Intro

A side business is a small enterprise that you run for supplemental income. Side businesses typically augment a 9-to-5 paycheck or bolster retirement savings. Because they’re small and personalized, they often provide satisfaction, stimulation, and—if run properly and prudently—long-term revenue and savings.

If you’ve already started a side business and you’re satisfied with your choice, you can skip this chapter. But if you’re not sure what type of side business is right for you, or you’re wondering if the business you’ve already started is the best choice, or you’re not really sure you’re the right person to be running a side business, then read on.

Before You Start: Nine Things to Consider

We wish you could simply spin a wheel to choose the right side business. Because your choice is likely to involve some investment of time and money, it’s best to weigh the choices. Here are nine things to consider before starting.

#1: How Will You Make Money?

The bottom line in any side business is … well, the bottom line. This may seem self-evident, but you would be surprised at how many people start businesses without actually knowing how they will make money. If you can’t explain to others in one sentence where the money will come from, then you’ve got a hobby, not a business.

#2: Are You Good at What You Do?

It’s not enough to like what you do; you also need to be good at it. Your side business will be most satisfying when your ability and your ambition are closely matched. For example, suppose you want to teach music to youngsters. You may be a great musician, but if you’re a poor instructor, you must either improve your teaching skills or consider another side business. You can get better on the job, but you must consider whether you can afford the learning curve.

#3: Are You Experienced?

You’ll find it more satisfying (and probably more profitable) to pursue an endeavor in which you have had some experience or at least some exposure. For example, if you’ve helped your sister at several crafts fairs, you’ll have some understanding of the crafts industry and how to sell crafts. This is not to say that you can’t gain experience as you proceed (that’s axiomatic), but having prior experience can shorten the learning curve.

#4: What’s Your Competition?

Before plunging into a new venture, check out the breadth of your competitors and ask yourself if the field is too crowded. Sometimes a crowded field means there is more opportunity (consider the tens of thousands of iPhone apps), but it can also mean no profits (Beanie Babies anyone?). If a field is too crowded, consider whether there is a variation, niche, or alternative. (Hmm, Beanie Baby phone apps?)

#5: Are You Good With People?

Before you choose a side biz, consider the human contact element. Your choice of side business and your level of satisfaction will be directly tied to whether you’re a “people person.” If you’re not good at dealing with kids, for example, then obviously you should forget about working as a children’s party clown. The good news is that there are many side businesses—for example, website creation or home cleaning—that require minimal human contact.

#6: What’s the Market Demand?

There’s a reason why people line up for Apple’s new products. Apple understands market demand. If you’re unsure whether market demand exists (or whether current demand will continue), don’t start that side business. Usually, you can determine the answers with some informal market research. For example, a friend of ours wanted to teach guitar to high school students until he asked around and learned that all the kids wanted to be DJs, not guitar heroes. Sometimes, you can learn enough by informally polling people in your area; in other instances, you may need to use online tools, statistics, or demographics.

#7: Will It Take Over Your Home?

Most side businesses operate out of the home. Before claiming the downstairs bedroom as your eBay shipping and storage center, it’s wise to consult with your family or roommates. If space is a concern, you’ll have less impact on home life if you maintain a small footprint—for example, a Web designer, freelance writer, or a bookkeeper—or if you work at your clients’ location—as does a handyman or an Internet troubleshooter.

#8: Will You Lose Your Job, Family, Money, or Mind?

Keeping it together comes down to how you manage your time. For example, if you run a website that generates ad revenue, do you have the time to monitor Google analytics, tweak your site, and constantly Twitter your customers with new offers? Does your free time sync up with that of your customers—for example, can you install wireless networks only during the evenings and weekends? Will you find yourself managing your eBay PowerSeller account at your day job? Can you estimate the hourly needs for your side business before committing to it? For more on this, see the section below, “Can You Really Maintain Your Full-Time Job and Your Side Business?”

#9: Sometimes the Best Choice for a Side Business Is None of the Above

Keep in mind that a profit motive, by itself, is usually not enough to sustain a side business. If your sole goal in starting a side business is to feed your bank account, you may be better off with a part-time job. With a job, you won’t have to drum up customers, manage your money, take risks, and worry about cash flow. Your decision not to run a side business isn’t a reflection on your talent, brains, or perseverance; it’s more about your priorities. A side business can take up part (or all) of your free time and, in combination with a full-time job, can be downright exhausting.

Can You Really Maintain Your Full-Time Job and Your Side Business?

Here are some things to consider about keeping your full-time job, your side business, and your sanity.

Your employer may not share your enthusiasm for your side business. Your first priority should be to keep things cool with your employer. It’s especially important that your employer not perceive your side business as competing in any way. Check your employee handbook in case your company has rules regarding side businesses. Check any other documents you signed when you began working in case you have agreed not to work with anything that conflicts or competes with your employer.

Don’t steal office supplies. Don’t stock your side business with supplies from your day job. In The Scorecard at Work (Holt), author Greg Gutfeld says stealing office supplies is one of the five fastest ways to get fired. You may rationalize this theft by saying “the company can afford it.” But since office supplies account for a fairly large chunk of the $67 billion lost to employee theft each year, employers apparently don’t think they can afford it—and are now more than ever on the lookout for disappearing staplers.

Don’t use information from work, including customer lists and trade secrets. Avoid using information you obtain at work for your side business, no matter why you think it’s harmless borrowing. Every employer has valuable confidential information that it wants to keep under wraps. It could be a sales plan, a list of customers, a manufacturing process, or a formula for a soft drink. In legal terms, these are your employer’s trade secrets. You have an obligation to preserve these secrets, whether or not you signed a nondisclosure agreement.

Don’t assume you own what you create for an employer. Even without a written employment agreement, an employer often ends up acquiring ownership of innovations you created in the course of your employment. Tread especially carefully if your side business is based on a product developed during your employment.

Go part-time, flextime, or telecommute. We’re mindful that you’re reading this book to increase your income, not reduce it. But if you can afford it, consider talking to your employer about: (a) flextime, which lets an employee work a nontraditional schedule—for example, working a full-time job in less than five days; (b) telecommuting, which permits you to work at home some or all of the time; or (c) part-time/ job sharing, when two workers share the duties of one fulltime job. Don’t be dismayed if your employer doesn’t offer these options—yet. You may be able to convince your boss to change course. Numerous books, career counselors, and websites are devoted to helping you achieve that goal. One site, Work Options (www.workoptions.com), helps you write a proposal for your boss and even provides scripted responses to typical objections.

Get organized. If keeping a job and running your side business is making you feel scattered, take some time to improve your organizational skills. Two of the most popular organizational gurus are David Allen, author of Getting Things Done (Penguin), and Julie Morgenstern, author of Organizing From the Inside Out (Holt). Fans of David Allen have memorized his mantra, “Do it, delegate it, or defer it.” Julie Morgenstern concentrates on organizing your mind first and tasks second. Unless you get your mind in order, she says, you’ll continue to create unrealistic schedules that increase frustration.

Get help. If you can afford it, sometimes the best way to juggle your job and side business is to bring in someone else to help with your business. You can hire a contractor or employee and pay them based upon sales or other revenue. The point is to find someone to help with the heavy lifting. You may be able to accomplish this without cash payment. Many contractors—particularly in bad economies—are willing to consider bartering. Several websites facilitate long-distance bartering—for example, to exchange online site creation for advertising services. Use terms such as “barter network” or “corporate barter” to locate these services.

Omitted from sample chapter: USA Today Job Satisfaction and Flexible Work Policies charts

Common Side Businesses

Below, we’ve provided an alphabetical list of some common side businesses. The choices are unlimited—we know someone who sells handpainted sand dollars—and this list is simply a short survey of popular opportunities. A lot of the information in this section is derived from the Occupational Outlook Handbook, available at the Bureau of Labor Statistics (www.bls.gov).

RESOURCE: For a thorough list of inexpensive-to-start side businesses, see 101 Businesses You Can Start, With Less Than One Thousand Dollars: For Stay-at-Home Moms & Dads, by Heather Shepard (Atlantic).

Adsense and Affiliate Marketing

If you maintain a blog or website, Adsense and Affiliate marketing can be peripheral or primary sources of income for your side business. Both of these marketing businesses place ads on your site and you earn money when someone either clicks the ad (AdSense) or buys the product in the ad (Affiliate marketing)—for example, people click through your site to buy a book at Amazon. (There’s much more to these marketing businesses and we provide details in Chapter 2).

RESOURCE: See How I Made My First Million on the Internet: And You Can Too, by Ewen Chia (Morgan James).

Bed and Breakfast

We’re hesitant to include B&Bs as a side business—they seem more like a full-time job—but research indicates that many people who run B&Bs do so in addition to a full-time job (or in connection with a spouse who is not working). A bed and breakfast side business must conform to city and state laws, obtain local licenses, abide by local zoning rules (and collect local taxes), and will need to carry commercial liability insurance. You’ll have to be a people person, a decent marketer, and willing to enforce the house rules. This is a competitive field affected by general travel trends. According to the Professional Association of Innkeepers International, there are more than 20,000 licensed bed and breakfasts in the United States.

RESOURCE: You can get an idea of your competition and their prices at www.BedandBreakfast.com and www.BBonline.com. See also How to Open a Financially Successful Bed & Breakfast or Small Hotel, by Lora Arduser and Douglas R. Brown (Atlantic).

Beauty

Whether you’re rendering highlights, creating weaves, providing scalp treatments, sculpturing or repairing nails, providing body waxing, or offering massages, you’ll need to look into certification and licensing rules for your state, as well as zoning requirements if clients will come to your home. (Many towns permit home-based beauty businesses with some restrictions.) Also keep in mind that this is a business that is based on health and cleanliness, so a home that is a war zone will not work well as your day spa. If you don’t want to operate out of your home, you can always take that blow drier or massage table to your client’s home. Start-up fees are minimal (unless you require expensive salon equipment) and you should look into professional insurance. Extra income can be earned by the sale of hair and beauty products. Managing our nation’s hair, nails, and skin is a $21 billion industry.

Omitted from sample chapter: USA Today Employment future chart

RESOURCE: See Neil Ducoff’s Fast Forward Salon & Spa Business Resource (Strategies).

Blogger

A blog is a website at which you write short entries (usually daily) on some subject of interest or expertise. A blog can be a marketing tool— for example, it can attract customers to your consulting business—or it can earn money (or both). Bloggers earn money either directly from advertising, sponsorship, and affiliate commissions or from book deals, licensing, or salary (yes, some people are paid to write blogs). Setup fees are minimal and many services are free, for example, www.blogger.com. According to the Wall Street Journal, there are over 1.7 million people earning money from blogs in the United States, and approximately 450,000 claim to be making a full-time living. (There’s more about blogs in Chapter 2.)

RESOURCE: See Darren Rowse’s ProBlogger site (www.problogger.com), or read his book, ProBlogger: Secrets for Blogging Your Way to a Six-Figure Income (Wiley).

Catering and Food Preparation

Off-premises catering—serving food away from your home or kitchen —is a rapidly growing industry and profitable (profit margins are usually 20% or higher). Whether you act as a personal chef or party caterer, you’ll need to learn about state and local certification and licensing, as well as zoning requirements. You’ll need to decide whether to use your own kitchen at home, or whether you’ll prepare food on-site at the client’s location. Start-up costs are minimal—usually between $500 and $1,000. Some caterers lacking start-up funds save money by initially renting supplies (dishes, silverware, and so on) until they can afford to own them. Obviously, cooking skills are essential, but equally important are skills in management (you may have to hire temp workers), planning (what time does that soufflé come out?), and marketing (you’ll definitely need to be a people person).

RESOURCE: See Denise Vivaldo’s How to Start a Home-Based Catering Business (Home-Based Business Series).

Child Care

Taking care of the little ones is a timeless, low-tech business. If it’s accomplished at the client’s home, the start-up costs are minimal, if any. If you’re planning to run a day-care center, however, things become more complicated (you’ll encounter local and state certification and licensing) and more expensive (such as toys, juice boxes, and insurance). As women continue to move into the workforce, the need for child care increases, making this one of the fastest-growing businesses in the United States (over $11 billion annually) with expected growth of over 40% in coming years.

RESOURCE: See How to Open & Operate a Financially Successful Child Care Service, by Tina Musial (Atlantic).

Cleaning and Janitorial

A cleaning service typically cleans homes; a janitorial service cleans offices. Cleaning is a side business that will never go out of fashion and will almost always generate a good profit margin (over $100 billion of revenue generated annually in the United States). What’s interesting about the industry is that because it is so low tech and labor intensive, it is populated by thousands of sole proprietorships. Start-up costs are low and customers usually come from word of mouth.

RESOURCE: See Beth Morrow’s How to Open & Operate a Financially Successful Cleaning Service (Atlantic).

Consultant

Consultants—we’re referring to any expert from an accountant to a tutor—commonly work out of a home office, don’t have employees, and, thanks to modern technology, can set up their businesses with the aid of a computer, Internet access, and a telephone. The three challenges common to all consulting businesses are: (1) finding clients, (2) pricing properly, whether billing at an hourly or project rate, and (3) acquiring and maintaining your expertise.

RESOURCE: See Alan Weiss’s Getting Started in Consulting (Wiley).

Craftsperson

No longer limited to crafts fairs and farmers’ markets, handmade crafts can be found in malls, mainline retail outlets, and online shops (check out www.etsy.com). Since many craftspeople start their trades as hobbies and then find a market for their goods, the start-up costs are low (you already own that leather punch). Factor in additional costs for studio rentals or for exhibition fees at shows. Profit margins vary dramatically, depending on whether you’re selling direct or on consignment (consignees usually take 25% to 50%).

RESOURCE: See Craft, Inc., by Meg Mateo Ilasco (Chronicle).

eBay/Amazon

According to one report, 700,000 people in the United States rely on eBay as a secondary (or primary) source of income, and 14% of eBay sellers report that they retired from their days jobs to work full-time on eBay. Lately, many eBay sellers are expanding or moving their operations to Amazon.com—in 2008, The New York Times reported that for the first time, more Americans clicked over to Amazon than to eBay—where the reselling business is focused on fixed prices, not auctions. The start-up requirements for an eBay or Amazon enterprise include a computer and high-speed Internet connection, a credit card and PayPal account, and of course, something to sell. It’s that last item that creates the greatest challenge—especially once you’ve cleared out your basement or garage. (There’s more on this side business in Chapter 2.)

RESOURCE: See The eBay Business Start-Up Kit, by Richard Stim (Nolo), and Amazon Top Seller Secrets, by Brad Schepp and Debra Schepp (Amacom).

Gardener or Landscaper

Ahh... the great outdoors. Here’s a side business for those with a green thumb and weed whacker. Marketing is usually simple—your work serves as a public calling card and revenues are generated from word of mouth. Billings are either by the hour or by the project (compare competitor’s prices at craigslist. com). Start-up costs are usually minimal (you may even be able to use a client’s tools) and there are no special certification requirements.

RESOURCE: See Owen Dell’s How to Start a Home-Based Landscaping Business (Home-Based Business).

Graphic Artist/Designer

Graphic designers create visual solutions using color, type, illustration, photography, animation, and various print and layout techniques. You don’t need to be Michelangelo to make money as a graphic artist; the United States has more than 250,000 full-time graphic artists and 25% are self-employed. A successful graphic artist needs to be willing to work with oft-opinionated clients. (The biggest challenge for many artists is to sublimate personal tastes in order to please the client.) This is a competitive field in which marketing and people skills often make the difference. Start-up expenses vary depending on the type of work performed, and you’ll need a high-end computer workstation and graphics software that can often be expensive.

RESOURCE: See the Graphics Artist’s Guild (GAG) website (www.gag.org).

Home Health Care

The home health care industry is expected to grow by more than 50% in coming years as the U.S. demographic ages—more than 80 million people are hitting senior status. Currently, more than seven million people receive home health care services, making it a $45 billion industry. About one out of three home care aides works part-time; most aides work with a number of different clients, each job lasting a few hours, days, or weeks. Start-up costs vary, as do certification and licensing requirements, depending on the tasks performed and state and local laws.

RESOURCE: See Home Health Care Provider: A Guide to Essential Skills, by Emily Prieto (Springer).

Home Repair and Installation (Services)

Most contractors prefer major remodels over smaller one-off jobs. That factor—combined with an aging demographic, the lack of leisure time for do-it-yourselfers, and more complicated repairs—leaves a wide-open market for anyone knowledgeable about carpentry, plumbing, electrical, or installations (especially alarms and solar panels).

RESOURCE: See The Handyman Business Guide to Success, by Bob Cheal (CreateSpace).

Musician

Making music is an ideal side business because the hours required — usually nights and weekends— rarely interfere with a 9-to-5. (If some lout yells, “Don’t quit your day job,” at your next show, tell him that you don’t need to; there’s no time conflict.) You may be surprised to learn that 35% of the money-making gigs for musicians are for religious organizations (the fastest-growing area of work for musicians), and 11% involve work for small community or chamber groups.

RESOURCE: See Music Law, by Richard Stim (Nolo).

Personal Assistant/Concierge

Since personal assistants are often on call 24/7, we were hesitant to include this in a survey of side businesses. However, we are informed that some personal assistants (or PA s) are needed only for specific personal tasks, which often can be performed during off hours. The fact is that many regular folks, overwhelmed by their multitasking schedules, are hiring others to help with shopping, taking the kids to school, or standing in line at the post office. In addition, there’s a growing business for people who provide concierge services, usually over the Internet, helping others with purchases, appointments, and travel arrangements. Start-up costs are minimal (a virtual concierge will need a dedicated phone line, high-speed Internet, and a computer) and people skills are essential.

RESOURCE: See The Two-Second Commute by Christine Durst (Career Press).

Personal Trainer/Fitness Instructor

This broad category includes everything from nutrition and weight consultants to yoga and Pilates instructors (and don’t forget those postnatal exercise specialists, too). The personal trainer business is booming (expect a 50% growth over the next decade). Start-up costs are low (certification costs—a key component in this business—will run from $250 to $600). To succeed you’ll need strong people skills and an ability to market yourself. You’ll also have to decide if you want to operate as a freelancer or work out of a fitness center.

RESOURCE: See Starting a Personal Training Business (www.starting-a-personal- training-business.com), where you can find a comparison chart of the various certification programs. For more on certification, see the American Council on Exercise, the Aerobics and Fitness Association of America, the American Fitness Professionals and Associates, the National Federation of Professional Trainers, or the International Fitness Professionals Association. Many of these offer home study courses.

Pets

Our furry friends are pampered; in the past two decades, the amount spent on them has doubled. Whether you walk them, groom them, train them, house-sit them, or create pet parties (Pupperware, anyone?), there’s a pet side business for you. Start-up costs vary from minimal (several leashes and a pooper scooper for dog walkers) to substantial. (Will your neighbors share your enthusiasm for your fantasy-themed doggie hotel?)

RESOURCE: See 101 Best Businesses for Pet Lovers, by Joseph Nigro and Nicholas Nigro (Sphinx) or How To Open & Operate a Financially Successful Pet Sitting Business, by Angela W. Duea (Atlantic).

Photographer

As with musicians, the combination of the Internet and digital technology has drastically altered the business landscape for photographers. On the one hand, it’s much easier for photographers to sell and license their wares via websites such as Shutterstock (www.shutterstock.com) and iStockphoto (www.istockphoto.com). On the other hand, there is far more competition and the payment—sometimes as low as a $1 per use at iStockphoto—makes it harder to earn a substantial profit. Others may find a bigger profit margin and more reliable income as an event photographer (think weddings, amateur sports events, and reunions) or portrait photographer.

RESOURCE: See The Photographer’s Survival Guide: How to Build and Grow a Successful Business, by Amanda Sosa Stone and Suzanne Sease (Amphoto).

Programmer/Web Developer/App Developer

If you’re gifted with programming skills—and, in particular, if you can combine those skills with some other talent such as graphic design— then you may be able to run a successful side business as a coder, website designer, or applications developer. Coders can do freelance work for others or independently develop programs that can be offered for sale online. As for creating independent programs for sale, many coders have participated in the gold rush of apps and widgets—small software applications that are installed on computers, phones, and iPods. (In one famous get-rich-quick story, a developer earned $20,000 a day from sales of his iPhone app.)

RESOURCE: See Rent a Coder (www.rentacoder.com), which makes it easy for you to submit bids on existing jobs. See also Stephen Fishman’s Legal Guide to Web & Software Development (Nolo).

Property Management and Rental

Whether you’re managing property for someone else, or renting out property that you own, you’ll need some expertise in a variety of areas in order to manage this side business lawfully and safely. For example, you’ll need to understand tax rules regarding rentals, know how to screen and choose tenants, handle the legal end of leases and evictions, and deal with problem tenants.

RESOURCE: See First-Time Landlord: Renting Out a Single-Family Home, by Janet Portman, Marcia Stewart, and Michael Molinski (Nolo).

Telemarketer/Salesperson

A typical telemarketing/sales position involves selling goods or services, such as magazine subscriptions, usually over the phone. In some cases, it may involve meeting with customers in person or soliciting donations for a nonprofit organization. Setup is minimal: Usually, all you need is a dedicated phone line. The pay is usually structured as an hourly base rate—$6 to $49 an hour—plus a commission for every good or service sold or appointment scheduled.

RESOURCE: See job boards Monster.com and CareerBuilder.com. Run keyword searches for “telemarketer” or “telesales.” Or check out companies that hire home-based telemarketers such as TeleReach, Intrep, and West Corporation.

Do You Need a Business Plan?

In his book Burn Your Business Plan, author David Gumpert argues that business plans are a bunch of mumbo jumbo with crazy projections. Moreover, he says that investors and bankers routinely disregard them because they really only want to see one thing: evidence of demand for your products and services. For purposes of your side business, we tend to agree. Preparing a full-blown business plan would be overkill for someone who teaches clarinet, creates handmade mailboxes, jams every weekend as a wedding DJ, writes a blog, or sells handmade rugs.

That said, some people have big plans for their side businesses. They want them to grow and prosper and they may eventually seek investment or loans. The business world still finds something comforting about that stack of papers marked “business plan” and routinely requests them when you put your hand out. More importantly, some elements of a business plan can benefit every side business owner—for example, the ability to predict cash flow.

If you’re interested in preparing a business plan, don’t worry. As with everything else in small business management, you can find people and products that can simplify the business plan process. Start by looking at business plans for businesses similar to yours. Many, many plans are available online. Start at Bplans.com, where over 60 sample plans created with Business Plan Pro software are posted. Once you’ve got an idea of what your plan should look like, map out your own using do-ityourself products or by hiring someone to help you. Expect to pay $200 to $1,000 for professional help.

RESOURCE: See How to Write a Business Plan, by Mike McKeever (Nolo); or Business Plan Pro, business-plan-creation software from Palo Alto Software.

Avoid Side-Business Scams

You may be inclined to start a side business after seeing ads that make big promises: They typically describe a paradise in which you make thousands of dollars a month (despite your lack of experience) while setting your own hours and working as much or as little as you wish. All you have to do to is purchase start-up materials and training, an up-front investment the advertisers imply you’ll earn back many times over! Chances are you won’t fall for this ad, right? Let’s hope not. Just in case, we’ve summarized a few of the more popular scams (excerpted from the Nolo book, The Work From Home Handbook: Flex Your Time, Improve Your Life, by attorneys Stephen Fishman and Diana Fitzpatrick).

Medical Claims Processing Scams

The scam promises to train you in medical transcription or medical coding (matching up medical procedures with the appropriate insurance codes). You’re promised a database of physician contacts and everything you need to start a service from home, all for a several-hundreddollar fee. What you get for your money is usually some outdated or inappropriate software and a list of local physician contacts that may have been photocopied from the yellow pages. Your chances of earning money with these materials? Zero.

Product Assembly Scams

This scheme works by asking you to purchase the materials and instructions for putting together products like baby booties, plastic signs, or toy clowns. You’re told that a company has already committed to purchase the assembled products at a significant profit to you, provided you follow the instructions and meet quality standards. But once you submit your assembled products for sale, you’re invariably told that they don’t meet “quality standards.” You’ll get nothing in return for your investment and time but some unsellable merchandise.

Envelope-Stuffing Scams

A company promises—maybe even “guarantees”—hundreds of dollars a week, just for stuffing envelopes in your own home. The ads appeal to many people because no training is necessary and you can do it while watching Oprah. The reality is that no established business actually depends on at-home workers to stuff its envelopes anymore—it’s a highly mechanized operation using sophisticated mass-mailing techniques and equipment. When you respond to an ad for at-home envelope stuffing (usually by paying a fee), you don’t get envelopes to stuff. Instead, you receive promotional material on other work-at-home programs.

Direct Sales Pyramid Schemes

Unfortunately, a fair number of crooks have taken the direct-sales model —popularized by Avon and Tupperware—and corrupted it into a work from-home ploy commonly known as a “pyramid scheme.” In these schemes, companies earn money primarily by recruiting new investors to purchase large quantities of product for resale. There is usually no real market for the products, and the company puts no effort into product advertising or marketing. The more “sales representatives” who sign up, the more money the people at the top earn, regardless of the number of products actually sold to consumers. Sooner or later, the pyramid collapses.

Recognizing Other Work-at-Home Scams

Here are some things to remember about side-business scams:

• Be wary of any opportunity that promises you’ll earn thousands of dollars a month or more.
• Watch out for the “no experience necessary” line, which is used to reel in the most vulnerable side-business workers.
• Be suspicious of any company you’ve never heard of.
• Avoid opportunities that require you to pay cash before you get started.
• Ask for references. Don’t settle for written testimonials, which are easy to fabricate.

What If...? Should You Consider Quitting Your Day Job?

There are many reasons to keep your day job. It’s your primary source of income and it may be hard, if not impossible to get a new job. Your regular job provides a sense of security—and then there are the employment benefits, assuming you’re lucky enough to get health insurance, dental insurance, stock options, vacation days, pension plans, or discounts at Six Flags.

Leaving your day job can also affect your credit rating—having a 9-to-5 makes it easier to borrow money and get credit cards and loans. The day job also provides a valuable tax benefit, because at tax time, your dual identity lets you deduct your business losses from your day job income.

Of course, if you’re not obligated to support anyone, indifferent to your current day job, flush with cash, in love with your side business, and not in need of discount employee tickets to your local hockey team, you may be an ideal candidate for quitting your day job and expanding your side business.

Before you take the big step, be sure there’s firm footing where you will land. We advise that you do some basic financial forecasting. Estimate living expenses for a year by making a budget based on the past year (or past two years, if possible). Will you have enough income from your business to live and pay your expenses (including health insurance)? Do you have a financial cushion like a savings account that will pay all expenses for six months? How close are you to retirement age, and how will leaving your job affect your retirement? There are no bright lines for determining the right financial mix, but when you weigh these factors you should feel comfortable that you could weather a worst-case scenario.

You also need to consider the psychological impact. How much of your identity is embedded in your current day job? What are you going to miss about it? Many departing employees are surprised by how much they miss the social life provided by a regular job. How does your family feel? Will they support your decision? Are people counting on you to take care of them? There are no simple yes or no answers. You need to examine all of these personal factors before making your decision. Experts use self-actualization techniques to help you make these decisions. You can see how these techniques work in Barbara Sher’s book, I Could Do Anything If I Only Knew What It Was (Dell).

If you do decide to quit, don’t burn your bridges—you may want the job back. And before you leave your job, schedule any last doctor and dental appointments.

As you consider your options, be sure not to violate noncompetition and nonsolicitation agreements. A noncompetition agreement (also known as a noncompete or a covenant not to compete) is a contract in which you agree not to compete with your former employer for a period of time. A nonsolicitation agreement restricts your ability to solicit your former employer’s clients or employees. These two agreements are often folded into an employment agreement or become part of a termination agreement that an employee must sign to get a severance package. If your side business is competitive, you’ll likely be in violation of the noncompete and your employer will be able to shut it down.