10 Tips for Starting a Business Before Quitting Your Job
If you start a business before quitting your job, it is possible that you will have the best of both worlds. You can get your new company up and running and still have the security of a regular income. However, running a small enterprise on the side is not without its challenges.
Here are ten tips to help you start a business before you quit your full-time job.
01 Choose the Right Kind of Business
Some businesses are ideal for running part-time, but some are not. So, carefully consider what will be involved in running your new enterprise before you set it up.
You must avoid allowing your part-time business to infringe on your full-time job. It would not be wise, for example, to be taking calls relating to your business at your place of work. You might get away with one or two phone calls, but if your business begins to impact your ability to do your full-time job, you could find yourself out on your own faster than you expected.
02 Check Your Employment Contract
Check that your employment contract does not prohibit you from owning or running a business, especially if you are setting up a company that might compete with your employer.
There may be clauses in the contract regarding the ownership of inventions and intellectual property (IP).
Suppose you invented a product while still in full-time employment, for example. In that case, you could have problems if your employment contract stipulates that any inventions made while employed belong to your employer.
03 Discuss Your Plans with Your Employer
If your business does not compete with your employer, it might be best to be open about your plans to start a side business. Coming clean would avoid the need for secrecy and lying, and make it easier for you to work your way into your new enterprise gradually.
Your employer might even allow you to work part-time when the business begins to take off, and there might be opportunities for collaboration or your employer becoming a customer.
04 Don’t Use Company Equipment
It is best not to use any of your employer’s equipment or supplies for your business. If you use company property, it would be theft, and you could find yourself in court. Try to avoid using company email accounts and internet connections for anything related to your business, too. Anything that suggests that your side business has cost your employer money or resources could land you in hot water.
05 Don’t Discuss Your Side Business
Avoid discussing your business plans with colleagues. Talking about your new venture might be construed as promoting the business during working hours. Word may also get back to your boss, which could be disastrous if you have not told your employer about your side business.
When you are on company time, it is best to stick to company business. It would also be advisable not to discuss your business with customers or suppliers of your employer.
06 Manage Your Time
Managing your time will need to become a priority when running a business alongside full-time employment. It is best to separate your day job from your part-time business, and, of course, you will need to leave some time free for social and family activities. It might be best to control the business’s growth to ensure you have sufficient time for your full-time job and part-time business.
However, even with good time management, you will probably find that you have far less free time than you would like. Unfortunately, that is the price you pay for launching a business while retaining the security of a full-time job.
07 Create a Business Plan and Exit Strategy
It is good practice to create a business plan for any start-up. When you intend to continue in full-time employment during the start-up phase, your plan will need to include a strategy for moving full-time into your new venture.
It is best to set yourself financial targets to meet before quitting your job rather than selecting a date to leave. For example, achieving a consistent net profit sufficient to support you and a cash reserve for emergencies would be reasonable goals to set.
If you select a date to quit your job, you might be tempted to make a move too soon and find yourself in financial difficulties.
08 Build a Cash Reserve
If you currently have a well-paid job, you will need some cash in the bank before you quit. You might already have sufficient money to use as a safety net. But if you don’t, it would be best to build up a cash reserve in your new business before you leave your job.
Having a resource of cash will cushion the blow if things don’t go to plan. And having some money in the bank will help you make better business decisions because you won’t constantly be worrying about your financial security.
09 Don’t Jump the Gun
It takes time for a business to get established. You will likely experience fluctuations in sales in the first year of trading. However, it would be unwise to assume that one month of good sales means that it’s time to quit your day job.
Wait until you have a steady and reliable income coming into the business and have developed a customer base before leaving your job. You may reach the point that business growth is being held back by the constraints on your time. Even so, it would still be best to bide your time and build up your cash reserve before you give up the security of your full-time job.
10 Don’t Get Cold Feet
It would be foolhardy to give up the day job too soon. Even so, you can only get so far running a business part-time. If you want your enterprise to reach its full potential, you will need to devote more time to it.
Use the financial targets mentioned earlier to guide your decision to quit your job. When you are hitting those goals, it will be time to take on the role of a full-time small business owner.
Try not to get cold feet at the last minute, though, or you will forever be wondering if your side business could have been much more.
Starting a business while remaining in full-time employment reduces the risk of moving into self-employment. But you must be confident that doing so would not be in breach of your employment contract, and you will need to only work on your new business in your own time.
You will need to be prepared to work seven days a week. However, if you are prepared to put in the hours, it could be the best way to set up a business and retain full-time employment security.