Today’s uncertain economic climate has many people interested in buying a home-based or other type of business opportunity, licensee opportunity, distributorship or franchise, all in the hopes of subsidizing their regular full-time income. If you are one of them, that’s a very reasonable plan as well as expectation.
However, having a second job or even a third presents a whole range of exceptional challenges when it comes to managing your time, let alone your life, whether you are working for yourself or someone else. And when it comes to owning your own operation in particular, it’s a whole different ball game than if you were just showing up to punch somebody else’s time clock. That’s for sure.
The trick is to be certain you know in advance what it is exactly you’re getting into and to do your due diligence to ensure to the greatest extent possible that you’re making a solid investment as well as a good move. Here are the most crucial questions you should be asking yourself about owning a side business long before you part with any serious money:
- Is the business I’m interested in buying legitimate and does it have a proven track record of success?
- How long has the parent company been in business?
- How will they support me at start-up and in the future as I grow?
- Is the product or service I will be selling one that is in demand? In general? In my specific market area?
- Who is my competition?
- What are my financial goals with respect to this new side business, and can I realistically achieve them in the necessary timeframe?
- Is my home set up to handle a side business with respect to such things as office space, the necessary technology and even inventory?
- Are there any covenants or local ordinances that may preclude me from operating this side business, either out of my home or from any other specific location?
- Can my personal life handle the changing dynamics that come as a result of being a new business owner and one with two jobs to do at that?
- Do I have the necessary experience to operate this new business or is there a significant learning curve, one that I can master?
- Do I have a business plan and a marketing plan, both of which are critical to the viability of my new business not only at the outset but well into the first few years or so?
- Have I asked enough questions with regard to just how much of an up-front investment I will need to make in this new enterprise? How about ongoing fees or royalties?
- Do I know what my options are for securing start-up capital, such as a bank loan, a U.S. Small Business Administration (SBA) loan, a state-sponsored small business lending program loan, a credit card or even family and friends?
- Can I realistically obtain the start-up funding I need from one or more of those sources and not put my personal financial health in too much jeopardy by doing so?
- Am I prepared to take the critical steps to protect myself and my side business, which includes setting up the right kind of venture from a legal standpoint (sole proprietorship vs. partnership; LLC vs. corporation, etc.) and purchasing the necessary insurance?
- Have I thought about how I will get paid and pay others, and can I put the processes, procedures and/or services in place to make it happen fairly quickly?
- Am I clear on what my state and the federal governments expect from me and my business when it comes to everything from naming and branding my new venture to filing taxes and everything in between?
With regard to this last question as well as many of the others listed here, the SBA is a great resource for anyone who is considering owning their own business, whether full-time or part-time on the side. And because the research you need to do before purchasing a business opportunity, licensee opportunity, distributorship or franchise is considerable, knowing where to begin is half the battle.