Even if you ultimately plan to run your business full-time, starting on a part-time basis can offer several advantages. It reduces your risk because you can rely on income and benefits from your full-time job. It also allows your business to grow more gradually.
Yet, the part-time path also comes with potential pitfalls. It can leave you with less time to market, strategize and build a clientele. Clients may feel you're not offering adequate customer service. You also run the risk of burning out. Holding down a full-time job while running a part-time business can leave you with little, if any, leisure time and your personal life may suffer as a result.
That is not to say a part-time business can't work. You'll need to have excellent time-management skills, strong self-discipline, and support from family and friends, according to Arnold Sanow, co-author of You Can Start Your Own Business. Also crucial, he says, is your commitment. "Don't think that, since you already have a job, you don't really have to work hard at your business," he says. "You must have a plan of attack."
Here's a run-down of what you'll want to consider before choosing which path is more appropriate for you and your business.
Assess Your Idea's Potential
If you find there is an unmet need for your product or service, no major competition and a ready supply of eager customers, then starting full-time might be the best plan. On the other hand, if you find the market won't support a full-time business, but might someday with proper marketing and development, then it is probably best to start part-time.
Investigate the competition in your industry, the economy in your area, the demographic breakdown of your client base and the availability of potential customers. If you are thinking of opening an upscale beauty salon, for example, evaluate the number of similar shops in operation, the number of affluent women in the area and the fees they are willing to pay.
The next step is to outline your goals and strategies in a comprehensive business plan. Make market projections and set goals for yourself based on these findings. It gives you a view of the long-range possibilities and keeps the business on track. Part-timers should write a business plan, too, as it will help you transition to full-time later on.
Evaluate Your Finances
Before launching a full-time business, most experts recommend putting aside enough money to live on for at least six months to a year. Completing your business plan will show you in detail how long you can expect to wait before your business begins earning a profit.
Consider your existing savings, whether you have assets that could be sold for cash, whether friends or family members might offer you financing or loans, and whether your family members' salaries are enough to support your family while you launch a business full-time.
If you're leaning toward starting part-time, then set financial priorities. How do you know when your business is making enough money that you can quit your day job? A good rule of thumb, according to Sanow, is to wait until your part-time business is generating income equivalent to at least 30 percent of your current salary from your full-time job.
Bring Your Family into the Process
The emotional and psychological side of starting a business is just as important in your decision as the financial and market aspects. Do your closest family members support you starting a business? Do they understand the sacrifices both full-time and part-time businesses will require? Make sure they know that they can discuss any objections or worries they have with you.
Then work together to develop practical solutions to the problems you foresee. Also, lay ground rules for the part-time business. For instance, agree not to work on Sunday afternoons, or not to discuss business at the dinner table.
Don't Forget About Your Own Needs
If the idea of taking the full-time business plunge keeps you awake at night then perhaps a part-time business is best. On the other hand, if you need to work long hours at your current full-time job, you commute 60 miles round trip and you have 2-year-old triplets, for instance, then piling a part-time business on top of all that could spell disaster.
Assess the effects of both a part-time and a full-time business on your life. You'll be most likely be working evenings, weekends and lunch hours, if not your holidays, sick days and vacation time, too. This is the kind of commitment you will need to make if you expect your business to succeed.
Whether to start part-time or full-time is a decision only you can make. Whichever route you take, the secret to success is an honest assessment of your resources, your commitment level and the support systems you have in place. With those factors firmly in mind, you will be able to make the right choice.
Excerpted from Start Your Own Business, Fifth Edition by the staff of Entrepreneur.