5 Side Hustles That Cost You More Money Than They’re Worth
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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The gig economy has certainly made a lot of people money over the years. It’s easy to see it as an easy ticket to growing your wealth. However, not every side hustle is worth the time or effort you put into it.
In fact, some side hustles require you to put money upfront while you bank on making that money back with no guarantees.
Here are five side hustles that may cost you more money than you earn.
Multi-Level Marketing (MLM) Ventures
Any side hustle that is dependent upon getting your friends and family to sell products too, known as a multi-level marketing venture (MLM), runs the risk of being a lot more work than it’s worth, according to Abigail Wright, senior business advisor at ChamberofCommerce.org.
She said that “MLMs can appear lucrative but often require a substantial upfront investment in inventory, training and membership fees.”
Not to mention, many participants struggle to earn back their initial costs, as any income you earn depends heavily on how many people you bring on below you (a “downline”) rather than direct sales.
“Maintaining monthly quotas and additional inventory purchases can add to ongoing expenses without guaranteed earnings,” Wright warned.
Dropshipping Businesses
If you’ve looked for remote jobs online, you’ve probably encountered dropshipping. This is a gig you can do from home where you take online orders on behalf of other sellers without holding onto any physical inventory for long and ship the orders to consumers.
While it has gained popularity due to its low barrier to entry, Wright warned there are hidden costs including a “significant investment in digital marketing,” which can cut straight into your profits. You’re also likely to deal with issues like high product return rates, shipping delays and customer service costs, which can leave your margins slim, Wright said.
Freelance Gig Websites
While freelancing itself can be very lucrative, depending on the area, freelancing platforms like Fiverr or Upwork may not be worth your time.
“Platform fees, underpriced gigs due to high competition and self-employment taxes can diminish income significantly,” Wright said. Additionally, you often need to invest in costly software, equipment or training to compete in these markets.
Real Estate Wholesaling
Finance gurus are always recommending real estate as a way to make money, and real estate wholesaling can look like an easy path to profit. The idea is that you begin the process of buying a home, essentially entering the contract with a seller, but then you transfer your contract to another buyer. It’s a way for people to avoid having to work with a real estate agent or follow the traditional path to buying a home.
However, it also requires you having enough money to buy properties, even at bargain prices.
“Finding motivated sellers and reliable buyers within a short time frame can be challenging, and without careful financial management, the costs can exceed any potential returns,” Wright said.
Print-on-Demand Merchandise
Selling custom designs on apparel or other merchandise through print-on-demand is another side gig that seems like it would be fun and easy to do from home. However, Wright said, marketing costs and high competition often make it difficult to break even.
“Success typically requires a steady investment in ads and social media, and profits on each sale are often minimal due to high production and fulfillment costs.”
Think Before You Hustle
For any side hustle you’re about to attempt, Wright recommended a thorough cost-benefit analysis and a clear understanding of setup expenses, ongoing fees and potential returns.
“Starting small, focusing on low-cost marketing strategies, and carefully tracking expenses can help avoid surprises and reduce financial risk.”
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