4 Factors to Consider Before Starting a Business While Keeping Your Day Job The security of a job and the income of a side business are possible but require a lot of juggling.
By Anna Wilds •
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It's not unusual for people to ask, "Can I grow a business on the side while keeping my day job?"
The answer is, "Yes," with this important qualification — it needs to be a semi-absentee business. So, what is a semi-absentee business?
In franchising, businesses typically fall into two general categories — those that require full-time commitment from the owner and those that require part-time (or semi-absentee) commitment from the owner.
Related: How to Startup and Keep Your Day Job
For semi-absentee opportunities, a good place to focus time, energy and effort is exploring retail concepts. Since not all retail concepts are semi-absentee, be sure to ask if the franchise allows for it. It may come as a surprise that there are plenty of options besides fast food chains that work in this category. Other examples include hair salons, fitness centers, spas, tax preparation services, pack and ship centers, etc.
According to the International Franchise Association's Franchise Business Economic Outlook: 2014, there are more than 770,000 franchised retail outlets in the U.S., which are projected to increase by 1.7 percent, or more than 12,500 locations. Franchises account for 40 percent of all retail sales in the U.S.
In a semi-absentee ownership situation, the franchisee hires a manager to oversee the daily operations at each location. Having a manager in place to deal with the day-to-day activities allows you the flexibility to work your full-time job and reap the benefits that semi-absentee ownership offers.
When searching for a semi-absentee business, there are four important factors to consider.
1. Mind-set.
Many people make the mistake of selecting a franchise based on what the business does, what the person likes or where their passions lie. It's important to understand if a business is actually structured to be semi-absentee. If your heart is set on having an home improvement business, you'll find that this type of venture lends itself to the owner-operator business model, requiring full-time commitment from the owner. Keep an open mind when looking for a semi-absentee opportunity.
2. Finances.
Your financial situation is an obvious factor that determines the type of franchise you can afford (or for which you qualify). Since semi-absentee businesses tend to be retail, you might consider financing through conventional or Small Business Administration (SBA) loans.
3. Skills.
People management skills are key to successfully operating a semi-absentee business since you will be providing oversight to a manager or managers if you have multiple locations. You need to be comfortable surrendering control and delegating the day-to-day operations of your business to the manager(s).
Related: Richard Branson on Knowing When to Quit Your Day Job
4. Time availability.
Since you are gainfully employed, it's important to consider an opportunity that offers you the flexibility to operate your business on the side while maintaining the work-life balance you prefer.
If any one of these four important factors is missing, it will be difficult to find a semi-absentee business that fits your criteria. Also keep in mind that your finances, skills and availability must be what the franchisor is looking for in order for them to award you a franchise.
It can be a viable option to grow a business on the side while you keep your day job. It's a smart way to diversify your investments through owning a business. For some people, a business on the side is their exit strategy from the corporate world. Once the business generates enough income to replace their salary, they are free to leave employment behind. Another common motivation is to generate supplemental income for current expenses, such as private school for children, or to put more money away for retirement. Whether it's an investment move or an exit strategy, semi-absentee business ownership while you have a job can be a wise and potentially lucrative decision.
