You Don't Have to Quit Your Day Job

There may be almost as many part-time entrepreneurs holding down full-time employment as those whose business is their full-time job. In 2002, as part of its decennial survey of business owners, the U.S. Census Bureau found that nearly 9.6 million of the more than 20.5 million business owners surveyed didn't consider their business their primary source of income. Even among the roughly 5.6 million businesses that were substantial enough to have employees, nearly 1.6 million business owners said their enterprise wasn't their primary source of income.

Entrepreneurs have good reason for working full time at a job and part time on their businesses, experts say. "For some people, especially in economic times like these when they're worried about their regular job, starting a part-time business gives them a safety net," says Paula Englis, an associate professor at Berry College and the University of Twente. Part-time startups by full-time employees may also offer a source of extra income when future pay raises are likely to be infrequent or nonexistent, she adds.

Running a business while still employed can also make good business sense. An entrepreneur with a full-time job to fall back on is under less pressure to make a venture succeed quickly, Englis notes. "It also gives you the opportunity to make a few mistakes and not have that mean the end of the business."
Part-time businesses can also be easier to start because they require less funding and the entrepreneur can raise the necessary funds by diverting earnings from a full-time job. "Given the financial environment now," says Englis, "it's going to be hard to go out and raise capital to start a full-time business."
Before you rush out to start a part-time venture, however, consider the potential downsides. Perhaps the worst would be if your part-time enterprise interferes with your full-time job. "You can't burn the candle at both ends without some risk," warns Bruce Kemelgor, a professor of entrepreneurship at the University of Louisville. If the time and energy you're devoting to the business results in poor attendance or impaired performance, you could lose your job.
If you're concerned that your business might pose a problem, Englis recommends consulting with your company's HR department. You may have signed a non-compete agreement as a condition of employment that could influence what kind of business you start. Unless you plan to go into business in competition with your employer, however, few companies have ironclad prohibitions against sideline ventures, Englis says.
Perhaps the biggest problem with part-time businesses is that it's hard for them to reach their potential when they receive only a portion of their founders' attention and effort.
Tip sheet
1. Know what you want. Having a clear idea of your objective in starting a part-time business will help you decide what kind of business to start and how to run it.
2. Pick something you enjoy doing. Much of the reward of part-time entrepreneurship may consist of the pleasure you gain from it, not the money, so make sure you like the work you'll be engaged in.
3. Pick something you know. If your business is related to a favorite hobby or professional sideline, you'll have an extra edge because of your background or expertise in the field.
4. Have a business plan. Even a part-time business needs a full-size business plan. Be sure you're especially able to describe a viable business model for generating profits.
5. Be patient. When you can't work at it full time, your business idea will take longer to get under way and grow to maturity.
6. Take care to separate your job, business and personal responsibilities. A part-time business can interfere with work and family relationships if you let it.
7. Have an exit plan. Decide in advance when and how you'll sell or otherwise get out of your part-time business. Otherwise, it could become a full-time burden.