Starting a business is a risky venture. According to the latest stats, almost 1 in 5 businesses fail in the UK every year.
Even worse, 60% of new businesses will fail in the first 3 years, making the market even more perilous for new businesses.
Now, some of this is down to common mistakes, which we’ll help you avoid in our guide to why new businesses fail in the UK. But regardless of the reason, that risk is still over your head.
To help mitigate that risk, a lot of people start their business while still working at their current job.
While there are many benefits to starting your business while working full-time, there’re also drawbacks.
Although you have less time on your hands, it’s a great way to hold onto your steady income while you get things off the ground and make a profit.
But working a full job and starting a business is no easy task. So to help you out, our team have rounded up the top tips for starting a business while employed. It’s something we even used ourselves while getting our own businesses out there.
The top 11 tips for starting a business while employed
Ready to become a part-time business owner? Let’s dive into the best tips for starting a business while employed.
1. Check your employment contract
There’s nothing legally stopping you from starting and running your own business while you’re employed.
However, there are a few restrictions to disclosures that you may have to follow depending on what’s in your employment contract that you could be in breach of by starting your own business.
Generally, these clauses cover one of the following events, but some contracts may have additional clauses that will affect your side business.
Intellectual property clause
If you develop the intellectual property as part of your full-time job, your business may have a conflict of interest disclosure that forbids you to develop similar technologies based on the knowledge and experience that you’ve picked up.
For example, if you worked for Dyson and had background knowledge about how their new hoover worked, you couldn’t then develop your own hoover business using the same technology.
Even if the intellectual property in question was your idea or hard work, you are prevented from using it for yourself because it belongs to the company.
It does suck, but if you are passionate about something that you want to turn into a business, develop it outside of work.
Alternatively, if you create something that’s different from your current employer, BUT create it using company resources or time, then this becomes the intellectual property of your employer instead.
The moral of the story here is to make sure your side business doesn’t copy your current employer – and you need to triple-check that you don’t work in business time or using their equipment.
Non-compete clauses
Some companies have non-compete clauses that prevent employees from leaving to join a direct competitor. So if you worked for Coca Cola, for instance, you couldn’t then immediately get a job at Pepsi and leak all your secrets.
Non-compete clauses don’t just stop you from working for a competitor, but also prevent you from creating a business that will directly compete with your current employer. So if you worked for Coca Cola, you would be forbidden to get a job at Pepsi or to create your own line of carbonated soft drinks.
Non-compete clauses often have time limits on them, so if you really had your heart set on making a business that does the same thing, you may have to find another job while you wait the limit out.
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2. Validate your idea first
Starting a business when employed gives you a stable environment in which to really take your time and test out your idea before feeling the pressure to make it work.
So before you get started, we’d always recommend taking advantage of this situation to really validate your idea and if it will be a success before making your business.
It’s not about being too scared to act – but making sure that when you do take the plunge, it’s for the right reason.
One of the best ways to validate your idea is to talk to potential customers. Although you might have already told friends and family and got some valuable feedback, their input will always be biased.
So, try to find a group of potential customers and get real, honest feedback in the early stages. Ask questions like:
- Would they be willing to pay for your product or service?
- What are their pain points?
- What are their needs?
This testing time will really help you get an understanding of your potential business, and spot any potential flaws and issues from the very off.
Don’t be discouraged by negative feedback here – everything that you get back here is golden advice that can help ensure that the very first version of the business you launch is the best you can make it (and better set up for success!).
3. Make a realistic plan
If you’re familiar with Business4Beginners, you’ll know how much we talk about the importance of a business plan. This guide is no exception.
Business plans are your golden map of who you are, what you do, and how you operate. It’s there to outline your goals and exactly how you are going to reach them. And, as a reminder, companies that use a business plan grew an average of 30% faster than those that didn’t, and were twice as likely to get investments or secure loans than those without.
We’ve got a step-by-step guide on how to create a business plan right here.
But an extra thing that you will need to plan for when starting a business when employed is exactly how much time you can dedicate to your new business. Juggling a full-time job with a startup is demanding, and it’s easy to underestimate the effort required.
Don’t set yourself up for failure by creating an overly ambitious schedule that you can’t possibly maintain.
Every minute that you aren’t at work or asleep can’t be used on your new business. Life just doesn’t work that way – and there’ll always be events or extra commitments that you need to fit in.
It’s far more important to be consistent, than to try and cram in 20 hours a week into your business.
4. Start small
Staring a new business is an exciting opportunity! While you’re first diving into it, you might be full of big ideas, plans and passions ready to funnel into your new business.
But, that’s not a good idea.
Putting too much in at the beginning while still navigating your current job is a sure-fire way to get burnt out and turn your bright spark into an extinguished flame.
Although you’re full of good intentions, you need to keep them bottled up for a tiny bit while you get an achievable, small step plan in place to carry on your business in the long term.
Think small steps and what you can achieve in a few hours a week, rather than pulling all-nighters to get your grand idea out of the box while you’re still employed.
This can also apply to how you scale your business. As a freelancer, it can be tempting to try and get as many clients as you can when you launch.
However, it’s much easier to balance your time while employed if you start out with just one or two clients that you can fully dedicate your limited time to. Then, when you have the capacity, start scaling up from there.
5. Save your side income for your business
One of the biggest benefits of starting a business while employed is that you can hold onto your regular income and protect yourself in case your business doesn’t work – or doesn’t make enough profit.
So when you start getting an income from your business, you’ll end up with more money than you’ve been used to. Now, instead of splurging out and treating yourself, it’s a good idea to save all the income from your business and reinvest it into the company.
Your normal wages will allow you to live life as normal, while this extra income will help grow and build your business to the point where you can join it full-time.
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6. Remember your work/life balance
With a full-time job and starting a new business, you’re going to be juggling a lot in your schedule.
But, you do need to remember to fit life into this work/work/life balance. Not taking a break from your business just leads to increased stress, burnout and resentment for what you are building.
No human was designed to work 24/7, so ignore what those CEOs tell you about ‘the hustle’ and make sure you actually have time to breathe, relax and get a life.
Taking breaks from your business will also help you with creativity, spark new ideas and keep the passion for it alive.
7. Create your ‘big switch’ plan
When starting a business while employed, there’s one big goal in mind. To get your business to a point where you can run it full-time and leave your current position.
So one of the best things you can do is outline your ‘switch goals’, making it clear at what point you’ll hand in your notice and fully embrace the world of self-employment. This could include:
- Hitting a certain amount of income that matches your current wage
- Reaching a profit goal
- Hitting a certain number of clients and predicted income
Whatever it is, make it certain – and don’t just pick a date out of the air. Although it’s good to set rough deadlines, you never know what’s going to change when you’re balancing two jobs.
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8. Know your legal obligations
As soon as your business starts to make a profit, you need to register for self-assessment with the HMRC. In addition to this, it’s also a good place to mention your contractual obligations with your current employer.
Make sure you read your employment contract and check for ANY clauses or disclosures that you need to be aware of. If you’re ever in doubt, seek legal advice.
When you register your business, you can also find out about the legal obligations of a sole trader here.
9. Make your business legit!
While you’re still working out the details, you don’t need to register your company. But once you’re ready to start trading, it’s always best to go legit and get your company registered.
This won’t just prepare you for the future, but also give you a more legitimate and professional appearance to start getting those sales in.
When you’re starting out, you’ll want to decide between registering as a sole trader, or forming a limited company. If you’re not sure which one to choose, read our guide on becoming a sole trader or a limited company.
When you’re ready to go legit, you might also want to take advantage of a formation agent. They’ll handle all the paperwork and minor details for your company and can even provide a company address for you to use to protect your privacy. It’s perfect if you haven’t got much time spare while you’re still employed!
Find the formation agent for your business with our top picks and reviews of the best company formation agents in the UK.
10. Delegate, automate and get help
No one can do everything, and when you’re starting a business while employed, time is of the essence.
Think about everything that is on your plate, and look for ways to delegate, automate and get help (hired or otherwise) wherever possible! That way, you can focus on the tasks that only you can complete.
If you’re not sure where to start, why not check out our accounting software reviews which can automate the time you spend on your books and working out your finances.
11. Build a support system
Starting a business, especially while employed, can feel like navigating uncharted territory. Having a strong support system is absolutely crucial for staying motivated, grounded, and on track.
To build your support system, you might consider getting a mentor or advisor to give you advice.
Seek out someone who has “been there and done that”—an experienced entrepreneur who can offer invaluable guidance and support based on their own real-world experience (especially if that’s starting a business while employed!)
A mentor can provide insights you wouldn’t find in a book, help you avoid common pitfalls, and offer a much-needed dose of encouragement when things get tough.
Networking with other entrepreneurs is equally important. Connecting with like-minded individuals who understand the unique challenges of starting a business can be incredibly validating.
These connections provide a platform for sharing experiences, exchanging ideas, and learning from each other’s successes and failures. Building a network of fellow entrepreneurs can also open doors to new opportunities, partnerships, and resources.
Lastly – don’t underestimate the power of your family and friends. They’re your biggest cheerleaders, and will be there to help you exactly when you need it. Don’t forget to lean on them when you need to, and let them know exactly how they can help you support your business.
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