Wednesday, June 19, 2019

Here are 5 myths about side hustles you can't afford to ignore - CNBC

Here are 5 myths about side hustles you can't afford to ignore - CNBC


Here are 5 myths about side hustles you can't afford to ignore - CNBC

Posted: 19 Jun 2019 04:56 AM PDT

A few years ago Demia Doggette saw fashion bloggers and Instagrammers turning their online personas into business empires, and she thought she could follow suit.

While working at a public relations agency full-time, Doggette, now 32, launched her blog, Beautiful Epiphany. She spent more than $1,000 setting up the company, hoping it would generate revenue to supplement her income.

"I invested in a professional camera and hired someone to create the perfect website," the Orlando resident says. "I did my homework on the topic of blogging, and I just knew I would be the next big thing."

Doggette isn't the only one looking for additional work to bring in cash, as wage growth continues to lag, with hourly earning rising just one tenth of a percent. Workers struggling with student loans and the rising cost of health care, housing and child care are looking for ways to boost the income side of their household balance sheet.

Two-thirds of side hustlers say they took on a second job in order to have more spending money, and 56% do it to increase their savings, according to CreditLoan.com.

The advent of the gig economy and platforms that make it easy to find flexible work outside of business hours has nearly a third of workers maintaining a side hustle in addition to their regular jobs. Still, they're often not a long-term solution. More than 60% of Uber drivers lasted less than six months on the platform.

"Side hustles always sound like they're going to be this cool, entrepreneurial activity," says Arne Kalleberg, a sociology professor at the University of North Carolina at Chapel Hill who studies labor force issues. "That's part of the PR and the lure of these platform companies — that you can work and make money whenever you want and be flexible. But that's not always the case.

Demia Doggette became a fashion blogger to supplement her income but learned it wasn't easy.

Allison Johnson of Allison Johnson Photography

Some side hustles are nothing more than pyramid schemes disguised as multilevel marketing programs that can lead to major financial losses. Even legitimate business ideas can get expensive quickly. One study found that the first-year cost of an entrepreneurial side hustle was more than $16,000.

There's no shortage of stories about the people who side-hustled their way out of debt or who launched a multimillion-dollar business while holding down a 9-to-5 job. For many would-be side hustlers, however, the reality of working two or more jobs is less glamorous — and often less profitable.

That was the case for Doggette. After about a year of writing and posting daily, the blog still hadn't gained traction and she hadn't earned any revenue. She started investing less time and money in it. Eventually, she stopped posting entirely.

If you're thinking of trying your hand at a side hustle, here are five myths to keep in mind.

1. Everyone needs a side hustle.

While there are plenty of advantages to bringing in extra money, taking on the added responsibility of a side hustle can mean more stress and less personal time. If you're happy with your current job and are making enough money to feel financially secure and not harboring dreams of entrepreneurship, spending time on a side hustle may simply add unnecessary stress to your life.

"Every hour that you spend working is an hour that has to come from somewhere else in your life, whether that's sleep, leisure time or your time with family and friends." says Alexandrea Ravenelle, author of Hustle and Gig: Struggling for Survival in the Sharing Economy. "

2. Your side hustle will solve all your money problems.

Additional income can make it easier to make a dent in your student debt or to save up for a home down payment, but side hustlers often underestimate both the amount of money they'll bring in and how much they'll spend on expenses to keep it going. Uber and Lyft drivers, for example, need to pay for gas, additional car maintenance and rideshare insurance. Other gig platforms also have expenses, including application fees and commissions that can cut into your rate.

"These platforms are notoriously bad at being transparent about what workers are getting paid," Ravenelle says. "It's not unusual to think you're getting one amount and you're actually making much less."

TaskRabbit, for example, takes a 15% service fee on all jobs. After factoring in taxes and travel expenses, a gigger might only actually net $60 on a job that paid $100.

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3. There won't be an impact on your full-time job.

One in five side hustlers admit to working on their part-time gig while at their primary job, according to CreditLoan.com. Even if your goal is to keep the side hustle entirely separate from your main gig, it may creep in. Whether you're answering occasional emails or text messages or are less attentive because you're stretched thin from working additional hours, having a side hustle will make you less focused on your current job.

In some instances your side hustle might even put your full-time job at risk, so check your employee handbook or ask HR whether there are restrictions on the type of outside work you can do, particularly if it might pose a conflict of interest, Ravenelle advises.

"A car service might not want workers driving for Uber in their free time, or a graphic design company might look down upon a worker offering discounted services on Fiverr," she says.

4. Turning your passion into profit is a dream side hustle.

For many people the side hustle grows out of a hobby they truly enjoy. Once your photography or knitting or cookie-baking becomes a business, however, it can be hard to maintain the passion. Plus, you're no longer responsible for simply producing the product itself. You also now have to do all the other things that go along with the business, such as marketing, accounting and invoicing, which you may find far less enjoyable.

5. It's easy to turn a side hustle into a profitable business.

It's certainly possible to start a side hustle that grows into a business of its own. But it's not easy. You'll need to put in long hours and be prepared for an emotional roller coaster that may not pay off in the end. Among entrepreneurs who have grown their small business from a side gig, one in four say their current company didn't come from their first side hustle, according to a study from Hiscox. One in five small businesses fails in the first year, and only about half make it to five years.

Doggette ultimately did become a successful entrepreneur, but it wasn't via her blog. Instead, she launched her own public relations firm, The Couture Agency, and made that her primary focus.

"I'm fulfilled now and making more money working full-time for my own agency," Doggette says. "I don't have another side hustle. I don't have time for it."

Check out How a couple's whiteboard strategy helped them pay off $18,000 in Debt in 2 years via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

Will a German investment in Ghana's youth slow down migration? - PRI

Posted: 18 Jun 2019 06:00 AM PDT

Halifax Osei Acheampong says there are few men his age left where he grew up.

"All the youths are gone," Acheampong says. "They have gone to Libya to look for work."

Acheampong lives in Sunyani, a mid-sized city of about 200,000 in central Ghana. He's not ready yet to leave for Libya — and European governments are sponsoring programs to encourage men like Acheampong to stay in Ghana.

In the Sunyani area, communities crowdfund to help young men migrate via Libya to Europe in the hopes of remittances that, in turn, enable more young men to migrate. It's home to 52% of all returnees rescued from Libya by the Ghanaian government during the 2011 uprising and subsequent civil war. 

"All the youths are gone. They have gone to Libya to look for work."

Halifax Osei Acheampong, entrepeneur

"I have a cousin and an uncle who went to Libya and now they are in Europe," Acheampong tells The World.

Another cousin died while living in Libya. 

"Now that there is a crisis in Libya, some [migrants] suffer from gun wounds, some are going through torture and slavery," says Superintendent Haruna Alhassan of Ghana's Migration Information Center, based in Sunyani — the first of its kind to provide information on migration safety. 

In 2019, about 555 migrants died in the Mediterranean Sea trying to reach Europe, according to the latest figures from the International Organization for Migration.

Acheampong, 30, has also contemplated leaving Ghana many times but has so far not done it. Instead, he started a small graphic design practice in 2018 making screen-printed T-shirts. 

Now he's part of a business entrepreneurship program that he hopes will help him turn his company, "Haliwear," into a profitable venture so that he can employ others and keep his friends from leaving. The project, funded by GIZ, the German development agency, is part of a larger pan-European effort to stop Ghanaian migration to Europe. 

Between January and March 2019, five-day boot camps were held in Accra, Kumasi and Sunyani. More than 3,200 young entrepreneurs participated. 

These cities were chosen because youth have migrated via Libya to Europe in higher numbers than anywhere else in Ghana to look for jobs and a better life. 

Unlike many of the other African countries where people flee for Europe, Ghana is a robust democracy with good economic prospects. It's the fastest growing economy in the world in 2019, according to projections by the International Monetary Fund.

But that hasn't stopped thousands of young Ghanaians from attempting the perilous journey to Europe via the Mediterranean in search of greener pastures. 

Related: African migrants are reaching Europe with tales of kidnap and torture in Libya

According to the International Organization for Migration, 62,422 Ghanaians remained stranded in migrant detention centers in Libya alone in March 2018. Ghanaians formed the fifth highest number (out of 38 nationalities) of detained migrants after Egyptians, Nigeriens, Chadians and Sudanese.

That's because structural problems belie Ghana's economic projections and stellar GDP figures: Ghana's new wealth, precipitated by the discovery of oil, has yet to trickle down to many — especially young people — in rural Ghana. 

Unfair global trade rules and the enduring legacy of British colonialism means Ghana is still dependent on the export of raw materials, such as cocoa, which hit a 10-year low in 2018. Ghana and the Ivory Coast, producers of 70% of the world's cocoa, agreed in June on a minimum price for cocoa to try to protect farmers. 

The unemployment rate of 6.7% is marginally above the sub-Saharan Africa rate. And the situation is most bleak for youth without formal education qualifications.

Big dreams, small businesses

Paul Nana Nketiah, a 46-year-old accountant, stands before a small, attentive class, including Acheampong. He teaches the basics of budgets and business plans: "Financial management starts with a budget," he says. 

Nketiah teaches young Ghanaians how to own and manage a business as part of the second round of GIZ's entrepreneurship program — officially called "Jobs for Youth: Migration and Employment Promotion Project." 

After an open pitching competition, 400 entrepreneurs get selected to move on to the second stage, which includes four months of "business incubation" classes. Out of this cohort, only 90 will take part in three months of "business acceleration" classes and just 10 will go on to receive funding to scale up their business ideas. 

Classes such as the ones Nketiah teaches are part of wide-ranging efforts across Europe to stop migration and to show that "alternatives to irregular migration do exist in the country," says Alan Walsch, head of GIZ in Ghana.

The EU's other initiatives include bolstering patrols on the Mediterranean while strengthening the coastguards of North African countries. Despite the militarized seas and gruesome testimonies, many still attempt the trip. 

Across Europe, far-right politicians are on the ascent, riding on a wave of populism and xenophobia. In European Parliament elections last month, far-right parties swept to victory in a number of countries including Italy, France and the United Kingdom. 

In Germany, an open-door policy has already cost Chancellor Angela Merkel her chancellorship. Merkel's decision to allow more than 1 million migrants and refugees have been praised, but it also ​​galvanized anti-immigration parties such as Alternative for Germany — now the third largest party in parliament.

If Nketiah's business classes can prepare young Ghanaians for success in business, the idea is that it will keep them rooted in Ghana. But Nketiah can already see a few problems with the scheme. 

"The challenge now is that they want to become rich overnight … Starting [the business] from humble beginnings, that's not what they want to hear. They want to start big." 

Paul Nana Nketiah, 46, accountant, Sunyani, Ghana

"The challenge now is that they want to become rich overnight … Starting [the business] from humble beginnings, that's not what they want to hear. They want to start big," he says.

Daniel Ankamah Mensah, also one of Nketiah's students, acknowledges the urgency and desire for change. 

"In 2017, I moved from my hometown to Accra to work on how I could get out of the country to continue my education and find a job because, after school, I wasn't getting employment," says Mensah, 28. 

He graduated with a degree in biochemistry in 2014, but still hasn't gotten a job and says dozens of his university friends have already left the country for Europe. After his own plans to migrate failed, he returned to his hometown to start a yogurt-making business. But nearly a year later, it's yet to turn a profit. He hopes Nketiah's lessons will change that.

About 90% of all Ghanaians who leave for Europe via the Mediterranean are young men aged 16 to 35, Superintendent Alhassan says. For young women, the destination is Gulf Arab countries where they find employment as domestic helpers under the kafala system which "can amount to forced labor," according to the United Nations.

But the efficacy of the entrepreneurship program remains a question mark. Realistically, not all businesses will succeed and not everyone possesses the temerity to manage a business. 

Professor Peter Quartey of the Center for Migration Studies at the University of Ghana has studied the use of aid by France to help minimize migration by setting up industries in areas with high migration with the hope that new jobs and income will stop people from leaving. 

"The scale was very low and therefore it was not able to achieve very significant impact," he said. Quartey adds that a major shortfall of such initiatives is monitoring after the project ends. 

"If, after the training, you equip them with capital and you don't ensure that the funds are used for the intended purpose, that will not help."

Economic prosperity leads to greater security and mobility, and the GIZ-funded classes might convince some would-be migrants to try making a life at home. But it could also produce the reverse result. 

For young entrepreneurs with big dreams, a small business might not be enough to keep them home if they are convinced of greener pastures in Frankfurt.

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