Quitting your day job to start a business is a huge financial risk. So why not do both?
Tammy Newport and fiancé Stuart Devenish just launched online men’s underwear store, Reer Endz. By day, Newport is a full-time retail buyer and Devenish a full-time gardener.
“We were looking for more flexibility in life,” says, Newport, 32.
Newport says the couple currently work 40-45 hours a week for their full-time jobs and 18-20 hours on the business, based in Baulkham Hills, north-west of Sydney.
It’s tiring, but the business “would need to start generating our current combined incomes” before they’d consider quitting their day jobs, she says.
“Full-time job must come first, as it pays the bills and funds Reer Endz,” Newport says.
“However, if an important meeting or photo shoot can only be scheduled for a weekday, then we take annual leave from the full-time job as we cannot afford to lose an opportunity that will help grow the success of our business.
“We have a strong advertising and marketing plan to grow the business so that eventually one of us, most likely Stu, can start working on the company full-time, then as things progress I would be in the position to follow.”
Venting creative curiosities
Catherine Blackford, 29, is fast-realising the pleasure and pain of running a small business.
“I started (online eco gift store) Bindle in 2012 as my creative impulses needing an airing,” Blackford says.
She now works 35 hours a week as a business analyst within an information technology unit – then another 40 hours a week on Bindle, based in Abbotsford, east of Melbourne.
“I manage my competing priorities on a daily basis, as there is a lot of variance in business demands … if required, I outsource tasks,” Blackford says.
“Although Bindle is gaining exposure and momentum, it is still in its infancy.
“My (growth) strategy incorporates plans for increased public relations and marketing to increase sales return. I am also targeting corporate clients and engaging in bespoke event solutions.
“If I knew all that was involved and the sacrifices made, I am not sure I would have thrown myself into it so confidently,” she says.
Someone who’s done it … and done well
In 2008, Jenny Paradiso and David Hille wanted to install solar panels at their home, but struggled to find a quality product in their price range. So they improvised.
“We did the sensible thing – we built it ourselves,” Paradiso, 37, says.
“We then started getting requests from family, then from friends, and then we suddenly realised we had a business snowballing.”
Five years later, their solar panel installation business Suntrix (based in Newton, north-east of Adelaide) has 22 staff and just last week was named the 2013 Telstra South Australian Business of the Year.
Paradiso was a librarian and Hille, 35, a network engineer for an internet service provider when they started Suntrix. Last year it turned over $11 million.
They initially cut their day job hours down to part-time when their first daughter born was so they could share child-raising responsibilities. But once Suntrix kicked off, their lifestyle dramatically changed.
“Working two jobs with a baby was extremely hectic and stressful. I now look back and wonder how we survived,” Paradiso says.
Paradiso says keeping their day jobs in Suntrix’s early days had provided peace of mind.
“We had no idea if our business could be sustained, so having cash flow from a part-time job provided some security and cash until the company became profitable and cash-flow positive.
“(However) we were exhausted, stressed and overwhelmed.”
Eventually, their fast-growing business demanded full-time attention.
“I still remember how terrified I was when we decided that Dave should give up his (day) job,” Paradiso says.
“We had mortgaged our house to start the business, I was pregnant with my second child and our only guaranteed income was from my three-day a week job.
“But Suntrix was growing and taking every spare minute, so we got to the stage where we either closed it up or focused on it full-time.”
Yay for the interwebs
A recent analysis of 1788 Australian online stores by Bigcommerce, an e-commerce platform for business start-ups, found that half of all logged activity happened between 5pm and 9am.
Bigcommerce co-founder Eddie Machaalani said: “In recent years, we have noticed more and more activity logged outside of regular working hours.”
“Anecdotally, we know there are of a lot of Australians who are moonlighting – they’re running an online store despite currently working in full-time and part-time roles.
“Either online store owners are working longer hours or there are a greater number who prefer to work late in the evening (and after midnight) because they are busy during the day [with full-time jobs]. In all likelihood, it’s probably a little bit of both.”
Machaalani says many people started online businesses to supplement their regular income.
“On some occasions, these ‘hobby’ stores end up becoming so big that the owner ends up quitting their day job to concentrate on their store.”
Business experts’ advice
Patrick Bell, managing director at BizAdvice business mentoring and coaching services, says “one of the safest ways of starting a business is to start initially whilst you are fully employed and therefore have an income stream to cover mortgages, living expenses and provide working capital for your business”.
“(However) most of us are time poor, so the prospect of working 8-10 hours during the day and then having to start work on your business can have a disastrous effect on a relationship as well as your own health,” Bell says.
“Also, many part-time businesses cannot be operated at night or out of office hours, so there can be a major conflict with your current employer as you try to do a few hours on your business whilst being paid by your employer.
“Many start-up businesses need time and energy committed to it … the two to three hours a day given on a part-time basis may well see the business fail or stagnate,” he says.
Lisa Murray from Revive Business Coaching says the advantages of keeping your day job while you start a business are:
- consistent income while you set up the business, work out the kinks and prove your idea has the capacity to generate an income
- you can test the waters and be sure it’s a business you love
- once the new business is income-producing, you have the benefit of two incomes
- psychological security (so you can focus)
- possibility for negotiating a staged exit with your employer as your cash-flow increases; in some cases, you may be able to sell services back to your employer as a consultant or freelancer
- you become more efficient out of necessity; creating systems that allow the business to run without you is great for future growth
- Many employers prohibit working other jobs
- Time and energy are in shorter supply
- It’s harder to make in-person connections for your new business
- Your systems for customer service need to be robust if you are not available for 8-10 hours a day
- You’ll probably spend most public holidays and weekends working on your business
- If your business is going to be a competitor to your employer, you probably won’t have your job for long.