In an economy where the cost of living is going up, and the average household income is remaining stagnant at best, many individuals may find it necessary to supplement their earnings. Whether they want to save for college or retirement, add to the family vacation fund, or simply make ends meet, many people are considering starting a side business.
A side business can offer an excellent source of additional income, especially for an entrepreneur who wants to follow a dream, but is not comfortable leaving a stable job for an unproven venture and may not be able to afford to purchase health insurance. The side business can serve as a test project; if successful, the owner can later expand it to a full-time small business or continue operating it as a side project long term as a source of supplemental income. Likewise, if the business fails, the owner has not lost a major investment and can continue with his or her full-time occupation.
The first step for any business owner is establishing an objective. What will the business do? Often, those planning a side business already have a project in mind, based on their existing hobbies, skills or work experience. If you don’t, however, you might start by taking an interest inventory. What hobbies or talents do you already have that could fill a need for others? For example, if you enjoy crocheting and quilting, you could establish a side business selling Afghans or blankets. Or, if you enjoy and work well with animals you could operate a pet-sitting or dog-walking business. Another option is to brainstorm current needs in the market. For example, if you wish someone would come to your house to wash and wax your car, perhaps that could be a business. It is important, however, to make sure you have a broad enough market to sustain the business.
With an established business plan in mind, you must determine if there are any local or state requirements you must meet. Obviously, if you are simply selling quilts, you don’t need a license. But if your business deals with many services, whether it be repair work, financial planning, or dog sitting, you may need to obtain a permit, certificate, license or liability insurance.
You might also consider establishing an address for your business separate from your home address. Private mailboxes can be rented rather inexpensively, and having one gives you the ability to publish your business address without pointing strangers to your front door. Plus, if you ever move to a new home, you won’t have to change your business address. You may also consider establishing a separate business telephone number. With voice-over IP services available online, you don’t necessarily have to establish a separate telephone line, but instead can have business calls forwarded to your mobile phone during business hours and a voice mail box any other time.
While side business owners generally don’t need to have an attorney on payroll, it’s generally a good idea to hire an accountant. You will have many questions when starting your business, and an accountant can not only provide answers but also guidance in how the business will impact your taxes. You might also look into how to incorporate and see if you need a proper legal structure for your business.
Unlike a small business venture, most side businesses require little investment. Time, however, is required to make any business a success. In order to ultimately get a return, you must be willing to dedicate the necessary time and patience toward your business and realize at first you likely will see little profit. In the beginning of any business, time is spent networking, creating content, marketing and learning additional skills or tasks that don’t necessarily earn money.
Make sure when designing your business plan, however, you consider how much time you have available outside your full-time job. Do not market yourself as available to clients anytime you know you will be at your job. Although limited availability may seem like a hindrance, you can use it to your advantage by marketing yourself as available when other businesses may not be, such as evenings and weekends.
The first marketing step any business owner should take is establishing a web site. Many reliable domain registrars are available to register your company’s domain name at little cost, or you can spend more for a web hosting service. If your company’s web site, however, is a simple page or blog, you may even be able to use a free application to register your domain.
Social networking can serve as another important online tool for business owners. It costs nothing to establish a presence on Facebook or Twitter, and both outlets allow you to connect with your customers and let your community know the products or services you offer.
Some of the best marketing for a side business starts close to home. Tell friends and family, and ask them to tell their friends and family. Print some business cards and hand them out to everyone you know, with extras for them to share with others. Tack your business cards to community bulletin boards. Before you know it, you will start getting more calls.
Manage your Business with your Job
Many companies have rules regarding employees holding additional jobs, including their own businesses. Before establishing your business, make sure it will not interfere with your full-time job as that will be your main source of income for at least the immediate future. Opening a business that offers a product or service that competes with your company may be a bad idea – you may soon find yourself out of a job.
Whether your work for a company that requires you to disclose your side business or not, be careful that the time you devote to your business does not interfere with your full-time job. If the company finds out you are spending company time working on your own project, you could be fired. Try to organize your time to get your side business work done at home and on your own hours.
You might also avoid broadcasting your side business too loudly while at work. In other words, while you may be tempted to discuss it to as many people as often as possible, frequently doing so at work could lead co-workers or management to feel you have divided attention and loyalty.
Good record-keeping is vital for the success and survival of any business for a variety of reasons. Much of what you purchase will be tax deductible. While you may already remember to keep receipts for business supplies and office equipment, you may also be able to deduct costs that would be incurred outside of the business if it’s operated out of your home, for example. Consult your accountant to find out all your possible tax deductions.
You will also want to keep thorough records of all business transactions, contracts and licensing in case of possible civil complaints or legal liabilities. A good record-keeping system can save time and money in the event a claim is brought against you or the business.
In today’s struggling economy, more employees are finding it necessary to earn additional income. Developing a side business can not only fulfill that need, but also provide a safety net for the business owner in the case his or her full-time job is eliminated, an unfortunate risk in the current job market. With careful thought, planning, organization and commitment, a side business can serve as a long-term answer to savings or even develop into a successful full-time business.
This guest post was provided by our friend Daniel Guidotti from www.capcredit.com. Please visit their website to find more great articles about starting your own business and other finance topics.