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Thinking of starting a business alongside employment?
Should you tell your boss about your small business? I'd say some of the most important factors are your relationship with your company/boss, and whether your sideline is competition. The size of your employer is probably quite a big factor too.
Organising your time is key: You need to be pretty brutal with your time. Plan, put things for your new business in the diary (say at lunchtime or at the end of the day), and divide your tasks into achievable bite-sized bits. Work out what is genuinely important and make lists. Look for dead time, such as a commute, that you might be able to press into service. If you have a family, explain to them what you are doing so they will expect you to be busier.
Don't forget about taxes: It's quite common for the newly self-employed to overlook putting money aside for their tax bill – particularly for those who have been employed and are therefore used to their tax being collected via PAYE. We would recommend that you always put aside at least 30% of your profits for your tax bill to avoid those nasty surprises. HMRC's penalty regime is pretty severe now. You can incur penalties for late registration, late payment of tax and late filing of tax returns – to name but a few. So trying to avoid leaving everything until the 11th hour would be my best advice.
There is a misconception that HM Revenue & Customs will somehow know that you have self-employment income. But this isn't the case – you must inform them by completing a CWF1 form or registering online. If you anticipate that your self-employment earnings will be below £5,595 per annum, then you may also be able to reduce the amount of national insurance you pay. Not many people are aware of this.
Build as many relationships as possible: Since setting up we've found that the most efficient way to market your business, especially when you don't have much time on your hands, is to get involved in as many local networking events as possible. Joining your local Chamber of Commerce is always a good way to get your name out there and start finding out about local networking events that are available to you.
Why not hire people to work on your small business for you, while you are at work: When you come home in the evening you can take a look at their daily report and instruct them on the upcoming day's work. If you only hire people for a few hours per day, or alternatively hire them through the internet in eastern Europe, for example, the amount of money used should not be of an overwhelming significance. Elance is currently giving $75 to all new British businesses who want to try hiring people online rather than locally.
Here are some time management tips: One way to free up time for your family and friends is to analyse all tasks you have to do in order to set up your business and identify how long they take, how complex are they and what could you do with the time if you did not have to do them yourself.
Then you would come up with a list of things that you need to do, but you would also come up with things to do that are time consuming and simple. Those that fall into this box, you should consider having other people to do for you, such as getting a bookkeeper that handles all your billing and invoices, an accountant that takes care of your budgets, a student that can punch in a lot of data to your website or write content.
Keeping this focus enables you to take care of the business-critical tasks, and then other people can help you deal with the things that do not require immediate attention.
Channel your focus in one direction: Get a really clear understanding of your target client and their specific needs and concentrate your efforts and energy in this one direction. Don't try to communicate with too many different audiences, as this will confuse and weaken your message.
It's worth liaising with your employer: Speaking from personal experience, there are employers who are prepared to look at a "phased resignation period". It will help your case if you can consider what the benefits will be for them by accommodating your needs.
In some cases, and if relevant, you might also be able to get them to consider using you as a consultant, perhaps on preferential rates, for a period beyond your finishing date. It amounts to the same thing, and they get to keep you for longer.
Relaxing is important: Maintaining energy levels is really important, and being able to recognise when you are at your peak is a useful skill to develop. My recommendation is to take some time each day for regeneration – even if it's just walking the dog or gassing on the phone to a friend for 10 minutes. You'll find it easier to stay fresh and more creative when you remember to take time for yourself.
Make sure you have financial security: It's massively important to go into a startup with a degree of financial security, if you can. In the first instance, unless you are very fortunate, you won't be able to pay yourself a salary and the last thing you need, when trying to focus on getting a business off the ground, is personal money worries. You'll be very focused on the cashflow of your new business, so could really do without having to worry about your own.
The mental shift from being employed to being your own boss can have an effect. I've seen it have more effect on people than they anticipated. You might feel fine – even exhilarated – in the new role, but are you working effectively? Any new job takes time to adjust to and I've sometimes seen startup adrenaline compensate for a slower shift in managerial approach – they are very different roles, after all.