've developed some really great scripts to help me with my exams and now I just wanna monetize that content and help all law students out there. I've got a website, it's just www.lawstudyhacks.com.au but it's a work in progress. All right, that was just a couple of comments from a couple of people.
As I said, in the community itself, we have more than 200 of those. People doing all kinds of things from all different places and for me, the best thing about it is how people are supporting one another, asking questions, providing advice, connecting people with different resources. So it's all starting really well. We also did a group call recently where I answered questions from members. We're gonna do that again at some point soon and if you'd like to know about the upcoming Cytosil Society relaunch, just come to sidehustleschool.com/society and you can put your name down there for a little email update.
I am thinking we're gonna start on February 27th and of course it will be time limited. I also wanna say I just love hearing from people like no matter where you are, what you're doing, whether you're a part of that program, whether you have no interest in it at all, I'm just fortunate to connect with you, the listener, the listeners, wherever you are. When I started doing this stuff 10 years ago, like not the podcast but the books I write, the blog, the art of nonconformity, other events, I really had no idea where it would lead. Like I had no grand vision to be here 10 years later with five books out and being able to travel and speak to groups all over the world. Like I said, I feel fortunate.
So wherever you are, let me know what you're up to and how we can support you. If you have a question or comment, you can call the Hustle hotline. You can leave a short response there or leave a question. That's 8449 Hustle, 8449487853 or you can also write into podcast@sidehustleschool.com. [Music]
All right, so let's look back a bit at a couple of things from this week.
So first things first, I wanted to do a quick little comparison between two very different kinds of projects. At the top of the show, I mentioned the guy who starts the artificial flower service for weddings. That was episode 412. Newlywed creates floral services that can't wilt. I'll come back to that one, but I want to mention episode 409 as well.
That's about a golfer who takes a swing and scores a $5,000 a month hustle. Because these are very different projects, not just in terms of topic or content. It's not like golf versus flowers. And not just in terms of the business model either. Like the golf guy, he's writing a blog.
The flower guy, of course, is providing his service to people getting married. But I also mean whether it's a portfolio model or a single focus model. Okay, so I don't know if I've used those terms before, so let me just define it a little bit. When I say portfolio model, I mean the golf guy. He starts a blog, he starts writing all this content because he felt that most golf instruction online was being compiled by people who had some kind of an agenda.
Like they actually wanted to get people to hire them to be their coach or whatever and make themselves look better. Which is not a terrible thing, but he wanted to provide something different. So he starts with the blog and he learns to monetize that a few different ways. He gets people coming to the site and then clicking links. So he's getting this advertising or affiliate revenue.
Then he writes an ebook, I believe. I think he writes a second one. And then he creates a membership site, which I think actually contributed quite a bit to his overall income. He's also thinking about having relationships with vendors and golf courses for an additional revenue source. So all this together, this is a portfolio model.
Like he has built this asset, which is this golf site, and he's earning money from it from a few different ways. It's not like he only wants to do the ebook or only have the advertiser income. I think actually one of his primary goals is to diversify, like to increase his income, but also to diversify. Whereas the single focus model, episode 412, about this guy doing the floral services, well he just has that one service. Like obviously there's some different prices to it, depending on how much you want to pay for your wedding, what kind of complexity you want in the world of artificial flowers.
But basically it's one service. He doesn't have a blog, he doesn't have an ebook, he doesn't have a membership site and so on. Now the reason I wanna make this comparison is you might think that I'm gonna say, oh, the portfolio model is so much better. And whatever it is you're doing, you should pursue that model. Well, the thing is there are a lot of good things to that model.
It is good to diversify your income. It's great to have multiple sources. The golfer is truly building a brand around this stuff. So for certain projects it actually makes a lot of sense, but I don't think it makes sense 100% of the time for everyone and for every project. I think actually in some ways a single focus project, a single focus thing where you're like, I've got one thing, got one product, got one service, that's all I do.
In some ways that can actually be more effective and less confusing for potential customers. Especially when you're first getting started, sometimes thinking about a whole portfolio can be overwhelming. But thinking about a single service, a single product, well, that might be more manageable. And also often, like in these stories, like with the golfer, he didn't start with a portfolio model, he started with a single focus. His first focus was to provide a better blog with golf tips from real golfers.
That then led to his first revenue model, which then led to his second, his third, and so on. So when you think about your project, think about that question. Do you want to build a portfolio model or do you want to work with a single focus model or are you not sure yet? And that's fine too. Just something to get you thinking.
[Music]
Okay, so one more thing before we move on. I promise to talk a bit about profit margin. And as I think about this, I realize, well, this should probably be an extended episode of its own, but I'll at least give you a couple of highlights here and I'll make some notes for the future. So in that episode 4.12, I said something about how this guy with the artificial flowers, once he acquires his inventory, he essentially has a 100% profit margin. Now that's not totally fair because of course he does have some expenses.
He doesn't have the inventory expenses, but he still has other expenses. He has to transport those flowers. He might spend some money marketing. There's probably some other stuff that I don't even know about. And of course the time he spends, which is the most valuable resource of all.
I just want to say that overall, when you're thinking about your prices, when you're thinking about, okay, what is the cost to acquire something and then the cost to provide it, your profit margin should probably be higher than you think, at least initially. That's not because you're greedy. It's because there are things you haven't thought of. And some things may take longer than you expect. And if you end up having a higher profit margin, then you have more cushion.
You can make more mistakes, not to say that you're gonna make mistakes, but you know, most people do. If the project takes off, it just means you'll have more capital coming in that you can then use to reinvest in the business or of course just keep for yourself. So don't forget that your time is valuable and your profit margin should probably be higher than you think. And what kind of margin you should specifically aim for, it really depends a lot on the business. It also depends on the price of what you're selling.
So let's do another comparison and I'll make this one really simple. Let's talk about reselling physical items. So these could be items that you go out and acquire at a yard sale or a flea market, somewhere in person and you could acquire them online somehow and then you're gonna resell them somewhere else. Again, whether in person online doesn't really matter. The traditional rule in retail is that everything is marked up 100%.
So in the publishing world, for example, bookstores pay 50% of the list price for their books from the publisher and then they resell them at the list price, which is again twice as much as what they paid. Then they also have room to discount because they can say it's 20% off, they're still making a profit when they do that. So let's imagine that you're gonna resell two things, okay? And one thing is really cheap to acquire and the other thing actually costs a lot of money. So let's say you're gonna resell fidget spinners and laptops.
So through your fidget spinner research, you may discover that you can buy them for a dollar each, let's say, if you buy 200 at a time from China, you can acquire fidget spinners for $1. Well, you could then turn around and sell them for $2 each, but the thing is you're not making much money even though it's 100% profit margin. You have to sell a lot of fidget spinners to have a real impact on your life, right? Whereas when you're buying laptops and reselling them, let's say there's a particular model that you know how to acquire for $500. Are you gonna be able to turn around and resell that for $1,000?
Well, you might be able to, I mean, that'd be great if you can, but what if you can take it from $500 to $700? Well, you're quote unquote only making $200 on that laptop reselling, but that $200 is the same as reselling 100 fidget spinners if you go from $1 to $2. So I'm giving you this example to show that it's not like you can always say like, here's the percentage of profit that I should aim for. But in this example, I would say if you're gonna sell fidget spinners, you should mark those up a lot more than 100%. If you're getting fidget spinners for a dollar each, you should sell them for $5 each or whatever it is you can get away with.
And again, you should think about your time. What is your time worth to you? What is the opportunity cost of pursuing laptops or fidget spinners or a golf website or floral services or any of the other things that we talk about on the show or any of your own ideas as well. You don't have to have the answers to all this stuff when you're starting. It's just good to be aware of.
It's good to kind of have floating around in your brain so that at some point you can think more about it. At some point you can make some active decisions. And hopefully as you listen to the show, these kind of concepts and stories are gonna sink in and they will make a difference to you when you move forward. At least that's my hope. That's why I do it every day.
And speaking of making the show every day, guess what? We're gonna make it every day next week. That's right, seven days, seven episodes. Among other stories, we've got something about wooden bow ties. We've got something about a student entrepreneur who sticks it to Wall Street with inspirational quotes.
I think you'll enjoy that one in particular. There might be another crazy animal story coming up. We haven't had one in a while. People are starting to complain that there's no story about worms or grasshoppers or crickets or whatever else. Saddles for pet chickens.
If you're new, all these things actually have been featured on the show before, true story. So we'll see if we can get back to that soon. And as we wind down the recap, I just wanna say thank you to everybody who makes this possible. I'm gonna start with you. Once again, the listener.
You're the reason I make this show. If you make this part of your routine, listening every day for just 10 minutes, I too commit to supporting you and your quest to create your side hustle. Which is really all about creating freedom for your life. Like if you don't wanna call it a side hustle, call it something else. Call it your freedom plan.
Call it your independence plan. Even if you love your job and have no plans to leave, this is something that you need for yourself. Now, in addition to you and in addition to me, I'm not the only person who makes this happen. We actually have a team of people dispersed around the world working on various parts of side hustle school. Our production team is led by AC Valdez in Washington, D.C.
We've got Sarah Barrett working in Mexico City. We've got Jed Chang working on location from Thailand. He's helping out with the online community, answering member questions and facilitating various discussions. Our show notes and in fact, our overall schedule planning. A lot of responsibility there and all of that's done by Whitney Karinek in Portland.
Also in Portland, my cat, Libby Gilliboe. She's working the night shift. Currently in charge of doing some bookkeeping for my taxes coming up because man, that's just stressful. Side hustle school is part of the Onward Project that was started by a good friend of mine, a mentor, somebody who's helped me a lot over the years. Somebody I look to for leadership.
Her name is Gretchen Rubin. She has a very popular podcast called Happier. Make sure you check that out if you have not done so already. And we have lots of happier listeners already. I am happy to have you.
If you are enjoying the show, do me a favor. Tell your friends about it. Show them how to subscribe. Leave a quick little rating or review for us in Apple Podcasts or wherever you listen to podcasts. Only if you enjoy it, only if you have time.
I know you're busy out there. I'm gonna respect your time. I wanna make sure that each week we're bringing you something that's valuable to you. And that's my goal. That's my focus every day as we kind of move along through the year and prepare for much more to come.
Inspiration is good, but action is even better. So I look forward to hearing about what action you're taking. These short episodes every day are an investment in yourself. Those episodes go online at 601 a.m. Eastern time every day.
And I hope you'll join me for them. I'm Chris Guillebeau for Side Hustle School. [Music]
