Whether you’re about to venture out on your own as a solo professional or launch a new business, it’s often easier to lay the groundwork while still working full-time. The stability and steady paycheck associated with full-time employment comes in handy when you’ve got real-world responsibilities like a mortgage and student loans—or you just want to eat something other than ramen every day.
Working on a business or freelancing while still at a full-time job builds your experience, confidence and project pipeline. You get to explore the different aspects of solo work and see if you enjoy wearing all the hats that come along with business ownership. As they say, you need to learn to walk before you can run. And staying employed while you learn the ropes can help you do this.
Balancing a job and a budding business is possible, but it does take some careful consideration—including legal, personal and professional matters. If you’re thinking about starting a business while keeping your day job, here are 5 things to keep in mind.
Before you begin taking on side projects, you should become very familiar with your employee contract and/or handbook. Some companies include non-compete clauses, which can mean you aren’t allowed to accept work on the side. The strictest clauses are usually found in ad and creative agencies who don’t want their employees to poach company clients.
Poring over legal fine print is no one’s idea of a good time, but it is essential. If you’re caught breaking the terms of your contract, you can be fired—even sued. Fighting a lawsuit while unemployed isn’t the best way to help get your small business off the ground. So, read your employment agreements carefully. If the wording seems vague, you can decide for yourself whether you’d like to approach your boss or HR for clarification, or keep your plans to yourself.
No matter how excited you are about your new venture, you’re still committed to your current job and company. It will be obvious relatively quickly if you aren’t holding your own in the workplace. This means staying on top of deadlines, getting to meetings on time, being enthusiastic—basically just doing your job as well as you always have. Underperforming at the office can hurt your professional reputation and long-term prospects.
There’s one important difference now. Since your new business is going to take up most of your spare time, you can’t stay late or work weekends for your “day job.” This means you need to make every minute in the office count. Master the arts of prioritization and delegation in order to get as much done as possible during your normal work hours. These are essential skills for being a freelancer and entrepreneur, anyways.
There are only 24 hours in a day, so you’ll definitely be feeling a scheduling crunch when you first start out. Try to develop a steady rhythm for working on your new business, setting time aside in the evening, early in the morning and on your days off. Creating a regular schedule will help you stay disciplined. You need to make time to work on the business whether you have projects or not—there’s always important work to do such as creating your business’ website, networking or hustling for new business.
If you are struggling to find time to work on your business, take a careful look at the root cause. It could be circumstantial; for example, you’re just really busy right now for a major project at work, but things will quiet down soon. Self-employment requires a lot of discipline, self-direction and self-motivation. It’s very different than previous experiences with a boss or professor. This means it is important to identify early on if the solo work style is right for you.
You may still be a full-time employee, but the minute you accept money for your work, you’re also a business owner and entrepreneur. This means you need to treat your side work as a legit business—and learn all the responsibilities that come along with owning a business, including how to organize your finances, report your income and pay your taxes.
This would be a good time to meet with a CPA or tax advisor who is familiar with the needs of small business owners and freelancers. Setting up good practices early will help you scale later. One interesting point is that if you form a business and it takes a loss during the first year, you can actually deduct that loss to offset your income from your regular job (talk to a CPA/tax advisor for the details).
In addition, consider creating a formal business entity (such as a Limited Liability Company) to help lower your personal liability should your side business be sued or can’t pay its liabilities.
As your business grows, you’ll surely experience periods of intense work overload. At this point, you will need to decide if it is better to quit your job or turn down new client projects. How do you know if it’s time to start working on your own full time? It’s not an easy question to answer, but here are a few thoughts…
Unless you’re willing to blow through your savings or take out a line of credit, you shouldn’t consider leaving your job until your business can bring in as much income as your current job (or close to it or at least enough to meet your needs). That’s the practical consideration.
In addition, it may be time to rethink your situation if you find yourself so excited about your new business that it’s hard to muster any enthusiasm for your day job. This can drain you personally and professionally and you don’t want to just stick around until your employer kicks you out. If you’re having a hard time going to work each morning, then it’s time to accelerate your new business. Figure out how to build a runway of clients and have some cash flowing in—then take the jump.