The Game with Alex Hormozi - From Side Hustle To Main Hustle | Ep 525

Episode Date: April 18, 2023

“Be willing to do the basics.” Today, Alex (@AlexHormozi) discusses the process of transitioning from a side hustle to a main hustle. He also provides advice on when to quit your job, how to secure your family financially, and how to sustain a reliable income from your side hustle before making the jump.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(0:52) - Side Hustle definition & knowing your season(2:57) - 3 steps: secure family, match income, make sure it’s reliable(5:20) - Pick high likelihood side hustle with experience(6:48) - Start with stepping stones to higher leverage opportunities(8:59) - Cut overhead to invest more time in your main hustle(10:42) - How Alex jumped to his main hustleFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

What you start with is not what you're going to end with, but it will give you the stepping stones that are necessary to get to the higher leverage opportunity. In my opinion, one of the bigger mistakes people make is they try and go to the big leagues before they're ready, and then they fall flat. Welcome to the game where we talk about how to sell more stuff to more people in more ways and build businesses worth owning. I'm trying to build a billion dollar thing with Acquisition.com. I always wish Bezos, Musk, and Buffett had documented their journey, so I'm doing it for the rest of us. Please share and enjoy. by far the most frequent question I get asked is when should I start my side hustle and when should

I quit my job once I have started my side hustle. And if you follow it any of my content, you might think that I'm against side hustles in general and I'm not. But there's constraints that I put around that and I want to explain how, in my opinion, you can tackle that the best to maximize your opportunity for income in life. All right. So first things first, I'm going to define a side hustle as a main hustle that has not gained enough size to support you finance. financially. And this is an important delineation because if you're just trying to make side money, then to me, that's a distraction from what your real main hustle is, which is probably your career. And so first things first, if you have a career or you have a job, then I'm a big advocate

of the reason you should have this job is because you're trying to learn and earn. And depending on where you're at in your life cycle of entrepreneurship or want to be entrepreneurship, it should be probably geared more towards learning than earning, especially in the first decade. Now, once you have some of those learnings, if you don't want to continue down this path of maybe being number 17 at Google, you know, to use that kind of analogy and maybe getting into a startup with a deep skill set, getting some equity and having a big upside, if you don't want to pursue that path and you want to just make your own money, then you take the skills you have and you have to make your side hustle really your main hustle. And so what happens is you have to shift your perspectives from,

I'm going to do my job to meet the requirements that I have to continue to be gainfully employed and over-deliver on what is expected of me in my role. The remaining hours of the day, I am shifting 100% of my focus to my new thing. And if you're like, well, what about my marriage? What about my kids? Something's got to give. And I'm a big believer in seasons, which is sometimes you have to have a season of sacrifice. Sometimes you have to have a season of sewing in order to have a season of reaping later. And so maybe that means 12 months or 24 months of sacrificing some time with the kids and the wife. And probably people are going to hate me for this. But like, you know what? There's only so many hours. If you've got to work eight for your job,

there's only other hours in the day and they've got to come from somewhere. All right? But I would say is try and maximize the time you are going to have their kids and be present for them so that when you are there, you're not, you know, scrolling on your phone and not actually present with them. Now, you have another eight hours a day that you're probably awake that you can do full-time side hustle work. And my objective here is to number one, first secure your family financially, which means live underneath of your means with just the income from your job. Your side hustle will also hopefully start making some income.

You can also bank that money too or that money goes back into adding more people or whatever you need to do to get that thing off the ground. Once I have a certain amount of savings, which for me would be like six months of living, is what I would feel comfortable with before starting my next thing. And it's exactly what I had when I started my gym. I'd say $50,000. And for me, I lived on less than that. I was like 20-something months of savings for me.

Now you might have a family. That might be less for you. Just do the math on your own. For me, the next step is that I need my side hustle to at least match my income from my current role. Now, is there an exception of that? If for some reason you're only able to work on your side main hustle four hours a week and you're doing half of your income

as you're doing in your 40, then I would look at that ratio and be like, well, in four hours, I'm making half of what I make in 40. If I had the other 36 hours back to add to my four, would I be able to match that? If you can use logic and say yes, then I would say I'd feel comfortable making the jump. But if you want to be safe, which many people were trying to make this jump, which is, just so you know, the single hardest jump in all of entrepreneurship is going from the safest thing, which is a job to being 100% eating what you kill. It was the hardest issue I've ever made in my life entrepreneur.

Some people are really easy for it. It was not easy for me. Still the hardest resource I've made. So I want to stack as many things in my favor to make that the lowest risk possible. One, I have all my savings. So I've got breathing room. Two, I've already matched my income for my current thing with the new thing. Three, and this is probably something you might not have thought of, is that I want to sustain that level of income for six months. This is like orders of risk. You have the savings. You've matched your current income. You're living below just one which means you're banking three quarters of what you're getting paid probably. And then three is that you've shown that it's reliable. Because if you just, the first month you match your income,

you quit and then the next month you drop back down to zero or one quarter because you're doing gig work or whatever, that's going to be really stressful. It's going to affect the work you do. It's going to affect how you sell. And honestly, it's going to affect every other aspect of your life. And so I would want to see consistency. So if I've done this thing, so it took me six months to save my stuff and it took me six months to get reliability of my income to match and stay at that level. then for me, I would say it's a reasonable jump for you to go out and do that thing. Now, for me, what side hustle do you pick? I want the side hustle to be something that I have a high likelihood of success with,

which is something that I have some sort of experience with. One of the easiest things to do is take whatever you're doing in your current role and start doing that as a contractor, 1099, etc. Do those companies have the most enterprise value? No, but you can make some money and learn some basic skills in business that you would have no other opportunity to learn. You'll learn how to hire people. You learn how to fire people.

Learn how to have hard conversations. Learn how to drive initiatives. You learn how to market. You learn how to sell to get new business. You learn how to contracted invoice. You learn how to process payments. You learn how to set up an LLC. There's lots of things that you have to learn just going zero to one.

Now, if you have a longer time rise and do that, you'll figure those out as you go. But I would say that you don't need to be perfect on the first pick. You just need to be directionally correct. And the first direction is, I'm going to be an entrepreneur. So if you make the first jump, you've already taken the biggest, jump in the right direction of what you ultimately want to do. It is very, very, very rare that long-term entrepreneurs' first business is their last business. Look at every single person that you aspire to and look up to in the business world with the exception of Zuck and Bezos. And the thing that

they started is not the thing that was their biggest thing, right? Andy Fressala had some direct response like brick and mortar store thing, and he was like painting lanes in parking lots, right? I think end my life was like selling insurance stuff. Like I was doing personal training online. Like there's what you start with is not what you're going to end with, but it will give you the stepping stones that are necessary to get to the higher leverage opportunity. In my opinion, one of the bigger mistakes people make is they try and go to the big leagues before they're ready and then they fall flat. Be willing to do the basics because realistically, I'm probably not BAS. I'm probably not Zuckerberg. And you might not be either. And that's okay. And so you don't

necessarily need to model their path. You can model one that decreases the risk because Bezos had a Wall Street finance job at a hedge fund. He didn't need to worry about money. And if he quit, he could go right back to the hedge fund and make probably a million dollars a year. Zuck was a Harvard grad dropout, whatever. He could get a job if it failed at any top tech company immediately. And if you don't have those prospects, then you need to be a little, in my opinion, a little bit more respectful of the risk that you're taking on. And so if I were going to walk through the transition of being in a job and then deciding to go in on my side hustle, that would be my three-step process. Save six months of living expenses by living under my means while I had my job.

I would start making money on my side hustle, and I would make it until I matched my current level of income on my job. And then step three is that I would sustain that level of income for six months before being willing to quit my job. And during that process, be continuing to stack savings so that if something happened, I could weather the storm. Hey, Mosin, a quick break just to let you know that we've been starting to post on LinkedIn and want to connect with you. All right, so send me a connection request and note letting me know that you listen to the show and I will accept it.

There's anyone you think that we should be connected with, tag them in one of my or layless posts and I will give you all the love in the world. All right, so let's get back to the show. And if you're a kid and you can live at home or you can live with four buddies, do that. And if it means that your living expenses are minuscule, cool. And if it means that if you can get your living expenses to be so little that you can cover it with part-time work, like if you can bounce at a club on the weekends for two days and you get the other five days back, I think that's a net win. But the biggest part of this is like how much overhead do I have to cover in my life that I'm burning hours on the thing I don't want to do long term to do to do the thing I do long term to do the thing I do long term.

So it's like massively cut your overhead so that you get as much of your time back to invest in the thing that you want to do most, which I categorize entrepreneurship rather than the side hustle. because that'll change, but the directional decision to go out on your own won't. And so for each of these phases, phase one, I save 50 grand for my consulting job over two years living far under my means, only making $50,000 a year during that period of time in order to have a safety nut to make the next step. The second thing is that when I started my side hustle, I actually started a charity project where I got all my friends to pay me $200 a month to do their fitness and nutrition programming

from home, and I donated all the money they gave me. It was about $4,000 a month. at one point when I decided to transition to my main hustle, which is just going to be fitness, I didn't even start my gym yet, but it was enough that I could live. I just said, hey, would you guys mind paying me instead of the charity? All of them said it was fine. And I transformed $4,000 a month to charity to $4,000 a month of income. And that's how I was able to quit my $50,000 year job for a $50,000 a year online business. And this was like 2013. So before online businesses were cool. And that's what actually gave me my living expenses when I started at my gym.

because I was like, well, I didn't even think online businesses were legit. I was like, I'm just getting PayPal and texting people programs, but maybe I should have done more of that. But then when I started my gym, that's actually what I used to eat off of while I was reinvesting stuff into hiring more people, buying more equipment, things like that, that I couldn't afford in the beginning. And so the phase three there was that I'd seen that they had sustained the level of donations for a six-month period.

And then when I asked them to go to four payment, that was my big risk. And they said, yes. And so then I felt confident that I sustained this level of income from my side hustle for an extended period of time. And that ultimately gave me the confidence to jump into the new thing. And to be fair, I actually moved locations during that period of time and dramatically cut my rent. So like I was saving really aggressively, but when I wasn't sure that the money was going to come in, my rent was first zero because it was just the gym. But before that, just when I got to California, I just rented a bedroom from a guy that I met at the gym for $400,

a month. And so, like, you can live super cheap. And he wanted me to live there because he wanted to get fit. And so he gave me that discount. And that's, I mean, use what you got, right? And so I would meal prep every Sunday with him. And so he got a little bit of value from that, which I got to have a discounted payment. And sometimes he'd chipping on groceries for my food. Like, I've maintained my relation with that guy for a decade now. And so, like, you can't, some of those early people who help you out, like, I think it's always worth remembering them. And so for my first phase of saving I saved $50,000 making $50,000 a year over two years, which means I was living on like a third of what I could possibly live on at that time because I wanted to save up this nut to go all in on the thing I wanted to do. The second phase was when I wanted to match my current income. That's when I started an online business and I got 20 of my friends to pay me $200 a month each so that I could make $4,000 a month. And that took a long time to get there. But as soon as I did that, I had a new level of income that matched my current level of income. Now, I didn't know how sustainable that was. And so it took me six.

months before I said, hey, would you guys mind paying me instead of this charity, which is phase three, which is that I had sustained that level of income that matched my income of my job to make the transition to fully go into fitness as my main hustle. So that was step one, two, and three, for me personally.