Safe Starts

(First published in the CAD++ Newsletter in late 1995)

Last month I covered some of the reasons for wanting to go forth and start your own business. This month I’ll look at ways to do this safely, without taking huge risks. I should  point out that my assumption here is that you have some idea of what you want to be doing. If you don’t, then hold off, reread last month’s column, and do some research.

Making Sacrifices
Before you commit to starting your own business, be prepared to make a major sacrifice of your free time, assuming you have some. If you currently don’t have any free time, it’ll be tough to safely start a business.

Safety First
Most entrepreneurs don’t just sally forth, drop everything they’re doing and just start a business. Most just can’t afford this financially. As such, there are two reasonably safe  ways to start your own business while still keeping some semblance of financial security until your own business is successful enough to cover your financial needs.

The first is what’s commonly referred to as “moonlighting”, working a second (or third) job in addition to your regular profession. This is perhaps the safest route to take in  terms of stability. I’ve used this approach to start a small consulting business.

The second approach is to find a firm, long term consulting contract which can bring in enough money for you to start your business on the side or after the contract is completed. This is the approach I used to start my last company.

Moonlighting
While moonlighting provides good security, the biggest potential pitfall is your current employer. Many employers, especially if you’re salaried, frown upon moonlighting,  since they see it to be a dilution of the attention you’re paying their business. Moonlighting, if it comes to the attention of your management, may very well result in a  termination of your regular employment. So much for financial security. However, there’s an article in the October 10, 1995 issue of The Wall Street Journal (see page B1 if you can locate a copy at your library) implying that some employers might actually support moonlighting. I personally see this as a rare occurrence, based on the people I’ve worked for, as well as my own attitude while I was an employer.

Moonlighting, if you work a regular 9 to 5 sort of job, also limits your new business options somewhat. In particular, you end up having to work your business efforts during  early mornings, evenings, nights, and weekends – all times when many potential customers may be difficult to reach. Even so, there are ways to work around this in this day and age of advanced electronic communications. Pagers, cellular phones, FAX machines and modems, and electronic mail are all great ways to stay in touch.

However (and this is a big one), absolutely never use your employer’s resources (long distance, FAX, photo copiers, etc.) to conduct your own business. This should even extend to performing personal for-profit work on your employer’s time and equipment. In addition to being unethical, it’s also a great way to get yourself fired for theft of resources, never mind the potential of giving your employer a legal claim of partial ownership to whatever work you’ve produced using their resources. Spend a little of your own money, and get your own personal cellular phone to make calls on, get a FAX machine for home, and keep it all completely separate. For example, some people may take their lunch in their car, and use their cell phone to conduct business during the day, following up with FAXes and e-mail at night or in the early morning.

Also, you should review all employment agreements you may have with your employer. Such agreements may require all your best efforts (i.e. all the time you have),  non-competition (more on this in a later column), and more. Make sure whatever you plan on doing does not violate your employment agreements.

Contracting
Going the contracting route is both easier and more difficult than normal moonlighting. It’s easier in the sense that you can usually keep a fixed schedule – a set number of  hours during specific parts of the day, and it also probably will pay better than a regular job. As a result, the company has no claim on your time beyond that which they  specifically pay you for. The difficulties in contracting lie mainly in the lack of long term security, as well as finding good contracts to work on. It’s much like trying to find a new  job several times a year. It should be considered, however, that contracting can effectively be the start of your new business, and that the company you’re contracting for could be your first client.

In terms of things not to do, all of the items I listed above under moonlighting still apply. Don’t use your client’s resources for personal gain.

Next Month
In my next column I’ll cover several types of common businesses people start on the side and the pros and cons of each.