Once you’ve decided to become an entrepreneur, the burning question on everyone’s minds is:
How long should I keep my day job?
Should I go all in and quit, or should I try part-time first (be it part-time entrepreneur or part-time day job)?
First things first: Finances
How long could your savings last you, if you quit your job today?
Do you have personal medical and life insurance? What about any retirement plans?
There is a culture around entrepreneurship that assumes you’ll end up bankrupt or ridiculously rich (à la tech startups such as Facebook or Twitter).
It may sound rather extreme but you could certainly end in a bit of a financial quagmire if you don’t do your math right before you commit to becoming a full-time entrepreneur.
Give yourself a timeline for your startup and work backwards.
If you expect to have your product bringing in profit in 12 months’ time, do you have enough savings to support you for that initial year?
Sit down and work out a detailed spreadsheet of your expenses and balance that against your savings and investments/assets.
If the numbers look comfortable, then you could dive in, head first, without feeling too worried about the immediate impact that your business will have on your day-to-day life.
Your community of support: Are they all on board?
Saying that you’re planning to quit your day job to start your own business will bring up a lot of emotions.
Your family and friends will have a lot of questions. “Isn’t this too much risk?” “What about your kids?” “Why throw away a perfectly good job for this?” “Can’t you do this part time?” “I thought it was just a hobby!”
Unfortunately, you will find that many people may not be as supportive as you might have wanted.
Whether it be out of concern or skepticism, there will be subtle or blatant push-back on your idea and your plan to quit your day job.
As hard as it may be, listen to their logic.
Share your business strategy and plans.
You need support of your family and loved ones, especially at the initial stage when things are very uncertain.
Part-time entrepreneurship: Pros & cons
The most obvious pro of part-time entrepreneurship is the ability to minimise financial risk.
If you hold onto your day job, you’ll be able to take ample time to let your business develop organically.
If you’re rather risk averse and prefer to take a longer-term approach to building your business, it may be better to opt for this “hybrid” option of entrepreneurship.
It may also have less emotional and psychological burden on you, as you wouldn’t need to sit everyone down to explain why you’re quitting your day job.
A part-time entrepreneurship is also an option if your business is borne out of passion/hobby.
Phil Knight of Nike started his shoe business while working for an accounting firm as he wasn’t sure if it was going to be sustainable.
If you’re an aficionado who loves to make teddy bears, it’s not really profit driven and isn’t worth the risk of quitting your steady day job.
Also, don’t discount the benefit you reap from the learning effect that takes place through part-time entrepreneurship.
A huge pro of keeping your day job is that you will be able to test waters, educate yourself about your market and establish a decent pool of clientele before making a full-time commitment.
But this hybrid model does have a downside.
If you’re planning to phase into full-time entrepreneurship at some point, you’ll be putting in a lot of time and effort into this business.
That means you’ll be burning the candle at both ends and that can be draining.
Don’t run yourself ragged and burn out before your business sees light of day.
If you envision this part-time side hustle becoming a full-time money earner at some point, be focused.
And exercise precision time management.
Know your rights as an employee
Another very important point if you decide to continue working at your day job is to be mindful of the legality of your part-time business.
Most employers demand that employees sign a non-compete agreement, which means you cannot use your skills to do jobs for any other company.
Make absolutely sure that you understand your rights and ensure that your part-time job does not sink you into a legal deep-end.
According to an NTUC handbook on workplace rights, “An employer should not stop a former employee from earning a living using the skill, experience and general know-how that he or she has acquired in the course of working with that employer.”.
However, if you have knowledge of your current employer’s trade secrets or other highly confidential information, or be able to influence its customers to move to your new employer, non-compete clause may be enforced.
Know where you can go for workplace advice, such as NTUC’s U PME Centre where they run free legal clinics for NTUC members, or walk-in and online queries from public on workplace protection, career progression and job placements.
Part-time entrepreneurship is a stop gap and a safety net.
It is excellent while you are mapping out the expansion plan for your business but it can’t be a destination.
Why? Because if you pour too much energy into your day job, your business will give, and vice versa.
The pros and cons of going all in
Giving up a good salary, medical insurance and other benefits that a steady full-time job provides is terrifying for the novice entrepreneur.
But if you have prepared yourself well in advance and all your ducks are in a row (finances, business plans, loans, clientele, etc), you may want to pull the trigger and commit to becoming a full-time entrepreneur.
The obvious pro of going full throttle is that you can give 100% to your business.
Whether you’re diving into it from a full-time job or transitioning from part-time entrepreneurship, being fully committed will give you the freedom to work without constraints, legal or otherwise.
Like most big decisions in life, the key is timing.
If you already have a large pool of eager customers and no major competition in your market, you should delve straight in and start full time.
But if you need time to develop your marketing and business strategy, then full-time entrepreneurship may be too big a risk to take.
Going straight into full-time self-employment directly from paid employment is rife with risk unless you have a solid business plan.
Because the minute you quit your day job, you’ll be dipping into your savings and the clock begins to tick on your business.
Most experts recommend putting aside enough money to live on for at least six months to a year.
So calculate your burn rate against your initial capital and make sure you can afford to run your business, full time.
[reminder]What are your thoughts about starting full-time or part-time?[/reminder]
This is part of my 10-part series that I originally published on The New Savvy