How to Start a Business While Working Full-Time (Without Making Costly Mistakes)

More Americans are taking on second jobs as the cost of living rises. In late 2024, the share of U.S. workers with multiple jobs hit 5.3% of the workforce, the highest since 2019.

According to Labor Department data, these levels were last seen during the Great Recession.

For many, working two jobs is a way to stay financially afloat. But instead of spending extra hours building someone else’s business, what if you used that time to create something of your own?

This isn’t just wishful thinking — many have already made the leap. Around 44% of entrepreneurs who started a business on the side in 2023 were actively employed at the time of launch.

Entrepreneurship has long been tied to the American Dream — the idea of financial freedom and self-made success. However, many articles online don’t go into detail, don’t outline each step, or don’t offer tangible examples of success stories.

Until today.

In this article, we’ll discuss all this and more, providing aspiring entrepreneurs with the knowledge they need to start a business and avoid making costly mistakes — all while working full-time.

Step One: Validate Your Business Idea

Validating your business idea early on ensures you don’t waste time and resources on a product that won’t sell. It’s also a good way to instill confidence among investors, crowdfunders, and banks considering funding your startup.

Harvard Business School outlined five steps to determine market validation:

Write down goals, assumptions, and hypotheses: Explore the value of your product, identify the target audience, and estimate pricing and business model.
Assess market size and share: Doing so helps you determine the potential of your business and justify its launch.
Research search volume of related terms: This can be used to boost your justification for launching your product and establishing market needs.
Conduct customer validation interviews: This helps you learn about your product’s potential and market validity.
Test your product or service: Testing your market proves its market validity. Do this with real users and beta testers for the best results.

Harvard’s online course, “Entrepreneurship Essentials,” describes entrepreneurship as a “process of discovery” because you need feedback on its validation to justify your reasons for launch.

Step Two: Create a Clear Business Plan

A clear business plan helps you navigate each phase of the business, guiding structure, run, and growth.

The U.S. Small Business Administration suggests first selecting a format that works for your needs. Most business plans fall into one of these categories:

Traditional Business Plans:

These business plans are most common because they use a standard structure and provide room for more details. However, they do require more work upfront.

Lean Startup Business Plans:

While these are less common, they still use a standard structure. The difference is the focus on summarizing the key features instead of going into too much detail. Lean business startup plans can be developed quickly and are typically only one page long.

Here is a summary of each:

Traditional business plan format: Executive summary, Company description, Market analysis, Organization and management, Service or product line, Marketing and sales, Funding request, Financial projections, Appendix.

Lean startup format: Key partnerships, activities, resources, Value proposition, Customer relationships, Customer segments, Channels, Cost Structure, and Revenue streams.

Step Three: Manage Your Time Effectively

In many cases, the biggest hurdle when starting your business while working full-time is time management.

To better understand this, let’s look at a few examples:

Anish Dhar, co-founder and CEO of the internal developer portal Cortex (a project management platform for companies’ engineering teams to collaborate and manage their work), struggled to effectively manage his time between his primary job and his side hustle.

“Initially, I found myself dedicating more hours to Cortex than my actual job. That imbalance was not sustainable in the long term for my career or any semblance of work-life balance,” he told Entrepreneur.

Ultimately, Anish ended up doubling down and fully transitioning to Cortex.

American business author and former management professor at the University of New Orleans Michael LeBoeuf started a side hustle writing business books and speaking to supplement his income as a professor during the 1970s.

By the end of 1984, he was making about as much money from his side hustle as his teaching salary. What was his formula?

“The only way you can find time to devote to your side hustle is to spend less time on or eliminate other off-the-job activities. Was it easy? Hell no. I would have much rather been doing other things, but in the long run, it turned out to be the best career decision I ever made.”

Author and ghostwriter Cheryl Merz argues that the solution to time management is prioritizing what’s important over what is not — while Jason Cases CEO Jason Comparetto believes in finding a primary job that isn’t too taxing on your mind and/or body, and sets realistic expectations.

“Don’t expect to have 2 jobs and have an amazing social life. It takes sacrifices. Eliminate waste. Most people I see spend quite a bit of their free time doing meaningless things. Drinking, engaging with the wrong people, and making other mistakes in life. Cut all that stuff out. You’ll have no time for it anyhow. This is just a start, in real life you’ll face many hurdles while attempting this and you’ll have to overcome them one-by-one.”

To recap the advice from these successful entrepreneurs:

Prioritize important tasks: Focus on activities that align with your goals and distinguish between what’s important and what’s not.
Choose a manageable primary job: Select a main job that isn’t overly taxing on your mind or body, allowing energy for your side hustle.
Set realistic expectations: Understand that balancing two jobs may require sacrifices, such as limiting social activities.
Eliminate time-wasting activities: Cut out unproductive habits like excessive drinking or associating with negative influences to free up time for your side hustle.
Prepare for challenges: Anticipate hurdles and be ready to overcome them as they arise in your journey.

Step Four: Stay Compliant with Legal and Employer Policies

Once you’ve completed the previous steps, take one final precaution: avoid any potential legal conflicts with your employer.

The first step is to review your employment contract. Many companies include restrictive clauses that could limit you on how far you can go into launching your own business.

Before starting, check for the following:

Non-Compete Clauses
Confidentiality Agreements
Intellectual Property (IP) Clauses
Moonlighting Policies
Conflict of Interest Policies

Smart Counsel also advises keeping your business separate as mixing it with your employment can lead to misunderstandings and legal challenges. Here are some best practices to keep things separate:

Don’t Use Company Resources
Set Clear Boundaries
Avoid Conflicts of Interest

In addition, managing risk is critical when starting a business while employed. Here are a few strategies to minimize your exposure to legal challenges:

Consider Forming an LLC
Get Legal Advice Early
Disclose Your Business (if necessary)
Keep Meticulous Records

Step Five: Keep Your Finances in Check

You can’t jump into the deep end without a life raft (or two).

When starting your business, proper financial management acts as your life raft. It helps you understand and oversee your finances from every angle.

Peoples Security Bank and Trust (PSBT) outlines 10 steps you can take to get your finances in order and your business financials strong:

Keep Personal and Business Finances Separate
Create a Realistic Budget
Understand Your Cash Flow
Choose the Right Accounting Software
Regularly Review Your Finances
Manage Debt Wisely
Build an Emergency Fund
Stay On Top of Taxes
Reinvest in Your Business
Consult Financial Experts

As PSBT points out, it’s not just about keeping track of money coming in and going out — it’s about helping you understand where your business stands, helping you plan, make financially sound decisions, and effectively handle challenges.

This is especially important when applying for loans or trying to attract investors as both will want to see how you manage your business.

Step Six: Plan Your Transition Before Quitting Your Job

According to top experts selected by the LinkedIn community from 235 contributors, there are six strategies for transitioning from employee to entrepreneur:

Assess your readiness: Do you have everything mapped out?
Plan your exit: Don’t just up and leave — give notice, negotiate reduced hours or keep your job until your side hustle picks up (and stays up)
Build your brand: Start with a professional website, logo, business name, and social media presence. Get your name out there through podcasts, blogging, speaking, or writing.
Validate your idea: Test your product with real users through surveys, interviews, landing pages, prototypes, or minimum viable products (MVPs).
Manage your time: Find a way to balance your work and personal life to prevent burnout. This can be done by delegating lower-priority tasks and creating routines, habits, and systems that support your productivity and well-being.
Learn and adapt: Keep up with the trends, changes, and opportunities in your market, monitor your performance, seek feedback, experiment, innovate, and pivot when necessary.

Above all, remember that entrepreneurs go through many trials. Don’t let that scare you — Dallas Mavericks owner Mark Cuban nearly went broke after his former secretary stole $82,000 from his business, MicroSolutions, and almost emptied the account.

He later sold his company for $6 million and joined what would become Broadcast.com as a co-founder. This company was sold to Yahoo for $5.7 billion in 1999.

His main takeaway? Be prepared.

“Before you quit, be prepared, know what you’re doing, save your money, have at least six months to live off, if you can,” Cuban told Wired. “And, then, maybe you’re ready to start your business.”

Step Seven: Evolve and Adapt

You have to innovate if you want to stay competitive. By developing new products or services, improving existing ones, or finding better ways to operate — you need to do it.

The potential rewards outweigh the risks that exist with innovation.

This constant change is brought on by several factors, including the digital revolution, economic setbacks, global pandemics, and changes in legislation.

But as DesignRush General Manager Gianluca Ferruggia points out, there are ways to navigate these challenges, including:

Define a clear growth strategy
Continually evolve and innovate
Always be a step ahead
Stay true to your founding mission

“A business that doesn’t evolve is a business that stays stuck. Growth comes from constantly refining your strategy, anticipating changes, and staying aligned with your core mission. The ability to adapt while scaling is what separates long-term success from short-lived ventures,” he adds

And while this can create a sense of urgency in some, it is important to remember that striving for perfection can lead to burnout.

About 31% of executives face burnout because they don’t have that holy grail of work-life balance.

Jinny Oh, the retired CEO of WANDR, offered some valuable guidance on the topic.

“Some creative entrepreneurs prioritize perfection in their craft, and that works for them. In my case, while I appreciate the creative aspect, my focus is on running a business efficiently.” Jinny shares. “Striving for 80% perfection has been my approach, recognizing that complete perfection isn’t always scalable.”

Jinny’s biggest takeaway on the topic was to avoid perfectionism. Instead, prioritize excellence but embrace “good enough” for scalable growth.

If something isn’t working, try a different approach. Learn from successful launches and use that experience to inform future product development.

Balancing a full-time job with a side hustle is no small feat, but with the right approach, it’s possible to build a thriving business.

From validating your idea and managing your time to staying legally compliant and keeping your finances in check; every step matters. The key is to start smart, stay adaptable, and learn from both successes and setbacks.