Check your contract of employment
Whilst not wishing to pour cold water on your entrepreneurial aspirations, it is essential that you check your contract of employment prior to commencing any new business. All too often there is a clause contained there that prevents an employee from starting up a business whilst employed. Your employer wants to make sure that you are fully devoted and committed to the job that they pay you to do – understandable really as they are paying your wages or salary.
My advice is never to bite the hand that feeds you. If you breach your contract of employment the consequences could be dire for your household finances.
Of course the challenge is to pursue your dream of having your own business whilst not jeopardising your main source of income!
Offset your losses
If you are in a position where you can start your new business whilst still employed then it is worthwhile thinking about the business structure right from the outset.
If you expect to incur some start up costs and make a loss in the first little while of trading then you might want to register as a sole trader as the losses can be offset against other income i.e. your wages or salary from your employment. So you could end up getting a tax refund.
Clearly your business cannot continue making a loss – it wouldn’t be a business if it did!
My advice is to have a chat with a reputable accountant who will talk you through the best structure for your business based upon your specific circumstances.
Work Life Balance
One of the hardest things to do is launch a business in your spare time, what little you may have of it. Aside from doing a full time job, travelling to work, eating, sleeping and handling the day-to-day minutiae of modern living just how much time do you actually have available? How are you going to achieve anything approaching a sensible work-life balance?
OK it may be possible to work your socks off for a short time to get the business up and running in your limited spare time but clearly this is not something that you can sustain. Remember once you have started to build business up you cannot turn off the tap of new enquiries or orders. So if you need to put the brakes on at any point then in all likeliness the business will suffer.
How to make the leap
There are two main reasons that many seek to start a business up whilst still in full time employment – to make sure that the business is a success and to keep earning whilst getting things up and running.
Assuming that the business does turn out to be successful then at some point a leap of faith needs to be made from your full time employment to the business. This should be planned and a household, as well as business budget, prepared so that the coffers are being well managed throughout the transition process. My advice is that before you start getting the business underway think about your exit plan from full time employment.
It won’t be easy and in all likelihood there will be a dip in your finances from your full time earnings to the profits from the business being at a level that can support you. If it were easy then everyone would be doing it!