KEYS TO ESTABLISHING A SUCCESSFUL PART-TIME BUSINESS
Most entrepreneurs supplement their income by starting and maintaining part-time small businesses. The circumstances and goals of these business owners run the gamut, but many are operated out of the home and are utilized to supplement income derived from other sources (a fulltime job, retirement benefits, etc.). But not all people established part-time enterprises out of economic necessity. Statistics also indicate that many individuals, and especially people with higher levels of education, launch part-time entrepreneurial ventures to make use of skills that may not be tapped in their full-time work.
Finally, the ability and desire to launch a business on a part-time basis is often impacted by family consideration; in some instances, the cost of raising children may serve as an incentive to start a business on the side. In other cases, a parent may decide that the hours involved in looking after his or her children precludes the possibility of a part-time business. Many owners of part-time businesses, however, contend that if the desire is there, a part-time venture can be managed by most people.
Establishing a Successful Part-time Business
There are several important factors in creating and maintaining a profitable and healthy part-time business venture:
Recognize importance of full-time job
It is vitally important for entrepreneurs who already have a full-time job to make sure that their part-time business does not interfere with their obligations to their employers. Moreover, it is important for part-time business owners to make sure that their employers do not begin to perceive that the side business is taking priority, for in the final analysis, your ability to meet the demands of both businesses is irrelevant if your employer begins to feel, fairly or nor, that the arrangement is detracting from your job performance.
For this reason, part-time business owners may want to weigh the likely reaction of their employer before even publicizing the existence of the part-time venture. Your employer may well have rules on outside work; if you don’t know, ask. And if you value your job, do your best to comply with them.
Type of Business
The nature of part-time venture is often an important factor in its long-term viability. Certain businesses can be more easily maintained without unduly complicating regular obligations. Service businesses often allow for this kind of flexibility. Men have for years carved out entrepreneurial opportunities as part-time plumbers, electricians, and carpenters. Women are discovering similar opportunities in such area as consulting and teaching. Retail stores and manufacturing establishments, on the other hand, are far less conducive to part-time businesses.
The individual’s full time job is flexible enough to give him or her the time and resources to take care of the entrepreneurial business’s needs during normal business hours or during particularly busy periods.
Entrepreneurs launching part-time business ventures should also be wary of overextending themselves. Many individuals tend to take on more part-time work than they can easily handle, especially during the first few months of operation, when they have less experience in estimating the time involved in executing various tasks. While finances are often a factor in establishing a part-time business, most part-time entrepreneurs do not begin a venture with the expressed intention of turning their life into a chaotic rush of impending deadlines. Complications associated with underestimating the amount of time a given project or assignment will take are also typically compounded if the entrepreneur in question has significant family obligations (child or elder care, for instance)
Scaling back existing businesses
Some of the most successful part-time businesses are those that were formerly full time endeavors. Indeed, may full time entrepreneurs choose to scale back their hours after a certain number of years. They may do this for any number of reasons; some simply reach retirement age and wish to relax a little more, others decide to start a family, and still others may decide to spend more of their time traveling or indulging other interests (including other promising entrepreneurial ventures).
In many instances, switching a business from full-time status to part-time status can actually strengthen the enterprises hourly productivity. For example, the entrepreneur who decides to turn his 50 hours a week venture into one that requires him to spend half that amount of time on the business each week will naturally do his best to maintain relations with his best clients, while letting his less valuable or more problematic clients go. As many business owners will quickly attest, having greater freedom to pick and choose who you do business with can be a most valuable side benefit of going part-time.
Some customers, especially if they are other businesses, may be wary of contracting with part-timers. The most effective way to counter the perception held in some quarters that part-time business owners are less reliable and responsive (because of their obligation to their full time employer) than full time entrepreneurs is simply not to advertise your part-time status. Of course, you should not lie about it if the issue comes up.
Legal and tax considerations
Owners of part-time businesses should also consider the potential legal and tax ramifications of their activities. Taxes may be one of the last things anyone thinks about when starting a part-time business, but they are out to be high on the priority list for anyone who is serious about making money in a part-time venture. Additional income from a part-time business means additional taxes, but those who wait until the end of the year may wind up paying penalties or not being able to take deductions they had counted on.
Part-time business owners should thus consider doing one of the following: 1) have their regular employers take out more withholding taxes, or 2) file quarterly estimated tax payments. Either approach can go far toward helping the part-time entrepreneur avoid tax penalties or a big end of year tax blow.
In addition, owners of part-time enterprises should make sure that they take full advantage of available tax deductions. Part-timers get the same tax advantages as full time entrepreneurs, including deductions for travel, entertainment, home office, and related expenses, plus deductible retirement plans. Home based business tax deductions can vary significantly, often depending whether the business is a full or part-time venture.