Moonlighting

Many companies begin while the founders have “day jobs” working for someone else.  The advantages of this are many, including funds available to invest in the business and provide support for living expenses; lower demand and slower “ramp up” of cash demands for the business; ability to “work out the bugs” and get proof of concept while maintaining financial security.

The drawbacks of having two jobs require some significant consideration due to the possible impact on the “potential” of the business.  Here are some of the major items:

•    Intellectual property ownership/employment agreements
•    Ability to develop commercial opportunities while employed elsewhere
•    Serving two masters – conflict between time and responsibility commitments to each company
•    Potential conflicts of interest

The intellectual property issue may be the single biggest hurdle of founding a new company if the company you are founding is in any way related to the responsibilities and technology of the company where you are employed. Many (if not most or all) employment agreements provide claims against or ownership of any intellectual property developed by an employee during the time of employment.  This is especially true with university and established technology companies.

Before you take the plunge and invest your time, effort, and financial resources, be sure to understand the terms and conditions of employment (or contracting/consulting) agreements. The terms, conditions, and scope vary depending upon your exposure to intellectual property, your role in developing IP for each company, whether there is an impact or “competitive” relationship, and so on. The best strategy is to understand the potential issues and conflicts.  There is always the potential to negotiate changes or have your employer endorse your efforts by investing, becoming your first customer, and so on.

If your day job has little to no flexibility in schedule or has tremendous time demands, then you may find it difficult to establish timeframes to work on the commercialization aspect of the business – getting paying clients.  Getting out, meeting prospects, and marketing your business take significant time commitments.  Everything from making phone calls, to attending networking meetings, to developing proposals takes time.  If your day job hinders your ability to take this critical step, then you must make the decision to give up the day job or hire someone else (employee, vendor, or contractor) to handle these tasks.  Depending upon your financial situation, it may be something that is quickly addressed through getting that other person on board or taking the plunge out of the cubicle and into business full-time.

If your job normally allows you the freedom of schedule or a predictable workweek schedule, then you may be well positioned to serve both the company you work for and the business you are starting.  Many people find, however, that the only thing that is predictable is that things will change.  As you get more into your business, the day job gets new rules, demands, or an enlarged scope.  What was easy to balance becomes impossible to manage – especially if you must factor in family roles and responsibilities.  At this juncture making decisions on whom to serve depends upon your financial position and the implications and ramifications which have differing priorities.

As you establish your business, the contacts and relationships you have established while with your current employer may be useful.  There is a serious question regarding whether or not it is permissible or wise to use those contacts to build your business.  There is no clear answer.  Each situation will be dictated by the elements previously discussed, including your role in each company, the expectations of each, and the agreements that are in place.

Moonlighting is a common practice for many people.  The issues arise when you are creating a business which potentially could have a real or perceived conflict of interest.  Addressing the elements of potential conflict begins with an analysis of what you want to accomplish and the restrictions your day job may or may not place on your activities.  The lines of demarcation aren’t drawn simply by time of day, location, or resources used.  When it comes to “intellectual property” the lines are drawn based at least in part on the expectation of the usage of your creative and business talents, skills, and abilities within proscribed roles and relationships.

If you aren’t sure about where the lines are drawn, invest some time and dollars in consulting with an attorney who understands employment and intellectual property laws.  It is a wise investment in your personal and business future.

Copyright ©2005 F.O.C.U.S. Resource, Inc.

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