Starting Up: Entrepreneurs Turn to Moonlighting

From smSmallBiz

However the demands of starting (and funding) a business, in addition to juggling three kids, a sizeable mortgage payment and a $1,500 a month grocery bill, among other things, are daunting — even with his wife's income. "The water level has been right at our necks," says Caminiti, who's turned to part-time gigs to make ends meet. From a financial standpoint, starting a business while simultaneously supporting a family "is extremely stressful," he says.

Caminiti certainly isn't alone. Having enough capital to keep a business — and yourself — afloat is often the biggest challenge for start-up entreprenurs. That's why experts such as Ross Marino, a financial planner who consults with business owners in Wilmington, N.C., suggests padding your pay with part-time income until the business gets going. While working part-time and tending full-time to a fledgling business is hardly ideal, "if you can keep some capital coming in, it can mean the difference between starting up a business slowly and not starting at all," says Marino.

Having a job on the side can also, in some instances, provide needy entrepreneurs with employer-sponsored healthcare coverage. For these business owners — especially those with preexisting conditions or families to consider — "the benefits are more important than the pay," says Marino.

Of course, not every part-time job will offer benefits, nor will every job fit perfectly into your new business-focused schedule. That's why many hiring and small-business consultants recommend assessing yours and your family's needs and weighing exactly what type of opportunity will be optimal for you.

Keeping Your Current Job

Many entrepreneurs will keep their full-time jobs and launch a business on the side, or they'll quit entirely. However, if you need to devote more time to your new venture and you need extra income, think about keeping your job but working fewer hours. By working part-time at your job, you'll continue building a relationship with that employer. Additionally, you might still receive benefits.

Whether your current boss will allow this "depends on what type of company you're working for and your skill set," says Pam Newman, president of RPPC Inc., an accounting and consulting firm in Kansas City, Mo. "If you have a skill set that's not easily replaceable or if you're an industry expert," she says, "that's when you have the negotiation power."

You might also consider working as a consultant to your current employer, she suggests. As an independent contractor, you'll typically have even more flexibility than as a part-time worker. Again, such conditions are ideal for individuals with particularly hard-to-replace skills and job knowledge. Keep in mind that as an independent contractor rather than a part-time employee, you'll likely miss out on employer-sponsored benefits.

Part-Time Employment

As in Caminiti's situation, maybe you just need some extra money to help cover your costs during your business' launch. If that's the case, seek out a part-time job that works best for your schedule, says Shawn Boyer, chief executive of SnagAJob.com , an online part-time and hourly job-listing service. Some business owners might want to concentrate on their own enterprise by day and work a "third" or late shift at a part-time employer for extra income, he says.

Some large corporations offer benefits (such as health insurance) to part-time employees, including Starbucks ( SBUX ), FedEx ( FDX ) and Home Depot ( HD ). Note that certain eligibility criteria may apply. For instance, to gain access to health coverage at Starbucks, you have to work at least 20 hours a week and have been employed at the company for three months.

Freelance Opportunities

If you're particularly skilled in fields such as marketing, copywriting and web design, working on a project basis as a freelancer or independent contractor may be an option. Since freelancers aren't directly employed by any one company and can generally come and go as they please, such positions may be ideal for flexible side job seekers. To find freelancing opportunities, check out Mediabistro.com , iFreelance and Guru.com .

Keep in mind, as a freelancer or independent contractor you can charge a premium for your service — but sometimes, that's necessary just to cover related taxes, says Stephen Fishman, a tax attorney in San Francisco and author of Nolo's "Working With Independent Contractors." While you'll get a paycheck, don't forget you'll have to pay your full share of Social Security and Medicare taxes, he says.

Other Considerations

No matter which type of part-time gig you select, make sure you're upfront with your employer that you're also launching a start-up venture. "They may require you to have a flexible schedule," says Boyer. Or, employers may not be keen on you having dual allegiances. Either way, it's best to know this ahead of time, he says.

Also, make sure you don't commit too many hours to your part-time employer. After all, your priority should be your new enterprise — and getting it profitable. "If you left your previous job so you could focus on your business, working more than 30 hours a week is a mistake," says Boyer. "The key here is that you don't take on something that ends up defeating the purpose."

("Starting Up," a weekly column written by Diana Ransom for smSmallBiz.com, follows entrepreneurs through the early stages of launching a business. Write to her at dransom@smartmoney.com .)