Written by Alan Shannon (Executive Head of Professional and Small Business Banking Marketing – Nedbank)
Over the past decade, South Africa has seen a sharp increase in the number of people earning an income outside of formal employment. For some, the need for a self-generated income arose from falling victim to the country’s steadily rising unemployment figures. But many people have also recognised the potential that exists to earn a second income through an entrepreneurial venture, while still employed. The COVID-19 pandemic and the national lockdown response highlighted the opportunities for these so-called side hustles, and the work-from-home protocols have made it easier than ever for employed individuals to operate small businesses from home.
It is estimated that one in three employed South Africans has such a side hustle or side business. For most of these part-time entrepreneurs, many of them young professionals, the motivation is not just about bringing in a bit of extra cash. Their side hustle is often driven by the realisation that the changing global economy makes it possible to have multiple sources of income. In addition, a side hustle is often born out of a desire to pursue a passion, which is a need that may not be fulfilled by the individual’s fulltime job.
And there are many other benefits to owning a side business. For one, the skills that these business owners acquire can often give them a competitive advantage in their formal career, allowing them to advance quicker. A successful side hustle can also be an excellent way of boosting confidence and self-esteem; enjoying more work variety; providing stimulation and opportunity for creativity; and even building valuable networks. This is especially true when these side hustles are in a completely different industry or sector to the one in which the person works for their formal employer.
Possibly more importantly, if these side hustle businesses prove successful and sustainable, it is possible that they can also create employment opportunities, which makes them potentially very valuable contributors to the economy as well.
The pace of digitisation across the world, driven by advancing technologies and better access to bandwidth, has also contributed to the stellar growth of the side hustle trend. Technology is enabling people to work and do business anywhere. And young, tech-savvy professionals especially are leveraging this digitisation to give effect to their innovative ideas and entrepreneurial flair, develop their skills, and grow their side hustles.
Of course, starting and running a successful side hustle is no simple feat. Apart from the time pressures of operating a business alongside one’s formal employment, and the need to ensure that a side hustle doesn’t impact on the quality of work delivered at a regular job, side hustle owners can put themselves at risk of burnout, add significantly more stress to their lives, and end up isolating themselves from friends and family.
This is why it is imperative for side hustle owners to make full use of every support opportunity available to them, particularly in terms of the non-essential components of running their businesses, like administration, tax and banking. Entrepreneurs should take full advantage of SimplyBiz, a free digital community powered by Nedbank, for business owners, by business owners. Side hustle owners can set up both a personal and professional profile to connect with like-minded business owners.
Given our acknowledgement of the vital role that side hustles will have to play in rebuilding the South African economy after COVID-19, Nedbank also offers a vast range of small-business services designed to enable the owners to take full advantage of their opportunities and avoid the risks and pitfalls of owning a business on the side. These range from business incubation programmes and mentorships to tailored business banking solutions, like the Nedbank Startup Bundle. This unique banking package offers businesses with an annual turnover of less than R3 million an array of free digital transactions, at no monthly cost, for six months, and access to an experienced relationship banker with keen business insights to help grow the operation.
As a country that recognises the importance of developing entrepreneurship, both government and the private sector have an important role to play in building a successful and sustainable small-businesses sector – and that includes the fast-growing side hustle culture.
It is important to recognise these professionals as an essential part of the economy and offer them the help, guidance and business-building solutions they need to formalise and grow their business ventures.