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Starting a Side Business While Employed

I have written about starting a side business while maintaining a full time job on several occasions in the past.  After all, this blog’s goal is to help you get more out of life.

In this post, I will focus on people who agree with me that you shouldn’t quit your full time job yet, and start your side business while maintaining your full time career.

I will talk about my experience, what worked and what didn’t, as well as why you should leverage your strengths rather than recondition and train weaknesses in hopes to bring them up to mediocre at best.

I don’t know how many people start side businesses while they still have a job, and I don’t know how many quit their full time careers and start a business, but the former has always made more sense to me for several reasons.

You have a steady cash flow, may not need loans or outside funding and have a safety net if you fall.  Most importantly, I believe that real world corporate experience has tremendous advantages and skills that it teaches an aspiring and growing entrepreneur.

Think Worst Case Scenario When Starting a Side Business

Success starts from your thought process and mind set within.  But as optimistic you should be about the success of your side business, think absolute worst case scenario if you still find yourself not able to pull the trigger due to the “what if” fear.

What is the worst that can happen?  Nothing at all!  You will lose some time, maybe some money, but think about the tremendous upside of your experiment?  You will certainly walk away from it having learned and experienced things you wouldn’t have otherwise.

Starting a side business is also a lot of fun (especially if you start one in a field / subject you are passionate about).  Getting back to your “normal” routine is very easy to reestablish at any time.

Leverage Your Strengths

Don’t try to be everything to everyone.  Identify what your strengths are and then play to their advantage.  Leverage your strengths by building a business model that is most conducive to them, and at the same time one that works even with your constraints.

Entrepreneurs are like He-Man, remember Him?  Their natural tendency is to immediately go up against their constraints rather than maneuvering around them.  Fighting constraints head on breaks even the toughest He-Men out there.

When you are employed full time, there are going to be certain constraints that will be inherent in your availability.  Because you are paid a salary during “normal working hours” (whoever defined those), you cannot attend to personal calls or emails when on the clock, at least not without shortchanging your employer.  You also won’t be able to consistently work on / at something, so you need a business model that allows you to work when you have the time and availability.

If you know that you will be in your employer’s office between 8AM and 5PM every day except weekends, then it doesn’t make sense to advertise your availability during weekday normal working hours does it?  Similarly, providing your cell phone number to your customers but not picking up their calls during the day would upset them.

So what to do?  You need to convey a message for your business that is consistent with your capabilities, from an angle that gives you a “competitive advantage” over your competition.  How do you do that?  Let’s revisit the two situations above, one where you cannot provide service during normal working hours and the other, where your customers cannot reach you by phone during work hours.

Cater a business message that turns these constraints into strengths by targeting the customer who is busy during the week and has time during evenings and weekends for your services.  Chances are, this customer base is also in a similar situation as you are and would rather communicate at their convenience via email instead of phone.

Consider the following message:  “We work hard to serve our clients on weekends when other businesses are taking a break”.  Do you think that gets the point across?  You bet.  Also, start providing your business email ID instead of a phone number that you cannot answer during normal working hours.  Either that, or record a clear voice mail message that indicates you will be returning calls on evenings and weekends.

Avoiding Trouble

It is important to realize that risk follows any potentially rewarding initiative.   For someone starting a side business while maintaining a full time job, you risk potential lawsuits and claims from your employer, your customer and your employees if you have any.

In a litigious society such as that we live in today, it is important to take all precautions necessary to avoid legal hassles.  I have experienced my fair share and can only provide my own experiences as examples.

Before we go further, understand that none of this is paid, expert, legal, tax or business advice.  Read my personal disclaimer further for more clarification.  As always, I strongly recommend engaging an expert professional prior to implementing any of what is discussed on this blog.

1)      Business Entity Formation

When starting a side business, it is important to keep the business entity separate from you.  Businesses can be treated as a stand-alone living and breathing entity.  Establish a business entity structure and get your business EIN – Employee Identification Number which is essentially your business’ Social Security Number.  This will allow you to open a business bank account, hire employees and file business taxes under a separate ID instead of your Social Security Number.  Keep all business funds separate from your own and do not comingle.

Read my discussion on how you can save a significant amount of taxes by having your own side business. If you’d like to form an LLC or an S Corp on your own, I highly suggest Socrates.  I have used Socrates extensively.  It is a web portal founded by and run by lawyers who equip you with easy to follow do-it-yourself instructions.  You can set up a company successfully for pennies on the dollar.

2)     Provide Relevant Disclaimers

Depending on the business you engage in, make sure you are aware of the relevant laws, regulations, DOs and DON’Ts.   Whether you are providing goods or services, make sure you provide all relevant disclosures and disclaimers in all you do (i.e. contracts, emails, receipts, business literature such as product brochures, etc.).

3)     Don’t Compete With the Boss

Take a hard read at your employment agreement and company policies and ensure that it does not restrict you from starting a side business while employed full time. Many employers don’t have a problem with this, and some do if you are competing in the same business space (i.e. providing tax return compliance while working for a tax firm).

When in doubt, don’t be afraid to ask HR.  Many employers, especially in the manufacturing space have clauses in employment agreements that entitles them to all of your production (even when done at home on your own time).  In addition, agreements specify that you must make your employer aware of your side activities or be ready to face consequences if discovered otherwise.

Just make sure you read and understand everything you are signing.  If you find that your employer has restrictions imposed on you and you are not willing to quit and join another company, I suggest you get buy-in from your boss or HR prior to engaging in a side gig – carefully and tactfully.

4)     Getting Employer Buy-In

It’s not very hard to get your employer’s buy-in in my opinion.  I had to do this once and it went a lot smoother than expected.  Many side-giggers have a tendency of not disclosing their business due to fear of some sort.  The concern is valid, but the alternative can be much worst (such as a lawsuit for example).

Write a simple letter to HR or your company’s Legal department indicating that you have a hobby that doesn’t conflict with work.  Indicate that you work on it on your own time and using your own resources (laptop, printer, etc).  Mention that as any hobby, it has the potential to generate a small amount of income.  Close your letter by indicating that if your hobby ever comes in the way of your work, you will notify your employer immediately.

Once you have this letter drafter, get it signed by someone from the Legal department.  It is also possible that you may not have to go through all this, especially with a younger and more modern company.  Many employers these days think the opposite, which is that a side gig enhances your performance at your Day Job better.

5)     Refrain from Using Company Resources

Starting a side business can be distracting at work.  Once you start your side gig, it can be difficult to refrain from using company resources to benefit it.  The most common use of company property for side businesses is the use of a company provided computer, software, laptop, printer, phone and car.

A restrictive clause in an employment agreement typically covers company property and indicates that any work conducted using it belongs to the company.  It is a fair clause, and you really shouldn’t be short changing your employer by using company property for your side business.

Be particularly careful of how you use email and instant messaging at work.  These activities are easily monitored and discovered if need be in a lawsuit.  It is best to assume that all of your activity is being watched and refrain from any of it that conflicts with what you are getting paid to do at work.

Growth Will be Slow

The sooner you come to terms with this the better.  You are spending a bulk of your time working for a paycheck, eating and sleeping.  The little bit of spare time dedicated to your side business will help it grow slowly over time, not overnight.

Although we all strive for a bigger, better business, growth will likely be slow in the beginning months and even years.  This is good if you ask me because it gives you time to experiment with what works, and understand what it takes to support and sustain a growing business.

Several businesses fail because they grow too fast.  By growing at a slow and steady pace, you maximize your chances for success as your business is not likely dependent on increased short term efforts or external events beyond your control.  Take comfort in the fact that your side business is your experiment, while you have a steady stream of cash flow coming from your day job.

Your goal should not be to strike gold overnight or make a million dollars in your first year.  Rather, it is to build a solid, long term and successful business that is sustainable and that which will bring you enough income to get more out of life.  You can focus on growing your business and quit your job if you so decide, or keep the day job and simply enjoy more financial success and freedom.  Or maybe it is the peace of mind through financial security that you thrive for.

Understanding and agreeing that growth will be slow when starting a side business initially will allow you to be at ease on your journey and have fun along the way rather than loosing your mind constantly anticipating the day when your business breaks through and brings in gobs of cash.

Manage Your Time Effectively

Time is something you have very little of when you are juggling a full time career and side business.  As efficient as I have become today, I was the worst time manager of all time.  I used to procrastinate until the deadline was yesterday.  I wasn’t very focused, and scatter brained enough to a point where my mind often imploded.  I was often paralyzed by useless analysis.

I was focused on staying busy doing nothing, rather than focusing on being more productive.  As an entrepreneur starting it up on the side, you likely have a lot of work as it is which will take up all your spare time.  The sooner you realize that you can’t afford to lose time, the faster you will realize results from your endeavors.

I wished there was a one size fits all solution to this problem, but there isn’t.  Managing work load is a matter of personal taste and conditioning. Here are some proactive conditioning steps you can take however to assist you in managing your time better.

Tips to Enhance Productivity

  • Limit Email usage to twice per day
  • Set up RSS feeds to get fed info from the web and not spend hours searching for it
  • Prioritize with a small TO DO list every day
  • DO NOT Multi task – Focus on one activity at a time and get things done!
  • Exercise often, eat and rest well – There are no compromises here. Health is Wealth!

Here are 5 more habits that lead to more productivity, especially for a busy side business owner.

If you haven’t gotten started yet and would like to but have a busy schedule, consider the the internet business model.  This is the model I chose when I was very busy and traveling as a consultant.  Time and consistency in life were something I did not have much of.

The internet business model gave me the flexibility to work when I wanted, where I wanted, however much or little I wanted to all in my spare time.  I have written a comprehensive book on how you can replicate my success, which I give out for free to anyone who subscribes to my Blog’s RSS feedYou can read more about my book here.

Readers: Have you or anyone you know started a side business while employed?  How was the experience like? Do you have any tips on starting a side business that you can share with us?


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