This article was originally published on Your Money
However, for a growing number setting up a business has become a reality out of necessity rather than ambition.
According to research from Direct Line, in the first six months of the year more than three million Britons had a second job and a further 1.5 million launched their own business to supplement the income from their primary job.
As wages fail to keep up with household bills, it is no surprise people are turning hobbies such as photography, arts and crafts and cake-baking into part time businesses or using their skills in website design, consultancy, retail and trade to bring in some extra cash.
While setting up your own business can be an incredibly rewarding experience, doing it while holding down a full-time job is no mean feat.
One of the biggest challenges is managing your time. Unless you plan to never sleep -not recommended – you’ll have to choose whether your job or your business requires more of your time.
“Your decision will be influenced by your current financial situation, the resources you think your business needs and, of course, your employer’s willingness to cooperate,” says Dani Booth from Jelf Small Business, an insurance broker.
Getting your time management right can be ‘make or break’ for your business idea. Taking this route requires discipline.
Booth says: “Adjust the timeline for starting up your business according to how many hours you can reasonably spend on it per day, prioritising the most important tasks first. Designate a set period each day as your ‘work hours’ and stick to them as rigidly as you would any paid job.
“A good tactic is to book a couple of weeks of holiday, and devote them to all the important things: completing your registration, business plans, talking to your bank, marketing and so on. However, don’t underestimate the importance of making time for relaxation too – without it, you’re in danger of over-stressing yourself.”
Remember, your employment contract may affect what you can and can’t do in your business.
“Any intellectual property – that is, inventions or concepts – you developed while on the job may well belong to your company by default. Contracts may also include non-competition clauses or restrictive covenants that may affect your options. Your company’s HR manager should be able to guide you through this,” says Booth.
It might be worth joining a network of part-time business owners or starting a group in your area; having someone else who has a business to talk to and share ideas and experiences can be very useful.
Successful part-time business owners can quickly see the fruits of their labour; they can end up boosting their bank account by thousands. Direct Line found the average Brit who takes on additional work pockets almost £2,536 a year.
But to make sure you end up in the black, adequate insurance is crucial in case something goes wrong. Amid all the excitement and enthusiasm, forgetting this critical element can be catastrophic.
There are three types of insurance you will need to consider:
Professional indemnity insurance will protect you against dissatisfied clients.
“If the party you work for feels you made a mistake and wants to sue you, you will need cover,” says Tim Worboys, director at More Than.
“This is important for anyone carrying out a service from photographers to IT workers.”
Public liability insurance protects you and your business against any claims for accidental damage caused to property or an individual while at your premises or as a result of your business activities.
Finally, it is compulsory to have at least £5m of employers’ liability insurance. This will cover against claims made by employees who are injured or taken ill during their employment.
“There are a couple of exemptions against the legal requirement – for example if you don’t register your company as limited – but it is worth checking,” says Worboys.
You may need to consider other types of insurance, depending on your line of work.
For example, van insurance if you are going to be transporting goods.
If you are keeping products at home, it is also worth checking the terms and conditions of your contents insurance as it is likely you will need to take out extra cover.
