Many entrepreneurs start out the same way, with a full-time job they use to pay the bills while they’re actually dreaming of a different kind of life. The stories of prodigies who start successful businesses right out of high school or college might make for good reading, but the reality for most entrepreneurs looks different.
That’s not a bad thing. Some life and work experience can come in very handy when starting a business of your own, and having the safety net of a regular paycheck can help cut down considerably on the financial stress of building a new business from scratch.
A study from the Academy of Management Journal even suggests that hybrid entrepreneurs—those who start businesses while still working full time—are more likely than those who dive right into full-time entrepreneurship to succeed at getting their businesses off the ground.
Of course, there are unique challenges to starting your business as a side hustle. Full-time jobs are often demanding and, between commuting, working, and meeting the other obligations in your life, it can feel like there’s no time left to take on the massive task of starting a brand new business.
Choose a business idea
Before you start your business, it’s normal to have a few (or even many) ideas floating around in your head. You may have a range of different skills and interests, and be unsure which you should incorporate into your business idea.
The truth is there’s no one perfect business idea for anybody. Your business idea should meet a few key requirements that we’ll go over, but there may be multiple business ideas you could be equally successful at starting. It’s more important that you choose one that has the potential to be successful and that you can enjoy than endlessly soul searching for the exact perfect business.
When deciding on your business idea, make sure it meets these key requirements:
It capitalizes on your skills
In a new business, pretty much all of the responsibility falls on your shoulders. Sure, you may be able to hire talent further down the line, but for now, you’ll be the one doing most if not all of the tasks in the business. That means that you should choose something where your strongest skills can be put to work.
It’s enjoyable
Ideally, you’ll be working at your business for years, or maybe even decades, to come. You’ll also have to muster up the motivation to work on it on evenings and weekends when the thing you probably want to do most is just relax. This means you should find most aspects of your business enjoyable.
Of course, all businesses have their unpleasant tasks and challenges, but the day-to-day work should spark joy and motivation. Otherwise, it will be hard to keep at it.
It can be profitable
This may seem too obvious to be worth mentioning, but when we get excited about a business idea it can be easy to delude ourselves into thinking it’s sure to be profitable. The reality is that many businesses don’t stay afloat because they don’t manage to turn a profit quickly enough. Make sure there’s a market for your product or service, and that you can be in the green within a reasonable timeframe, even after expenses.
It’s scalable
Whether or not your business is scalable depends on both the size of your potential market and your own constraints in terms of delivering your product or service. Make sure your business can be scaled to a point where it makes enough money to meet your goals.
It can be done part-time
If you’re starting a business while working full time, it will limit the kind of businesses you can start. You won’t be able to start a restaurant just yet, but you may be able to start a weekend catering business.
You also want to consider your current employment contract to make sure your new endeavour doesn’t breach any agreements you’ve signed with your employer.
Get proof of concept
Without paying customers, a business can’t survive. Your job when vetting your business idea is to prove that you can get paying customers.
Many businesses’ first customers are friends and family, but you’re better off not taking those sales into account when proving your concept. Most people are happy to open up their wallets to support a friend or family member starting something new, but that’s not enough to sustain a business long term.
Try to get a few paying customers who you don’t know at all. If you can get three to five people to pay for your product or service who have no other connection to you, that’s a pretty good indication that there’s a market for what you’re selling
Of course, you can also do research to validate your idea. It’s good to have knowledge of your chosen industry, such as the size of the industry and the average price of your product or service. However, until you put yourself out there, you won’t know for sure if that data translates into actual revenue for you.
Consider the financial costs
As a general rule, however much you think you’ll need to start and run your business is most likely an underestimate of the real cost. Businesses are expensive to get off the ground and maintain.
Having said that, some businesses have much lower capital requirements than others. If you’re starting a service-based business, you may primarily need to consider a website, some branding costs, and advertising costs. For a product-based business, you’ll incur additional costs such as inventory, tools and materials, manufacturing equipment, and storage facilities.
Create a business plan
A business plan is a standard document in which you provide an overview of your entire business, including your costs, sales plan, marketing plan, and business targets. It’s a must if you plan to get access to capital to grow your business, since banks and other lenders will want to see your plan to determine if they feel comfortable lending to you.
Even if you don’t plan on accessing capital, going through the process of creating a business plan will help you consider every possible cost and expense of starting and running your business. This is a very helpful exercise, since it will give you a realistic sense of how much you should save in order to start your business.
Set business goals
There’s a famous quote from management theorist Peter Drucker that says, “what gets measured gets managed.” It applies perfectly to starting and running a business, because the more you have set measurable goals for yourself, the more likely you are to identify when you go off track and rethink your strategy.
Make your goals SMART
SMART goals are specific, measurable, attainable, realistic, and time-based. Your business goals should be SMART so that you can check in with them frequently to make sure you’re meeting them. Your business’ specific goals will depend on what you are selling, but they should be oriented around becoming profitable as soon as possible.
Your bottom line should always be among your top considerations, because it’s very difficult to grow a business if you’re bleeding money and don’t have a good plan in place to generate revenue.
Create a schedule
Starting a business while working full-time requires relentless commitment to time management. People who aren’t also working a job can regularly put in 12 hour days if they want to. You’ll most likely be limited to early mornings, evenings, and weekends. Having a strict schedule that dictates when you work on your business and what you’ll do during those hours is key to being successful.
How to transition to being a full-time entrepreneur
Once you’ve spent some time as a hybrid entrepreneur, you may be able to start seeing the light at the end of the tunnel and envision a world where you can quit your job and finally dedicate yourself fully to your business. That’s a huge achievement, and one many entrepreneurs look forward to.
Bank some savings
Even if your business is going well, it can be a financial shock to longer have a reliable paycheck coming in every two weeks. It’s a good idea to have a comfortable amount saved in the bank to cover your living expenses for at least six months. Business growth is rarely linear, and it’s normal to experience some lulls and slow periods. Having enough saved to cover your living expenses, and making sure you don’t dip into those savings for your business, will give you peace of mind as you transition to full-time entrepreneurship
Be respectful of your employer
While you’re still working as an employee, make sure you still give the time that you’re on the clock to your employer. Avoid the temptation to work on your business while you’re employed, even after you’ve given your notice. It really is a small world, and that kind of behaviour can damage to your reputation. This is especially true if your business is in a related industry––you never know when you’ll cross paths with, or even do business with, your former employer or colleagues.
Be honest with yourself
Now that your sole source of income is your business, it’s more important than ever to check in with yourself regularly about what aspects of your business are going well and what areas can be improved. Without a boss or manager to guide you, you have to keep a critical eye on your own work. Make some time to check in weekly about what went well, what didn’t, and what you can do to improve.
Outsource some tasks
Just because you’re switching to full-time entrepreneurship doesn’t mean you should do every little task in your business forever. In fact, with more time to dedicate to your business, it’ll likely grow faster than it did when you were only working on it part-time.
The more your business grows, the more you’ll benefit from outsourcing time-consuming tasks so that you can focus on the things that really contribute to your bottom line. Tasks like bookkeeping, graphic design, social media, and other digital marketing activities are good places to start. You don’t have to hire an employee, but getting a virtual assistant or some regular freelance help with these tasks can help you focus on what matters.
There may be no guarantees in life, but having your own business can be extremely rewarding and is worth the extra work and sacrifice. You may make sacrifices to work full-time while starting a business, but you may also buying yourself a lot more freedom and income for later in your life.
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.