According to a recent study, entrepreneurs who keep their day jobs are 33% more likely to succeed than those who take the "full plunge".* Starting a business on the side can enable you to test the waters of being a business owner, while not risking your finances or investing too much time.
Here are some steps I took to start my business on the side. In my case, I had two babies within one year (gasp!) so I did it 'on the side' of parenting. Now that I have more time and have been successful at a small scale, I am about to launch my business into a full time operation.
It can be really daunting to start a small business, but if you have the interest - I encourage you to give it a try! Before doing anything below, I suggest finding someone in your field who can act as a mentor. A goodfriend in town opened a massage business before I started - and her advice was so helpful (even though she was in a different field). I later met a business owner in my field who was about 10 years ahead of me, and she was a great resource to ask questions and advice.
Moving on, here's how I got started with little financial investment:
1. Made an appointment with the Los Alamos Business Center and applied for a business license and a Tax ID number. Try checking with you county of local chamber of commerce to figure out the legal paperwork to get started (business license, tax id number). I registered as an LLC. because that seemed to make the most sense liability wise. Sound confusing? Try to figure out who in your town helps small businesses grow, and then see if they offer free consulting to help you figure out how to start the basic license paperwork.
2. Opened bank account and open a bank account for my business. You want to keep checks from clients and money you spend completely separate from your personal stuff. This is really useful in figuring out how much income you made (and the taxes you need to pay on it) as well as how much you spent - and what you can deduct (which is A LOT of it).
3. Made an appointment with local accountant to figure out what taxes I need to pay. This was literally, the most daunting task. The first half hour was free, and I learned everything I need to know. I pay gross receipts twice a year online - which is super simple to do once you receive your tax id numbers and then I pay everything else during tax season via Schedule C on Turbo Tax. I ordered a DOME accounting book ($15?) and spent a couple hours figuring out how to use it. Once a month I open my bank statements and record deductible expenses, expenses and income (which is what I pay the gross receipts on). Not only does it prepare me for when taxes come around, it's a nice checkup to see if I am making or wasting money.
4. Emailed and researched local designers to see what they charge. A mentor in your field might be able to help you with this one. I had no idea what people charged for design. I emailed every designer I could find. Prices in my area went from $50 to $135 (usually the bottom price being $70, and marketers (that claim they can do graphic design) do it for less than that. A lot of people a product fee instead of hourly. Figure out what your expenses are and what you need to make to make sure your business doesn't go under. If you have high software costs, rent, daycare - whatever it is that is costing you money you need to make that back and then some. Or, what's the point? $60 sounded crazy high to me, but after taxes and expenses, its more like $15-$20 take home, which is proving to be fairly low. Currently, I am working towards developing a more product-based pricing.
4. Created a very basic contract and GOT DEPOSITS BEFORE WORK. Again - a mentor in your field, some online research, and/or a lawyer can help you figure out how to cover your butt. You need to decide ahead of time things like: time limits, revision limits, licensing and copy rights (your artwork? give them a limited usage right or crank up the price), you-don't-get-the files-if-you-don't-pay-me limits. You need to write down EVERYTHING you will deliver ahead of time, that way when a client asks for more, you can show them that that's not within the contract, and bill as needed. For designers, AIGA has great example proposals and contracts. Everything needs to be in writing, even if it's just in an email.
5. Met people and marketed myself. I emailed all the designers in town and met them. I am a big fan of collaboration, not competition when it comes to colleagues in town. I got to see what needs I could fill. I also did some pro bono projects (NOT DISCOUNTED, but free) that put me in front of eventual paying clients. I joined AIGA ($14/month) and met awesome mentors and people I could ask questions. I stay involved in my community, and make sure people know I exist. I made an online portfolio and this blog, and I constantly update it.
6. Narrowed my focus. In the beginning I had time to work for a variety of clients and projects and now, I feel like I know what direction I want to pursue. I know my skills better. I want to be the best option for my clients and offer them design work that gives them results. I am figuring out what I can offer that is of high value to my client, and in return I can generate more income for my business. I learned to say no by nicely referring someone else. In design, it's best not to accept projects unless they lead to more projects or are good experience for your portfolio. Learn to say no to clients that aren't a good fit for you.
7. Continued my education. PODCASTS ARE AWESOME. I love Working Without Pants by Jake Jorgovan. He interviews loads of freelancers (while traveling across the world and working as a freelancer himself). I learned so much and was really inspired. I also am currently doing a Masters of Science at Arizona State University in Graphic Information Technology. I take classes at a snails pace (1 per semester usually) that way i have time to apply everything I learned. This obviously is not free, but there are loads of scholarships available.
8. Worked on my own self. It's important to be self aware and focused. I do several things to maintain the best version of myself like sleep and exercise. I also do self-checkups (did I take that too personally? Where is that person coming from?). Business success is a lot about learning to work well with many different people and personalities.
So that's it! Have you started a business? What was your process?