Side hustle success
Follow the rules when running a side business outside of your day job.
Let’s be honest. How many times have you stared out the window dreaming about another passion or talent you have, wondering if you could make it work?
The fact is, there are thousands of people who have taken the leap into side hustle success, and the numbers are growing.
Apple Computers, Instagram, Spanx, WeWork, Yankee Candle Co. are just a few well-known companies that began as an entrepreneurial way to explore passions and make a little side money.
A side hustle is a business launched outside of a person’s day job. Years ago, companies may have used it against employees, calling it a reason for termination. Things have changed, however.
Just as COVID-19 accelerated the idea of remote work, it also has sparked an interest in generating additional income on the side. This year in fact, UW–Madison announced the Side Hustle Society, open only to students, as a “path to entrepreneurship, space for professional growth, and a way to earn income in your spare time.” Its motivation, according to a Daily Cardinal article, is to lessen the pandemic’s effect on student’s finances.
Regardless of the reasons, the entrepreneurial nature of working for oneself, if done wisely, can prove fruitful.
What follows is information for potential side hustlers to ensure they’re on the up and up, plus stories from six hustlers in various stages of ownership.
Launching a side hustle
Wisconsin-based entrepreneurs and co-owners of Tandem Consulting, Carrie Bohlig and Craig Clickner, successful side hustlers themselves, emphasize being smart about building a passion into a moneymaker in their book, So You Want to Start a Side Hustle: Build a Business that Empowers You to Live Your Life, Your Way. Clickner offers firsthand knowledge in an online article, “How I Stepped Away from Corporate America in My 30s (From the Side Hustles I Built in My 20s).”
Their advice to anyone seriously interested in living the dream is to separate all side-hustle activity into two buckets: preparation and productivity. One is decidedly more fun; the other essential to building a successful business. Both are necessary.
Lindsey Decker founded DogMa in Madison in 2012. Decker was on track for a career in corporate marketing but decided she enjoyed caring for canines even more. The company offers dog walks, dog hikes, day care, and in-home pet sitting services with her specially trained dog “mas.”
Turning a passion into an income stream has drawbacks as well. Will you still love your “hustle” as much when there’s cold calling, rejection, and income taxes involved? How will the business be funded and promoted on a consistent basis?
IB asked three local experts — Tom Godar, partner, Husch Blackwell; Dan Fahey, attorney, Boardman & Clark LLP; and Cindy Meicher, managing partner, Meicher CPAs LLP, to weigh in on side hustle opportunities and how to avoid the headaches they sometimes can bring.
Does your primary employer have an employment agreement or a stated policy about side hustling, questions Godar. “Those are the two areas that may put a damper on an employee’s ability to do anything he or she wants to do.”
Whether an employer needs to know that their employee is driving for Uber on weekends is not the issue, he explains, “but very often, [companies with] individual employment agreements, especially for top management and executives, expect that an employee is devoting 100% of their working time to them. They might carve out exceptions for board work or other consulting projects that were initiated before the executive joined the company. For those executives, a side hustle, which may or may not be renumerated, may be contrary to their agreement.”
Employment agreements may pertain to a position within a company, whereas employee handbooks set the policies for all. Often, Godar explains, policies may prohibit a second job without the employer’s approval. A conflict-of-interest statement also can complicate matters.
“Generally, you’re not supposed to be working contrary to your employer’s interests or taking advantage of your position with the employer to generate positive employment prospects elsewhere,” Godar cautions.
There could be a conflict of interest even if there’s no prohibition of moonlighting or second jobs. Most often, there’s a duty of confidentiality spelled out in an employee handbook, he explains. “If a company’s confidentiality is apt to be breached with this second job, you could potentially be in breach of the policies or handbook and therefore also subject to discipline.”
Does an employer care that an employee leaves work and tends bar at night? Probably not, but if that same employee begins showing up late or their performance on the job suffers, perhaps. “A general rule is that if you have a primary job, you can’t let the other thing interfere with your ability to do excellent work for your employer. Bottom line,” he continues, “you’ve got to keep showing up for work.”
Know the rules. “If your side hustle may impact your relationships or your responsibilities at work, that’s a good time to talk to your human resources department or your boss.”
Dan Fahey, Boardman & Clark, says many side hustles start out innocently enough. A person may create something, then a family member or a friend sees it and asks for another, and before they know it, they have a business. “It can be very unintentional and organic,” acknowledges Fahey.
Others launch a business because they’re well skilled in something and can leverage their talent for income to “see where it goes,” deciding to test the waters without jumping in headfirst.
At first blush, side hustles capture the entrepreneurial spirit, Fahey explains. Owners are often self-employed and earning extra money on the side, usually on nights and weekends.
They may opt not to tell their employer unless the side hustle is in the same line of work. “If the side hustle is baking bread or something completely different than their primary job, there rarely will be an issue,” Fahey explains.
Side hustlers should be very clear on their purpose. Are they starting a side hustle for fun? For a future career change? For independence? It’s always good to have a business plan to understand the market and the competition, Fahey advises, so long as it doesn’t interfere with the person’s day job.
As a side hustle grows, liability grows. That’s why he recommends forming an LLC, especially in a field that may be prone to dispute or liability by nature. While that could be a potential pitfall, he notes, without it the owner could incur personal liability.
Years ago, an employer could terminate an employee found moonlighting at another job, but Fahey believes those days are gone. “There’s a growing acceptance of young people doing these things outside of work. I think employers are being forced to adapt and the internet has allowed it to happen.”
Those darned taxes!
Now more than ever, people are starting side hustles to make money doing what they love, notes Cindy Meicher, managing partner at Meicher CPAs. “Just be prepared for self-employment taxes,” Meicher cautions.
When working for another company as a W-2 employee, the employer and the employee split the Federal Insurance Contributions Act (FICA) tax, which funds the government’s Medicare and Social Security programs. That means 7.65% is paid by the employer, and 7.65% is deducted from employee wages.
“When someone is self-employed, the IRS says they should be responsible for both of those, or a 15.3% self-employment tax on an individual’s first $142,800 of wages or self-employment income per year,” Meicher explains.
As an example, if a W-2 employee making $60,000 a year decides to start a side hustle, they’ll be taxed a 15.3% self-employment tax plus their federal and Wisconsin income tax rates. Doing the math, someone in a 12% federal tax bracket could be taxed 33.3% of every dollar they make as a self-employed individual.
“If someone is in a higher tax bracket — for example, a 22% federal bracket — they’re looking at a 43.6% total tax rate on self-employment income, so it adds up very quickly,” she notes.
Meicher admits the self-employment tax can be “brutal” if people don’t realize what they owe until the year’s end when taxes are due. “If someone makes $20,000 in a year and has to give 35% or 44% of that over to the federal government, that hurts.”
The best way to combat self-employment taxes, she explains, is to track all business expenses, which are “totally deductible and are a dollar-for-dollar reduction in your self-employment income.”
If working from home, claim a home office deduction and keep track of ordinary and necessary expenses required to conduct business, such as business mileage or cellphone usage.
Consider opening a separate business bank account to keep side hustle recordkeeping separate from personal accounts. “It makes it much easier at tax time,” Meicher says.
Establish an LLC to protect yourself, and if there’s a partner in the business, Meicher recommends having an operating agreement describing in detail how the business will be governed. “Fifty-fifty deals can be very problematic,” she cautions.
Partnerships in an LLC may require a partnership tax return, an S corporation tax return, or a Schedule K-1 to report the owner’s share of income. “When you get into that realm, you should have an accountant help you make the right decisions.”
On the positive side, side hustles can create opportunities for additional retirement savings. Higher earners with maxed-out 401(k)s can set up a Simplified Employee Pension (SEP IRA) with their self-employment income to sock more dollars away.
Meicher says there’s no limit to the number of side hustles a person can have, so long as the rules are followed. “The more complicated the better. We specialize in complicated.”
Mr. Bob’s dream gym
Side hustle: The Little Gym (Middleton)
Owner: Cindy Joers
Advice: Stick with the core mission.
Cindy and Bob Joers opened The Little Gym, a gymnastics-based franchise for children, in 2004. At the time, Bob was the athletic director at Middleton High School, although Cindy says he always dreamed of working at a gym. “Bob was big-picture practical while I’m the cheerleader in the moment, so we made a good team.”
After visiting The Little Gym owned by her sister’s neighbor in Naperville, Illinois, Cindy learned a franchise was available here. “It just made sense,” Cindy says. The gym focuses on age-specific motor skills for children ages 4 months to 12 years, and the couple loved the fact that it was noncompetitive. “Some kids just won’t be all-star athletes, but they can still be active. That noncompetitive part is huge, in my opinion,” she relates.
Bob believed in the program so much that he took a one-year leave of absence to ensure the side venture could support the family. “Within that first month, we realized it would,” notes Cindy.
Bob worked at the gym for seven years before returning to the high school in 2011.
“When he first went back, I was worried about how the gym would survive,” she recounts. “Everyone knew ‘Mr. Bob.’”
Thanks to Cindy and their grown children Alex, Brett, and Mattie [left to right, facing page], it did survive, even after Bob succumbed to cancer in May 2020 during the pandemic. “This is the type of business I consider essential,” Cindy says, “but we had to shut down for three months last year because of mandates.”
The business shifted accordingly, she says. Inside classes? Outside classes? “We knew that if we stuck to our core offerings, we’d be successful. It’s so important for the children. We’re really proud of how we came through it, and we’ve been ramping up ever since.”
The Little Gym community grows daily, Joers says, as parents learn about the program. “By fall, we’ll be firmly reestablished,” she predicts. Meanwhile, Brett and Alex now teach part time in the family business.
“This is their side hustle now,” Joers comments. “I think of Bob every day and how he’d feel about things. I think he’d be so proud.”
Filling the Gen Con void
Side hustle: Gamehole Con
Owner: Alex Kammer, partner/attorney, Atterbury, Kammer & Haag S.C.
Advice: Be realistic about your time and energy.
About 15 years ago, Alex Kammer, a Dungeons & Dragons aficionado, began weekly game nights in his basement with seven other area professionals who shared his enthusiasm for the game. “We named our space the Game Hole, like the Hobbit Hole,” he says.
They lamented the loss of Gen Con in 2003, a tabletop gaming convention that for years had secured a spot in Milwaukee. “It outgrew the city,” Kammer explains, and moved to Indianapolis.
Ideas began flowing, he says. “This was a pretty capable group of friends that could pretty much run any company, so we thought, wouldn’t it be fun to run a new conference now that Gen Con is gone?”
So that’s what they did. In 2013, the group launched Gamehole Con, a tabletop gaming convention at a local hotel.
In its inaugural year the event attracted 430 people, but attendance nearly doubled in year two, forcing a move to the Alliant Energy Center. By 2019, Gamehole Con registered nearly 5,000 attendees. After cancellation in 2020, registration opened July 1 for this year’s event in October.
The four-night gaming conference now sells hundreds of hotel nights at 15 area hotels, with most attendees traveling
to Madison from outside Dane County and other states.
Is it profitable? “It could be,” Kammer notes, “but we’ve made large donations to Extra Life, an organization that raises funds through gaming for Children’s Miracle Network Hospitals. So, it’s set up as an LLC, but we continue to operate it as a breakeven proposition.”
Kammer, a personal injury attorney, works in a two-lawyer office with two paralegals. “I’d have to fire myself,” he laughs, when asked how he manages both jobs simultaneously. “This is a creative outlet from my day job. When you love something, you just find time to fit it in, whether that’s at 10 p.m. in bed with my laptop on my lap,” he says.
His advice for side hustlers: Be realistic about your time and energy. The last thing you want to do is start something and then realize you’re in over your head.
“I’m painfully type A,” he says. “I can get a lot done in a day, but that’s not for everyone.”
From hunch to side hustle
Side hustle: Electrocycle LLC
Owner: Matt Furlott, former IT director/HIPPA security officer, health care
Advice: Your way may not be the cheapest or fastest. Explore options.
Since the age of 15 when his mom drove him to his first IT job, Matt Furlott, 40, has had a passion for computers. Yet no matter where he worked, he recognized one constant problem: “Companies don’t know what to do with their old IT equipment,” he states.
In his experience, companies stacked old equipment in a corner of a server room where it would remain until someone either determined it to be a fire hazard or complained that it looked terrible and had to be dealt with.
Along the way, Furlott watched CFOs ask for thousands of dollars to purchase equipment only to have to ask for more money to remove it. “That’s a tough sell,” he says.
There had to be a better way, he reasoned. “You can’t throw this in a dumpster. Nobody wants to pay to get rid of it. You can’t expect your IT people to also be experts in IT Asset Disposition, (ITAD) because it’s basically two different careers.”
Furlott launched Electrocycle as a side hustle in 2017 to alleviate that problem, but only recently left his day job to pursue it full time.
“I’d been thinking about this for a long time, but as a full-time employee, I had no real intention of going anywhere with it. There was no grand plan,” he says, “and I never mixed the two.”
Now as the sole employee, Furlott picks old equipment up for free. “Many people think the most important part is recycling equipment, but actually it’s data security. Hard drives contain a lot of proprietary information, so I ask companies what they want done with their data.” Electrocycle has about 20 regular clients.
Furlott is based in Ozaukee County, but he’s familiar with Cascade Asset Management in Madison, which does the same on a much larger scale. “I’ve used Cascade and they’re great,” Furlott says, “but most of my customers in small- to medium-sized companies don’t have the staff to get rid of or inventory equipment. My selling point is the simplicity of my operations.”
His advice: Get business insurance to cover your bases and avoid risk. Also, find the best way versus the fastest or cheapest way to do things.
Side hustle: Just Between Friends
Owner: Kristen Parent, program and events manager, Middleton Chamber of Commerce
Advice: Get organized.
When Kristen Parent was pregnant with her oldest daughter, a friend told her about a twice-yearly pop-up consignment sale of gently used children’s items. A fan of rummage sales, Parent knew the Just Between Friends sale was a way to find what she needed in one place. Now, as the owner of the local franchise, she coordinates 225 consigners, rents a 30,000-square-foot venue, and plans the twice-yearly four-day sale while balancing her role at the Middleton Chamber of Commerce.
“I like organization, I like lists, I like checking things off,” Parent explains, describing the tasks required of her side hustle, which averages about 10 to 12 hours per week. The franchise provides marketing support and technology to ensure items are scanned and tracked to the correct consigners, who receive 60% of the sale.
The large event typically draws more than 2,000 shoppers, primarily first-time parents or grandparents. Parent says she has no trouble managing the event outside of her 8 to 5 work schedule and mainly works on the business at night and on weekends. “Nobody knows that when I’m building my email database that I’m on the couch watching Netflix,” she laughs.
The relationship between Parent’s business and her role at the chamber is symbiotic and owning the business has helped her better understand both. “I can relate to what business owners have on their minds, and 30,000 square feet is no small venue to find for each sale, but my connections help.”
Her side hustle also has introduced her to software tools that she’s been able to share with the Middleton chamber membership through educational programming.
Just Between Friends has operated in Dane County for 12 years, but Parent has owned it for two. As it grows, she’s glad to see the bottom line turning green at the end of the year, but she’s opted not to take a salary until her business loan is paid.
“I see myself doing this as long as people keep coming to the sales,” Parent says. “Even when family incomes go down, children continue to grow and there will always be a need for these items.”
Cows agree, balance is best
Side hustle: JPG Nutrition Consulting LLC
Owner: John Goeser, nutrition director, Rock River Laboratory Inc.
Advice: Get paid for your experience.
John Goeser knows nutrition, especially when it comes to the dairy industry. As nutrition director for Rock River Laboratory with several academic degrees, Goeser has spent years fact-checking nutrition for dairy farms. When the need arose years ago for analysis and projection of the data he was checking, Goeser saw an opportunity for a side business.
Rock River Laboratory was not in the business of data analysis or projection, nor did it want to be. In response, Goeser started JPG Consulting to provide data analysis services using data collected through Rock River Laboratory. From there, he grew his side hustle business to include three more LLCs, including Cows Agree, an umbrella company that includes other consultants who contract with Rock River Laboratory.
Along with consulting, Goeser regularly writes industry articles, gives talks and webinars, and manages a rental property that one of his businesses rents from him. While most of his income comes from his primary W-2 position, his businesses are profitable and provide a large supplement to his income.
With two small children, three dogs, and a wife working outside of the home, time management can get tricky. Goeser keeps his priorities straight by focusing on the important tasks at hand. “I’m not a 60- to 70-hour-a-week kind of guy,” he says. “Losing my dad unexpectedly caused me to reset my priorities.”
Now he makes sure he’s available to his family every morning and in the evenings even though that can be challenging. “I’ve got more than I can accomplish in any given week, so I’m constantly reprioritizing what I need to be working on.”
The lesson he’s learned to make it all work? Pay the experts.
A solid reputation in the industry has shown Goeser that people are willing to pay for what he knows. This taught him to pay others when a task is outside his wheelhouse. “I need to make sure I have a team of advisors to help steer me,” Goeser says of his team of accounting and legal experts that he consults with regularly.
He hopes to pass along the lessons he’s learned to his own children when they are ready. “They are too young to understand now, but I want them to know how to make their way in business.”
Philosopher’s passion project
Side hustle: Red Rooster Madison
Owner: Jesse Steinberg, associate professor/assistant chair, Dept. of Philosophy, UW–Madison
Advice: Know what makes you happy.
Associate Professor Jesse Steinberg is as comfortable behind a guitar as he is behind a desk at UW–Madison. In addition to his teaching position and assistant chair role in the department of philosophy, Steinberg plays about 60 gigs a year with the blues band Madtown Mannish Boys.
After learning that one of the band’s performance venues — the Knuckle Down Saloon — was closing, Steinberg and a few band members decided to purchase the bar, rebrand the business, and support live blues and traditional American music.
One partner purchased the property and three others, along with Steinberg, plan to run the bar and restaurant. “I love making people happy with food, and music has been a major influence on my life,” says Steinberg, who will handle bookkeeping and live bookings.
Other band members will take on additional business tasks, he shares. “I think we each bring a certain skill set that will make this work out.”
A nod to Blues artist Howlin’ Wolf’s song, “Little Red Rooster,” the new establishment will be named Red Rooster Madison and feature live music three to four nights a week. After renovations and securing permits are completed, the owners hope to open the business by the end of the year. It will have a neighborhood bar vibe and serve homemade dishes with locally sourced ingredients. “We’re trying not to go too high-end,” Steinberg says. “The food ethics class I taught helped me meet local farmers, so we’ve got some good partnerships already.”
As far as balancing the tasks of his UW position with the side hustle, Steinberg doesn’t seem to be worried. “It’ll be tough, but I’m pretty good at compartmentalizing and managing my time.”
Still, he admits, he’ll probably be grading some papers at the bar. “People know me, and they know how passionate I am about this. They know I can get my normal job stuff done and do it well.”
Steinberg believes self-reflection is key to making a passion project successful. “Maybe this is just the philosopher in me, but knowing yourself is really important,” he explains. “You need to know what you care about and what you’re willing to devote your time to. If you line these things up correctly, you’ll be happy and thrive.”
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