This transcript was generated from the episode audio and may contain minor errors.
[Music]
Oh, hey there, what's up, welcome. This is Chris Guillebeau, your host for "Sottosville School," bringing you the weekly recap. Gonna look back at some stuff this week. I've got some listener comments, a question to respond to. Last week I had some comments myself about network marketing.
A listener called in with a question, and I actually hear questions about network marketing or multilevel marketing pretty much every week. And in the past I have gently said that I don't think it's a great idea for most people. But last week I decided to go just a bit further because I see so many people wasting time, wasting money, believing that there's something wrong with themselves. If they invest in a network marketing program, then they're not able to be successful. And I actually have a fundamental problem with the whole industry.
So I talked about that a little bit last week, and I said I'd probably get some complaints about it. You can go back and listen to that episode. It's 4-4-2 if you're curious. And I haven't gone back to listen to that myself, but I think what I said was that there are some success stories, but whatever success stories come out of that industry are the exceptions. And the vast majority of people, like the vast, vast majority of people, never even make back the money they spent to get into that program.
So honestly, the whole thing is problematic. And what I'm trying to show people through Side Hustle School is that there are all kinds of other ways. You don't have to go through somebody else's program. There's something that you're good at. There's some knowledge that you have that we can pull out somehow, maybe transform or adapt it in some way.
And that's why out of all the different stories I've told you, 400 plus so far, since we started January 1, 2017, none of them have anything to do with network marketing. There are some that have to do with the gig economy or selling through somebody else's platform, but that's not the same thing as network marketing. And even those stories are a minority. Like I would say 85 to 90% plus are just what I mentioned, people looking at their skills, their experience, things they enjoy doing that they're also good at, things that have value to other people, and then saying, okay, how can I turn this into a product or a service? Like the basics of this are not that complicated.
There really are just like different iterations of it, different iterations, different variations. It's kind of like going to the movies. If you ever watch a superhero movie, like the story is pretty much the same thing in every superhero movie or every quest movie. It's all built on this hero's journey concept. And you see the same elements appear over and over just in different forms.
And I think it's interesting to look at those different forms because they can give you ideas, they can strengthen your knowledge, they can show you what not to do. There are all kinds of benefits to it, but I guess the point is I'm trying to teach people how to do something for themselves, not look to somebody else to save them, which is a big part of the messaging behind how these programs tend to market themselves. And so for most people, for most of those opportunities, if you go down that road, you're not really being empowered. You're not really doing anything for yourself. It's a false sense of security.
So if there's somebody out there who's in the midst of this kind of thing, like I don't mean to bring you down in any way, I want to affirm you, I want to build you up. But honestly, I think the best thing you can do is kind of run from that opportunity, like get out while you can before you spend any more money or waste any more time. And once again, go back to these core principles of learning the power of observation, of going from idea to offer, creating that product and service, all this stuff that I talk about. So that's a little recap on that. And feel free to disagree with me, by the way.
Like if you have a different opinion, that's fine. But do know that I'm speaking from the experience of starting Side Hustles for 20 years and working with thousands of people all over the world in different perspectives, different backgrounds. So I really do think there's a better way. And today's topic, another thing I want to talk about is this question of profit margins. Basically the question is, is it okay to make money?
Although that's not how people tend to phrase it. This is another thing that comes up quite a bit. We had a conversation with one of the people that we featured on the show recently. I'm not going to say who it is, 'cause they have a great story and they actually gave us lots of details. But as part of the conversation, we got to talking about profit margins, how much it costs them to make a certain thing that they sell, and how they didn't want to say publicly what that was.
So I've got an opinion on that too. I think it's going to challenge some of your thinking, at least some people's thinking out there. Sit tight and I will bring that to you. I want to say hello to a couple of people. We've got this thing called the Hustle Hotline, by the way.
I'd love to know what you're working on this week. What's your number one goal? If you want to give me a quick call and leave a little recording, just say your name, what you're working on, what your number one goal is. In the weeks to come, we'll be sharing some of those recordings on the show. And the Hustle Hotline conveniently has a phone number.
You know, it is a hotline, right? That number is 8449 Hustle, 8449 Hustle, or that's also 844-948-7853. If you'd like to make little voice notes or voice memos with your phone, you can do that too. Just make that little message and then send it to podcast@sidehustleschool.com. What are you working on this week?
What's your number one goal? Let's hear from a couple of listeners. I think we've got one question and somebody I want to do a shout out for. And then I'll share my thoughts about those profit margins. [Music]
Hey Chris, my name is Jessie and I'm calling in from Encinitas, California.
I love the show so much. And after listening for the last six months, I've finally started working on an e-commerce store of my own. Now, a lot of people have talked about using PayPal as a payment option for customers on their website, but I really don't like them. Are there any alternatives that you would recommend that are easy to get started with? Thank you so much for your help and keep up the great work.
- Jessie and Encinitas, thank you so much for listening. I'm excited about your new upcoming e-commerce store. - Yeah, so the thing about PayPal is there certainly are alternatives. I mean, there's a lot of them. One that I've used before that actually is really simple and intuitive is called Gumroad.
We don't have a partnership with them. It's just a resource I've used myself. So you can check that out at gumroad.com. If you can put in a little bit more work on your e-commerce store, or if you know a developer, somebody with some coding skills, you might also want to check out Stripe, Stripe.com. That's a very standard common processing solution that's used by a lot of the internet these days.
I would just say quickly about PayPal though, the thing is, it's not so much about you, it's about your customer, right? And a lot of customers like to use PayPal. I mean, the majority of people listening to this show probably have a PayPal account. So if you really want to do something entirely different, of course, that's fine. I would just be careful in writing off something that so many people use.
It's important to think not just about yourself and your own preferences, but also what your customer wants. Anyway, good luck. I look forward to checking out your online store. - Hi, Chris. This is Michael Levo from St. Louis.
I'm a marketing and business teacher. I've recently been turned on to your podcast and I can't wait to add it to my entrepreneurship class as a regular daily exercise for all of my high school wannabe entrepreneurs. Thank you so much for what you're doing. - Okay, here's the context for some comments about profit margins. We had a discussion with somebody we featured on the show recently and they didn't want to say who it was, so we'll respect that.
But I think the conversation is appropriate anyway. We were talking about their startup costs and their profits and all that kind of stuff like we usually do. And it came to this question about profit margins. This person is selling something that costs about $600 at retail and it costs them about $200 to make it. All right, so they're making something for $200 and they're selling it for $600.
And they were selling quite a lot of them. So they were really successful. It's not like it was overpriced. I mean, people were gladly willing to pay $600 for it. But they were a little bit concerned about saying on the show, it only cost $200 to make this thing that we sell for $600.
Because maybe some people think that's bad. Or maybe some people think like, oh, we're ripping people off or something. I thought that was really interesting because there could be a perception issue, like you might want to be mindful of that for some reason, for some people. But that's the only issue. In terms of business, in terms of making something and selling it, I don't think you have to apologize for having a good profit margin.
If you're able to sell something for $600, like in this example, does it really matter to the person buying it if it costs you $500 to make it or $200 to make it or $20 to make it? If they choose to see that there's enough value in that purchase for them, then everything else is kind of irrelevant. And you might be able to see the problem with the logic of thinking that your profit margin is too high if you just consider a hypothetical example like that. So let's change it up a little bit. And let's say the markup for something is 100%.
It costs you $5 to make something and then you're gonna turn around and sell it for $10. Totally reasonable. That's a very normal formula in retail, lots of different industries. Well, what if along the way you find a way to make that same thing for $4 instead of $5 and people are still happily paying $10? Like what is your response at that point?
I guess you could go and lower the price and say, "Oh, well, now it's costing me less, "so I should then lower the price." Or you could congratulate yourself and say, "Look, I found a way to save money "without impacting the quality of the product "or whatever it is. "So therefore I now have more of a profit margin." And the thing is when people are starting out with their side hustle, especially for the first time, they tend to underestimate their costs. They underestimate how much time it's gonna take, they underestimate different things that you need to get going. And of course on this show, I'm always promoting like low startup costs, get started quickly, et cetera. But it's certainly true that your time is valuable.
So I actually think it's really good, if at all possible, to aim for a high profit margin. It's actually dangerous to be selling a commodity or something where you have like a really, really low profit margin. It gives you no margin for error. Like if you mess up in some way, you make a mistake, or you're not as efficient or optimal as possible. If your profit margin is 5% on a low priced item, it's gonna be really, really hard to succeed.
So I guess all that to say, we could talk about it a bit more. But my point is, don't be ashamed in any way of making money from your product or service. It's gonna allow you to grow. It's gonna allow you to make different decisions. It's gonna allow you to expand.
It's gonna bring you that freedom, which is what it's all about for a lot of people. But even just in pure business terms, it's gonna allow you to make different investments and otherwise grow that business to be able to serve more people. So to bring it full circle, I don't think someone who sells something for $600 that only costs them $200 to make is doing anything wrong at all. I think they should be congratulated. They found a way to make something that people want and they found a way to make money from it, which is what I talk about every single day on the show.
That's just my two cents, or should we say my 300%. I'd love to know what you think, of course. Let me know, like I said earlier, send me a little message, either voice memo or email, whatever's best for you. And one more thing before we go on, I was thinking about the episodes of this week, kind of looking back and reviewing some notes. And a question I kept coming back to, especially regarding two episodes that I'll tell you about, now this question is, what are your motivations for doing this?
Like what's the whole point of you starting your side hustle? Which is another thing I try to encourage people to think about, like why? What attracted you to side hustle school? Why do you want to have a project like some of the ones that you hear on the show? And there were two episodes, episode 443 and what is it, episode 448.
So basically the episode that started the week and the episode that ended the week, Monday and Saturday. The first one was called Online Dating Profile Service Turns Frogs Into Princes. And the last one was called Santa Barbara Gift Shop Sells Soulful Succulents. Can't believe I actually got that right. Soulful succulents.
And in each of these stories, the people who started them had kind of different experiences than what I often talk about. The first story actually happened several years ago and the second story is really just now getting started. Like it's been going for something like three months. In each case, the motivation for both people was not to make a huge amount of money. It was more along the lines of personal growth, but it was personal growth with profit, right?
Should go back to the whole point about how your side hustle needs to be profitable. So in the case of episode 443, that online dating profile service, it's about a woman who is helping people, men in particular, to improve their online dating profiles. And this project wasn't a big failure, but it also wasn't a huge success. I forget exactly how much it made, but it was relatively small amount of money. What it did do was it helped her get a job.
It helped her get a better job than the one she had. And then later that side hustle experience gave her the confidence to actually go out and work for herself full-time, which she hadn't even really considered when she started. So it's kind of like a small project can lead to something much more. You just have to step out and start that small project. Similar lesson, but in a different way with that last one, the Santa Barbara gift shop, it was this person's dream to always have a retail store, but retail stores are expensive.
How are you gonna open a bricks and mortar location, especially in Southern California? But through a couple of circumstances, all working out the right way, she's been able to do that over the past few months, making, I think, a couple of thousand dollars a month from this gift shop. And that too was motivated from a place of change. I believe her name was Nina, and she had just gone through a divorce. She had always had side hustles before, but she didn't have one at this time.
And she wanted to make a change in her life. And in a lot of ways, this gift shop has given her renewed meaning and purpose. So that story is still kind of being written. Like I told you about how it's gotten started in that episode and how it's doing so far. We'll have to come back at some point and say, okay, well, what was the result a year later?
Did it actually like blow up and become a full-on business? Or did she just move on to something else? Did it lead to a different kind of project? Maybe something that she wouldn't have considered otherwise. Who knows?
But that's just part of the adventure, right? That's part of the journey. So when you're thinking about your side hustle, like what's the point for you? Why are you doing this? Maybe you don't even completely know.
Just like with that first story, she didn't have the goal of going full-time. That happened along the way. But still, I think it's always good to ask yourself, okay, what's my goal? What do I hope will come of this experience? What's the best case scenario?
And what is the minimum acceptable scenario? Like if it's not a home run, what is at least going to be a success for me? [Music]
Okay, well, I have said a lot in this recap and I always wanna respect your time. So I'm gonna close out the week. We've got a whole nother week of stories coming up.
As I close out the week, I just wanna say a quick thank you to people who make this show possible. Our production team is led by AC Valdez. It also features Sarah Barrett, sometimes some other people filling in. Our show notes, host wrangling, all kinds of other stuff is led by Whitney Korinek in Portland, Oregon. Of course, my cat Libby Gillibough, she hasn't done much this week, but you know, that's how it goes.
I want to thank you as well for listening. I wanna thank you for being part of this community. If you make this a commitment, if you make this part of your routine, like I'm gonna listen every day for 10 minutes. Well, my commitment to you is that I'm gonna be there every day for 10 minutes. Whatever your motivations are to create a new source of income, I wanna make sure I support you fully in that quest, in that goal, that side hustle that you've thought about for a long time that haven't turned into reality until now.
Let's make it real. If you're enjoying the show, do me a quick favor, tell your friends about it, give us a quick little rating and review in iTunes, also known as Apple Podcasts, but mostly don't forget to do something for yourself today. It is our single-minded mission of the show to be a support for you in that regard. Let me know how we're doing, much more is on the way. I hope you'll join me tomorrow and each day next week with more stories and actionable ideas.
Our episodes go online at 601 a.m. Eastern time every day. I'm Chris Guillebeau, this is Side Hustle School.
