My 4 ideas for a side business to diversify income
Lately I've been thinking about ways to earn extra money through a side business.
It's not that I'm going broke, I'm just looking to apply the concept of stock diversification to my income stream.
Ideally, I'd like multiple sources of income coming from multiple places.
As a self-employed writer, I'm already diversified: My income comes from as many as two dozen different publications and websites.
Almost every year, budgets get cut and I lose a client or two. It hurts, but it's easier to deal with replacing 10% or 15% of your income than all of it.
I also earn a little bit of money from my stocks (dividends and capital gains) and a few bucks (literally) per year in bank account interest.
But I'm looking to diversify outside of my field.
I also need something relatively passive because I can't afford to take time away from my writing business.
The first thing everyone suggests is rental property.
I've thought about it.
There are two small houses on my street that would make great rentals. It has great long-term prospects but too much short-term risk for me.
Even if I had $30,000 to drop on a down payment, I'm not ready to tie up that kind of money in a piece of property right now. Plus I really don't want the hassle of being a landlord.
I'm looking for a side business that I could start for $5,000 or less.
Ideally, I would have to spend no more than a few hours per week and be able to generate a few hundred bucks per month within a year.
I understand these might be unrealistic expectations, but I'm flexible.
I've been reading a number of books including The $100 Startup: Reinvent the Way You Make a Living, Do What You Love and Create a New Future.
The author interviewed 1,500 people who became "unexpected entrepreneurs" after discovering an unfilled market niche.
The book highlights a number of success stories, including photography businesses, websites and home-based web retail operations.
I've thought about a few ideas in the past couple of years, including:
- A DVD rental machine.
All of the video stores in my neighborhood have closed and the local Redbox machines have limited inventories. There's a big market gap of new releases and video games.
I looked into a small franchise, but the $23,000 initial investment (includes machine) would take me years of $1.50 DVD rentals to break even.
There's way too little return on capital.
- A photo booth business.
This is a popular growing business. It's essentially a photo booth that you rent out for parties and special events.
Some businesses use homemade booths, others buy manufactured units for around $4,000.
Ideally, I would get the business going then eventually hire someone to work the parties.
This could be a viable opportunity, but it's a relatively new market and appears to be saturated in New Orleans, where I live.
- Peer-to-peer lending investments.
I recently started investing in P2P lending notes at Lending Club. It's basically a platform that allows you to play bank and lend money to strangers.
I started with $1,000 and so far I'm earning a projected return of near 9.75%. I've seen some investors earning even more.
But to generate a few hundred bucks per month, I'd have to invest $25,000.
While I like what I'm seeing so far, I'm not yet willing to put up that kind of cash in this type of investment.
- Running boot camp.
I've been an avid runner for five years. I'm neither super fast nor an expert. But I took myself from not being able to run to the end of the block to running marathons and lost 40 pounds in the process.
I run five days per week, love it and would take great joy in helping others learn how to run.
This is certainly not passive, but I'm willing to overlook that here.
I envision a 6-week running "boot camp" that meets one hour, twice per week. At the end of the course, we would run a local 5K.
If I charged $100 per pop and had 10 people in the class, that would be $1,000. Maybe I do four sessions per year.
It's not the highest-grossing idea, but there's little upfront investment -- plus it's something I love.
I'm still thinking on this one.
In any case, with the state of the economy far from certain, I think we should all seek out some type of passive income.
I may run through 100 ideas before I find something that will work, but I'm going to keep looking.