Building wealth by night

Ever planned to set up a little business on the side while holding down your 9-5 job? It has long been the Kiwi way and there are plenty of people out there doing it and supplementing their income nicely.

Not that it is necessarily a move which is motivated by money. It could just be an itch you have to scratch, as employment lawyer Jim Herbert at Hesketh Henry puts it. It might be a hobby that you are happy to potter away on for a number of years or it might be your escape route from the boredom of your day job.

While there is no law against you having a business on the side, it is best to tell your employer about it, says Herbert. Also, check your employment contract and see if there are any restrictive clauses in there.

The lawyers give one obvious warning: if your venture bears a striking resemblance to your current employer's business they will not take it well. On the other hand, if it is complementary, you might be able to work on it with the financial support of your employer.

But before you launch your first venture, there are a few things to plan for. See an accountant and make sure you have the best tax-efficient vehicle for the size of your business.

Financial adviser Lisa Dudson advises drawing up a business plan even if you're just planning to rig up curtains for friends on the weekends. You must figure out how you will manage your money from the outset, says Dudson. "What do you want to achieve? Are you maybe building something for the future?

"Go in with your eyes open because some people go into part-time business, which in the future might be full time, and they have no clue. They do things wrong from the beginning. I often find that people fall into these businesses and they don't get the best outcome."

One of the most popular ways of earning extra income in New Zealand is having a small but manageable property investment company.

American Kim Smith, senior consultant at Robert Half recruitment, is doing just this with a handful of properties in West Auckland.

"The Kiwi way is to own your own business. For some it's truly another source of income... I did mine for the wealth creation."

She works the equivalent of four days a week for Robert Half and spends her spare hours organising and developing her properties. Her strategy has been to buy properties, subdivide and build another house.

"I spend anything from one to two hours to 20 hours a week on the property business," says the financial recruitment specialist.

Smith, a trained accountant, who had never done any property investing until two years ago, has invested in learning about the industry, attending seminars and reading books.

It would be futile to deny that sometimes side businesses encroach into the main job, and Smith admits this happens. But she is not worried.

"There will be some times when I work on my property business at work but I also take home Robert Half work as well. The company is completely understanding. As long as I am doing a good job and doing the job I am supposed to be doing, they're fine."

Melissa Robinson, a client of Smith's, is another working into the wee hours on her own money-making projects.

Her day job is as a senior accountant for a large accountancy firm. By night the 25-year-old is a DJ/events organiser - you may have seen her this weekend at the Lush event playing at The Loft club in Hamilton. She and her partner also run a clothing line, Pink Vinyl Pusher, which has a strong musical theme.

She and a group of friends have designed a number of boutique-style clothes. They are mainly sold through www.pinkvinylpusher.co.nz. On top of this she works one night a week in a Viaduct bar to help a friend out, and she has a small but growing property portfolio. She admits all her fringe businesses, each of which is an LAQC (loss attributing qualifying company), can be a bit overwhelming, particularly this year as she does her chartered accountancy exams.

Her employer is aware of all her activities and is comfortable with it. In fact one of her superiors has bought some of her clothing.

Some companies take the news that you have other things going on out of work as a sign of an active and intelligent mind, while others can perceive it as a bit of a threat. Robinson's boss, who preferred not to be named, says: "As an accountant, the best way to understand growing businesses is to be an entrepreneur."

Robinson, who has a business management degree in accountancy and strategic planning, says she wouldn't be happy if she didn't have her own projects. "I am really interested in clothing, and I think property could be really good. I get bored really easily if I do one thing."

For working mothers, running more than one business can come naturally.

Robyn George-Neich, a Wellington-based chartered accountant, does tax returns for friends as well as her main job of running a specialist legal recruitment consultancy. But her real love is her design company, Hey Baby, which sells children's accessories such as practical paint smocks and scarf/hat combinations.

"I am always looking for ways to make money," says the entrepreneur. "A few years ago I was a career chick, now I am a mother and other things come second."

The accountant still looks after her clients well. She remembers her husband bringing tax returns into the hospital the day after she had given birth to her daughter, because it was tax deadline time.

George-Neich admits things "turn to custard" at times when all three businesses demand attention.

Some weeks, "I am up at 5 doing work, then I get the kids up for breakfast and off to school, work all day 9.30-2.30, pick the kids up, put them to bed and then work from 7-10.

"The hardest thing is to keep yourself motivated," she adds.

There is a chance her design business might expand quite rapidly in the next year, with George-Neich taking a stall at a big trade show in Las Vegas. Her turnover has already gone from $60,000 to a forecast $150,000 this year. She plans to sell her Hey Baby products via party groups as well as through a large retail contract.

If it does take off, the mother of two might have to make some tough decisions about which jobs she will be able to keep up. Still, she would love her favourite business to grow. And her boss, who comes over twice a year from the UK, would be understanding, she says.

"If I had an employee who wanted to be an entrepreneur, it is obvious they have got skills beyond what they are doing. You could be negative or you could think 'what an opportunity'. I have got staff and I'd be happy to see them showing some entrepreneurial spirit," says George-Neich.

Employment lawyer Jim Herbert says that small sideline businesses have a habit of mushrooming. He says things can happen so fast that before you know it, your home enterprise is interfering with your day job.

The key, at these times, is to keep communicating with your employer, he says.

"If you keep them informed, it makes it more difficult for them to come back to you [with a complaint]."

And remember the reason you first set up your little business on the side. To have some fun. If it stops being fun, you'll lose money, get stressed, and take up a new hobby instead. There's more than enough stress in your day job already.

Go to www.biz.org.nzfor information on setting up your own small business.