Think Before Delving into a Side Business
- A means of supplementing one’s income;
- Boredom, after several years in their core business;
- Diversification to mitigate risk; and
- The desire to keep up with others and maintain status in their community – often a “grass is greener” mentality.
In many cases, increased regulations have taken the fun and financial “gravy” out of their current businesses. The cost of compliance has become so burdensome that entrepreneurs begin to wonder why they are working so hard without the upside they envisioned would make it all worthwhile.
Side businesses are sometimes in the same general industry as their current venture; other times in a completely different industry. Real estate is a popular side venture but is often not as “easy” and profitable at it appears. Often times, it is the future generations that will reap the benefits from real estate investments. Entrepreneurs are also attracted to franchises for their side businesses. Although much of the structure and controls have been established by the franchisor, owning a franchise is hard work and can be extremely time consuming.
For entrepreneurs considering starting a business with one or more other people, make sure those partners can be trusted. For added security, agreements should be in place to deal with the various scenarios that might evolve. And, as with any business venture, entrepreneurs must be financially capable of losing money if the side businesses do not pan out. Without adequate capitalization, the failure of a side business can be catastrophic to your core business.
Venturing out into a side business is not all doom and gloom. Successes abound and sometimes they prove more profitable than one’s core business. As with any business start up, entrepreneurs should utilize professionals, such as attorneys and accountants. The project should be undertaken with the same planning, discipline and structure that made their core business successful.
Before writing that check, call Levine Law, LLC at (516) 921-6700 for assistance in starting your side venture.