The job market is evolving, and non-traditional career paths like self-employment, side hustles, and entrepreneurship are becoming more prominent. A challenging macroeconomic environment, technological advances, and the remote work boom have all contributed to a surge in folks looking outside of their W-2s for income and advancement opportunities.
A recent study published by LinkedIn indicates that about half of the adult US population has some form of secondary income as of 2023, and in the US alone, an average of 4.4 million new businesses open each year.
While terms like side hustles, self-employment, and entrepreneurship are often used interchangeably, they each have distinct differences that impact career and lifestyle choices.
Comparing and Contrasting Side Hustles, Self-Employment, and Entrepreneurship
To illustrate the differences and similarities between these paths, consider the following table:
| Criteria | Side Hustle | Self-Employment | Entrepreneurship |
|---|---|---|---|
| Primary Motivation | Extra Income, Experimentation | Autonomy, Flexibility | Growth, Innovation |
| Risk Level | Low | Moderate | High |
| Time Commitment | Part-time, alongside a job | Variable, often full-time | Full-time, often more |
| Financial Investment | Low | Moderate | High |
| Growth Potential | Limited | Limited by Individual Capacity | High |
| Key Challenges | Time Management, Burnout, Lack of Growth Opportunities | Financial uncertainty, isolation | Stress, access to capital/funding, high risk and uncertainty |
Passion for what you do and a distinct skillset are essential in each path, but you also have to factor in your risk tolerance, financial goals, and lifestyle preferences when deciding what avenue is right for you.
For example, I’ve worked with several clients who aim for total self-employment because they’re particularly passionate about something they believe they can monetize. Yet once the reality of depending solely on themselves for income and the difficulties of marketing, selling, and networking set in, they realize that doing their passion-based work as a side hustle while working a flexible standard employment job is the best fit for where they’re at in life.
All three types of work can be complex, time-consuming, and challenging. It can take some time and experimentation to figure out the best fit for you at any given stage in life.
The World of Side Hustles
Side hustles are additional ventures pursued alongside a primary job. They provide extra income, low risk, and flexibility, and are perfect for testing business ideas.
Challenges of maintaining a side hustle include time management difficulties and potential burnout. Balancing a side hustle with a full-time job requires strategic planning. Additionally, if you depend upon traditional employment to meet your financial needs, it’s important to discuss potential conflicts of interest or additional employment policies with your employer’s HR department to make sure you don’t end up in unexpected hot water for trying to expand your income on the side.
Common Types of Side Hustles
- Freelance Writing or Content Creation: Writing articles, blog posts, or creating content for websites and social media platforms.
- Online Tutoring or Teaching: Offering online classes or tutoring services in various subjects or skills.
- E-commerce or Online Selling: Selling products through online marketplaces like Etsy, eBay, or Amazon.
- Rideshare Driving: Working as a driver for rideshare companies like Uber or Lyft.
- Food Delivery Services: Delivering food for services like DoorDash, Uber Eats, or Grubhub.
- Virtual Assistance: Providing administrative, creative, or technical services to businesses remotely as a virtual assistant.
- Graphic Design or Web Development: Offering design or website development services on a freelance basis.
- Social Media Management: Managing social media accounts and content for small businesses or individual clients.
Understanding Self-Employment
Self-employment is when individuals work for themselves. It offers flexibility and autonomy, leading to personal fulfillment. However, it also presents challenges like financial uncertainty, lack of benefits, and isolation. Those considering self-employment should weigh these factors.
Common Types of Self-Employment
- Freelancing: Professionals such as writers, graphic designers, and programmers often work as freelancers, offering their services on a project-by-project basis.
- Consulting: Experts in fields like management, finance, or marketing offer their expertise to businesses or individuals.
- Online Businesses: This includes e-commerce store owners, affiliate marketers, and those who monetize blogs or YouTube channels.
- Tradespeople: Skilled workers like electricians, plumbers, carpenters, and mechanics often operate their own businesses.
- Creative Professions: Artists, photographers, musicians, and other creatives commonly work as self-employed professionals.
- Personal Trainers and Coaches: Fitness trainers, life coaches, and wellness coaches often work independently.
- Real Estate Agents: Many real estate professionals work as independent agents or under a brokerage on a self-employed basis.
- Tutors and Educators: Individuals offering private tutoring or specialized educational services.
- Catering and Personal Chefs: Those with culinary skills may start their own catering businesses or work as personal chefs.
Entrepreneurship Explained
Entrepreneurship involves starting and running a business. It's marked by potential for significant growth, innovation, and leadership opportunities. The cons are high risk, substantial time and resource investment, and stress.
Entrepreneurs need resilience and a strong commitment to their vision; they often need access to startup capital, investments, or other funding sources to get their business off the ground. One of the hallmarks of entrepreneurship that distinguishes it from self-employment or solopreneurship is that it typically seeks to establish a business that is able to perpetuate itself beyond its original founder. Entrepreneurs often have an exit plan for themselves as it relates to the business their building, which can include selling the business to a larger entity, transitioning leadership of the business to a subsequent leader, or aiming for an Initial Public Offering (IPO) and becoming a publicly traded company. The business remains even when the original founder is out of the picture.
Common Types of Entrepreneurship
- Tech Startups: Developing innovative technology solutions or software, often focusing on solving complex problems or creating new market opportunities.
- Retail Businesses: Launching physical and/or online stores or platforms to sell products directly to consumers, often involving working with manufacturers, distributors, suppliers, and supply chains to maintain inventory and fulfill purchases.
- Social Entrepreneurship: Creating businesses that primarily aim to address social issues or contribute positively to society, often blending profit goals with social impact.
- Franchise Ownership: Purchasing and operating a franchise of an established brand, which involves following the franchisor's model while running one's own business.
- Innovative Product Inventions: Designing, patenting, and marketing a new product or invention, often involving manufacturing and distribution processes.
- Restaurant or Food Business: Opening and managing a restaurant, café, or other food-related business, which can range from fast food to fine dining.
- Health and Wellness Services: Starting businesses in the health and wellness sector, such as fitness centers, yoga studios, or health coaching services.
- Real Estate Investing and Development: Engaging in property investment, development, and management, including buying, renovating, and selling properties or managing rental units.
Navigating a Career Change
If you’re considering pursuing a side hustle, self-employment, or entrepreneurship, be prepared for a significant number of challenges that require you to be adaptable regardless of what you choose. Particularly if you decide to pursue entrepreneurship and will have other employees depending on you, it’s ideal to make sure you have collaborators, capital, and mentors lined up beforehand.
Thinking in Bets & Weighing RIsk
What scares a lot of people away from entrepreneurship or another form of self-employment is the degree of risk inherent to that decision. If you don’t have a large cash surplus or support system to fall back on, then you are putting a lot on the line when you step away from a full-time job to launch your own business.
And yet, the allure of a successful enterprise is often worth it for many aspiring creators and business builders.
One common approach to mediating the risk of moving toward entrepreneurship is using a side hustle or part-time self-employment to experiment and test the waters. That way, you can identify skill gaps in yourself that you need to address, start building a customer base, and turn enough of a profit margin to qualify for business funding before you go all in as an entrepreneur.
Another tactic for mitigating risk that’s a bit more challenging but incredibly impactful is building your network and finding collaborators and cofounders to join you. Bringing on cofounders means you won’t be the sole decision maker in the mix, and you may have to give up some autonomy to meet them halfway on things, but it also means that there’s someone else working to make the business a reality, which diffuses some of the risks you carry and ensures that if you’re having a bad day or need to rest, someone else can keep running the show.
Our Parting Advice: Think Slow, Act Fast
Technology has reshaped– and continues to shape– the economy in a way that there are myriad exciting and rewarding career opportunities to pursue. As individuals, we’re able to create a positive impact for our families, communities, and states in ways that past generations could have only dreamt of.
And yet, whether you’re looking to tack on a few delivery gigs to cushion your wallet or thinking about going all in on that business you’ve always dreamt of, it’s important to formulate a plan and avoid diving in headfirst without considering your goals, values, and long-term objectives. One of the biggest mistakes I’ve seen budding entrepreneurs make (including myself at various points in my career) is to get excited about an idea and immediately leap at it without thinking through the implications. It’s a surefire way to lose money or end up on a career trajectory that’s not truly aligned with what you want to be doing, even if it felt right in the moment.
So, my advice to anyone reading this article because they’re considering some flavor of entrepreneurship: think slowly about what you want in life and in work, and then act fast once you have a plan.
Other Resources
- Join the Howdy Curiosity Community & Business Book Club! Meet potential cofounders, collaborators, and supporters while engaging in thoughtful conversations, participating in a book club, and getting access to exclusive perks and discounts.
- Check out our collection of startup-focused books, particularly titles like
- The Long Game by Dorie Clark if you’re looking for a refreshing and realistic perspective about figuring out what the hell you want your entrepreneurial life to look like.
- Business Model Generation by Alexander Osterwalder if you’re thinking about how your idea can fit into or challenge traditional business frameworks.
- Deep Work by Cal Newport if you feel like your mind is going in a million different directions and you’re struggling to make progress toward launching your business.