Why Side-Hustles Matter To The Local Economy
This past weekend, I ran across some stats that supported a hypothesis I have held about microbusinesses for a while.
Some of your community’s next entrepreneurs aren’t looking for business support. They’re looking for extra income.
When we talk about entrepreneurship, we often picture someone who has decided they want to start a business. They have an idea, begin looking for resources, attend a workshop, contact a local support organization, or start researching what it takes to launch.
But that is not how everyone enters entrepreneurship.
For many people, the starting point is much more practical. Their regular paycheck is no longer covering what it used to. Groceries cost more. Gas costs more. Housing costs more. Don't get us started about the rising costs of health insurance. The increase in the costs of everyday expenses is outpacing increases in income and putting enormous pressure on household budgets.
So people look for another way to earn money.
They sell something they make. They take on freelance work. They clean houses, mow lawns, bake, repair, photograph, cater, consult, resell, or turn an existing skill into income.
At first, they may not be thinking about entrepreneurship at all. They are trying to make their household finances work.
For many people, entrepreneurship begins as a household financial strategy before it becomes a business strategy.
That matters for economic developers and small business support professionals because it changes where we should be looking for entrepreneurs and when and how we should begin supporting them. Side-hustles matter to the local economy.
Why More Americans Are Turning to Side Hustles for Extra Income
Here's the data that grabbed me.
According to the Federal Reserve's 2026 report on the economic well-being of U.S. households, 58% of adults said higher prices had made their financial situation worse in 2025. Prices remained the most common financial concern in the country, with 91% of adults describing price increases as at least a minor concern.
In an April 2026 CNBC/SurveyMonkey survey, 30% of Americans said they were taking on extra work, a side hustle or a second job specifically to offset rising costs. Another 29% were looking for a higher-paying job.
For people already operating a side hustle, the income can be far more important than the phrase “extra money” suggests.
LendingTree's 2026 side-hustle survey found that:
61% said their life would be unaffordable without their side-hustle income.
32% use the income to cover increases in the cost of living.
25% use it for primary expenses or bills.
36% said the current economy contributed to their decision to start a side hustle, while 31% specifically cited inflation.
The average side hustler reported earning $1,242 per month, compared with $473 in LendingTree's 2022 survey.
These numbers suggest that, for a large portion of households, a side hustle isn't just about vacation money, saving for a boat, or discretionary spending. It is part of how the household budget works.
That gives side hustles an economic role long before anyone decides to turn one into a full-time business.
Why Side Hustles Matter to Local Economies
Economic development conversations often focus on attracting large employers, businesses that add employees, open storefronts, expand into new markets or generate significant new investment.
Those businesses matter. But that type of growth is not the only way entrepreneurship contributes to a local economy.
If a resident earns several hundred dollars a month through a side hustle and uses that income to pay for groceries, utilities, housing, gas or other everyday expenses, that activity is already serving an economic purpose. It is helping stabilize a household. That matters because households are part of the local economy, too.
A person who can cover an unexpected bill, keep up with rising expenses or avoid falling further into debt is better positioned to continue participating in the economy around them. Side-hustle income can help preserve spending power when wages alone aren't keeping pace with household costs.
For most side-hustlers, the goal is not to create a large business. The goal is simply to create a reliable second income stream. They may have no desire to leave their job, hire employees, open a storefront or scale beyond the amount of work they can comfortably manage.
That does not make the business unsuccessful.
If the goal is to generate an additional $500 or $1,000 a month, then a small, stable side business may already be achieving exactly what the entrepreneur needs it to achieve.
This is especially important when we consider how dependent many side hustlers say they are on that income. If 61% say their lives would be unaffordable without it, then these aren't simply hobby businesses generating a little extra spending money.
For many households, that income has become part of the financial foundation.
That gives side hustles at least two forms of economic value.
First, they can strengthen household resilience by creating an additional source of income.
Second, some of them become the starting point for a sustainable microbusiness, a full-time self-employment opportunity, or a business that eventually creates additional economic activity in the community.
How Side-Hustles Become Small Businesses
A side hustle does not become a business all at once. The transition is usually gradual.
Someone starts by trying to make a little extra money. Then a customer comes back. A friend refers someone else. Orders become more regular. The person begins to realize there may be more demand than they expected.
That is when the questions start to change.
How much should I charge?
Do I need a business license?
Should I register an LLC?
How do taxes work?
How do I keep track of expenses?
How do I find more customers?
Could I eventually replace at least part of my paycheck with this income?
At that point, the person is no longer just solving a household income problem. They are beginning to make business decisions. This is where the side hustle becomes especially important to local entrepreneurship ecosystems.
QuickBooks' 2026 research found that 40% of people with side hustles hoped to eventually turn them into full-time businesses. Among Millennials, that number rose to 46%.
The same research found that many people were already earning money without fully formalizing what they were doing. Forty-seven percent of U.S. adults reported earning income from a side hustle, but only 20% of those side hustlers had formally registered the activity as a business.
That means a person can already have customers, revenue and evidence of market demand before they ever think of themselves as a business owner.
In other words, the business may exist before the business-owner identity does.
This is what makes these entrepreneurs hard to serve. They fall through the crack because they don't see themselves as business owners and the small business support organizations and programs aren't identifying and attracting them.
The Hidden Entrepreneur Problem
Part of the reason side-hustles are underserved is that they operate under the radar. These entrepreneurs are not necessarily hard to find because they are inactive. They are hard to find because they don't have a storefront, they aren't Chamber members, and they may not be using the language that entrepreneurship-support organizations are listening for.
They may not call themselves business owners. They may not be searching for “small business assistance" or attending entrepreneurship workshops. They may not have registered a business, opened a business bank account, or created a formal business plan.
But they may already be selling products, serving customers, generating revenue, and figuring out how to make the numbers work.
That is what makes them hidden entrepreneurs.
QuickBooks' 2026 research helps illustrate the gap. Many side hustlers were earning money without formally registering their activity as a business, and many lacked basic business systems such as separate banking, invoicing and expense tracking.
At the same time, aspiring entrepreneurs reported barriers that should sound familiar to anyone working in small business support: lack of money, lack of time, lack of business knowledge and low confidence with financial tasks.
This suggests that many early-stage entrepreneurs may need help well before they are ready to seek out a traditional business-support organization.
They may first need simple answers.
- What do I need to do legally?
- How should I price this?
- Do I need insurance?
- How do I track income and expenses?
- What should I do next?
And perhaps most importantly... Is the support available in my community actually meant for someone like me?
If local entrepreneurship systems are designed primarily around people who already identify as entrepreneurs, they may be meeting these business owners too late.
By the time a hidden entrepreneur walks through the traditional front door, they may have already spent months or years learning by trial and error.
How Communities Can Better Serve Side-Hustlers
If these hidden entrepreneurs are entering entrepreneurship through household financial need instead of a "how to start a business workshop", communities may need to rethink both the support they offer and how they reach people.
Design support for the businesses they are actually building.
Not every entrepreneur needs a pitch deck, investors or a long training program. Someone making their first few sales may simply need help with product-market fit, pricing, licenses, bookkeeping or marketing. Someone earning steady side income may be ready to formalize the business, improve systems or decide whether they want to grow.
The support should match the entrepreneur's stage and goals.
Go where these entrepreneurs already are.
They may not be following the Chamber or city website. They may be selling at farmers markets, vendor fairs and pop-ups, working from home, providing services on evenings and weekends, or freelancing from the local coffee shop.
If communities want to reach hidden entrepreneurs, they have to look beyond the usual business-support channels.
Use language that includes them.
Someone who still thinks of what they do as “just a side hustle” may not respond to an invitation for “entrepreneurs” or “small business owners.”
They may not see themselves in those words yet.
The goal is not to push every side hustler toward growth. It is to help each person build a sustainable business that meets their own definition of success.
For some, that may mean becoming a full-time business. For others, it may mean creating a reliable $500 or $1,000 a month in additional household income.
Both are valid outcomes. Treat them as such.
A Front Door For Entrepreneurship For Everyone
This is one of the reasons we built SmartStart around the idea of a simple front door to entrepreneurship.
The SmartStart Navigator gives people a place to begin their entrepreneurship journey even if they do not yet know what kind of help they need. It walks them through the steps of starting and growing a microbusiness, provides education and tools along the way, and connects them with local organizations, people and resources already in place when they need them.
It uses inclusive language and basic business steps that anyone can easily use no matter what the business goal.
For communities, that creates an opportunity to meet hidden entrepreneurs earlier in the process instead of waiting for them to identify themselves as business owners and find their way into the existing support system.
Supporting hidden entrepreneurs is not simply a matter of creating more resources. It is about identifying them earlier, helping them understand what to do next, and connecting them with the right support at the right time.
Do not wait for people to enter the entrepreneurship ecosystem. Look for where entrepreneurship is already happening.
Sources
Federal Reserve Board. Report on the Economic Well-Being of U.S. Households in 2025. May 2026. Federal Reserve report
CNBC/SurveyMonkey. Quarterly Money Survey – Affordability. April 2026. CNBC/SurveyMonkey affordability survey
LendingTree. Survey: Side Hustles Are Declining. 2026.
Intuit QuickBooks. Entrepreneurship in 2026: Business Intent, Money Barriers & AI Tools. 2026.
Intuit QuickBooks. Land of the Free, Home of the Hustle: America’s Side Hustles Will Keep Growing in 2026.
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