Many top Australian businesses began in a garage or home office. At some point, each owner made the decision to make their business a full time project – but when did they realise the time was right to commit?
Our guide can help you determine the right moment to make the transition.
Whether to go full time from the outset
Deciding to operate a full time business from its inception is risky because you won’t have any other income to keep you afloat while your business develops. However, running your business part time at the outset can mean:
- Lower financial risk – Income from another source guarantees a more stable financial situation.
- Viability – Give yourself time to test your business idea before you accumulate significant debt.
- Opportunity – Develop business skills before permanently committing to your new venture.
- Caution – Ease into business gradually, taking all the necessary steps to help make it successful.
To build your business part time while holding down full time work, you’ll need strong self-discipline and exceptional time management skills. As your part time business begins to flourish and it’s harder to manage it alongside full time work, you’ll have to decide whether or not to fully commit. Do you want to grow your business or maintain it as a part time earner?
Knowing when it’s the right time to commit
There’ll always be the feeling of a leap of faith when you do eventually take your business full time. These signs can help you recognise the right time to commit:
- An established business – Your business has steady revenue and consistent turnover growth.
- Increasing pressure – You’re struggling to meet current demand around your main job.
- Locked-in contracts – You have guarantees of future custom and supply chains in place.
Before you take the leap to full time, ensure you’ve thoroughly planned your next steps. Have a look at our guide to business planning – getting it right for some extra information.
Conduct market research
Is there sufficient demand to support the growth of your business? Identify a group of potential customers and ask the right questions to get a picture of likely future demand.
Have a look at our article doing your own market research for more advice.
Better still, ask your customers directly whether they’ll buy from you again. Find out why or why not – there may be something small that you can do differently to encourage them to spend more. Check out our guide to delivering outstanding customer service for tips on getting customers to return.
What moving to full time involves
Carefully plan any new skills you’ll need, as well as the targets you’ll have to hit, for a successful transition from a part-time hobby to a full time income-earning business. Some changes could be:
- Longer hours – They’ll probably be a reality for the foreseeable future.
- Work environment – Your workplace may have to change to cater for more customers.
- Turnover – Having to increase turnover to support a living wage for yourself, plus any staff.
- Tax – Review your tax obligations and draw up a payment calendar.
Can you afford to go full time?
Cash flow is often an issue during the move to full time. As well as losing regular employment income, many businesses find cash is limited as they scale up or wait for new debtors to pay what they owe.
It’s smart to have enough money in the bank to see you through this phase – or at least to have access to funds in case you need them. It can be more difficult to access finance once you get your business firing on all cylinders, as you spend your savings and lose other income streams, so plan ahead. Have a look at ANZ's Business Finance Eligibility Indicator or talk to a specialist to see what you’re able to borrow.
Who to speak to for advice
Have a chat to your accountant to work out exactly how much cash you’ll need and when you can afford to evolve to full time. Timing can be crucial – make sure you have the finances, that there’s growing demand for your offerings, and you have the manpower in place to meet increasing sales.