Should you tell your boss you’re starting your own business?

Entrepreneur fever has officially gripped the nation. Almost one in six UK workers plan to start a side hustle in 2023, as company employees take advantage of flexible working to pursue their own interests and ambitions.

Experienced startup owners will know that there’s enough to be getting on when launching a business. There’s one step where many new business owners come unstuck, however: telling the boss.

The idea sounds daunting. After all, you can’t be certain how managers will react. But being transparent builds trust, and they will probably appreciate the heads up. Legal requirements are also a factor.

Is honesty the best policy? Or is it better to keep your side hustle sidelined? We hear from five people who have started a business alongside working a main job to get their expert views on if, when, and how to let the cat out of the bag.

Why you should (and shouldn’t) tell your boss you’ve started a business

If declaring a side project is not expressly written into your contract (we’ll go into this in more detail later), then working out whether or not to keep managers in the know is an entirely personal ruling.

Of course, there are influencing factors. Firms where there is a positive and supportive company culture, for example, might help employees to feel more comfortable about sharing the news.

Industry norm is another influencer. In certain sectors, such as freelance copywriting, it is more common to take on new client work in your spare time, making the practice more acceptable.

Outside of these contextual elements, however, the decision on whether to spill the beans to your boss can only be made by assessing your individual circumstances, and evaluating the potential benefits and risks of disclosing your side hustle, to arrive at a conclusion.

“I did client calls on the stairs”

We spoke to several SME owners about which side they fell on in the new business-broadcasting debate. They disclosed three persistent fears that had put them off revealing a side hustle to their employer:

1. Impact on career trajectory: One oft-cited worry was about potentially jeopardising progression. Raising concerns about missing out on promotion opportunities, they presumed that managers might think they are not as dedicated to their full-time work.
2. Financial taboo: Research by service provider Utility Warehouse shows that nearly a quarter of UK workers with multiple incomes believe there is a stigma attached to the practice, and they don’t want to talk about it with family or friends.
3. Low confidence: Many entrepreneurs who chose to stay mum on their business ambitions said they did so due to a lack of confidence. If their startup fails before it can get off the ground, they reasoned, there was no need to go through the potential stress of updating bosses.

Samuel Hurley worked at Made.com, before it became one of the many brands which have gone into administration this year. In 2019, he left the company to turn his side hustle into a multi-million pound business that employs 40 people.

Hurley didn’t tell his boss straight away that he was starting a business, out of fear the venture may not work. As a result, he avoided an awkward conversation with management. But, he warns, the approach was not all smooth sailing.

“I’d have to spend my evenings doing the actual work and then fit in client calls around my actual day-to-day work,” Hurley recalls. “I made the calls during lunchtime. I did them on the office stairs or anywhere I could find privacy.”

“They let me use the office on weekends”

Assuming a negative reaction is a common mistake when deliberating whether to tell. Dhilon Solanki is the founder of personal podcast gift platform, Story Locker. Solanki was uncertain about how his employer would react when he broke the news he was starting the business.

To Solanki’s surprise, the news went down a treat with his employers. “They were really happy,” he recalls. “As founders themselves they ‘got it’ and were so accommodating and supportive. They allow me to use the offices on the weekend to work on my side hustle.”

Solanki is proof that good can come out of keeping your employer in the loop. Doing so will demonstrate transparency and build trust with your employer, and limit the risk of them feeling betrayed if they find out further down the line anyway.

They’ll also be more likely to feel motivated to find ways to support the side project, such as by changing work patterns or, as with Solanki’s case, letting you make use of their resources.

Sharing his business plans also proved beneficial for the company’s growth, as Solanki didn’t have to hide his activities.

“Ultimately, I’d want to know if I was in their shoes,” Solanki explains. “Plus I wanted to be able to tell them about my ambitions. To maximise Story Locker’s success I needed to promote it and this would have been tough without telling them.”

Legal considerations of starting a side hustle

We’ve discussed the reasons for and against informing your boss about starting a side hustle. But in some cases, you won’t have a choice.

While there is no legal obligation to tell the employer if you are running your own business, there may be a clause in the Contract of Employment requiring the employee to declare any other work.

In common law, this is referred to as the duty of fidelity (essentially, it is a promise to be loyal to the company that you work for). Employers can enforce this law by requiring the employee to get a supervisor’s sign off before they can register a business or as a sole trader.

This is called a non-compete clause (NCC) and it will usually be written into the employment contract. Before starting a side hustle alongside your main job, read your contract carefully to see if it mentions an NCC.

If a worker chooses to start a side hustle that competes with their employer without the employer’s permission, they face dismissal from the company. In extreme cases, they may even file a lawsuit for breach of contract.

The good news is that if you are not in competition with your employer, they will rarely refuse permission. An IT employee, for example, would have no trouble setting up a dog walking company.

Other considerations:

• Time commitments: employers might have concerns about impact on rest breaks. If running the business prevents you from taking an appropriate amount of time off work, your employer may have concerns about how this affects health and wellbeing
• Conflicts of interest: if your side gig conflicts with your employer’s interests, they might be concerned about reputational damage. For example, if you work full-time for an environmental consultancy but do freelance work for an airline
• Use of trademarked materials: if you plan to use trademarked or branded equipment from the business, the employer is within their legal rights to turn down your request to start a side hustle, as this will be classed as trademark infringement
• Cybersecurity: if you are using your work laptop, mobile, or other device this might bring fraud risks due to confidentiality / employment restrictions

When to tell your boss you’re starting a business

Timing is an important point of concern when telling your boss that you’re launching a startup. Announcing the news prematurely, before you are fully committed to the idea, could mean the business fizzles out in a few months.

Similarly, leaving it until you’re running a thriving business might brew feelings of unease from your employer, who could end up feeling like they have been left in the dark.

Simon Bacher is CEO and co-founder of Ling App, an edtech startup which he started whilst working full-time as a development consultant. Bacher advises communicating with managers only once you’ve left the ideation phase, and are sure that a startup is something you want to put all your efforts into.

“Once you have proof of concept and have saved or secured funding to really pursue your dream, only then should you consider mentioning your pursuit,” he recommends.

Finance is another factor. Launching a business can be expensive. It may take months to reach break-even point when setting up shop, as you’ll have a lot more outgoings than you’ll have revenue coming in.

Particularly if you aspire to run the business full-time, Hurley advises that side hustlers build a timeframe into their business plan for when to quit. Design a cash flow forecast, so you can calculate earnings each month.

“Aim to get just above your salary income consistently for three months before you can confidently quit and know you will earn more,” he says.

“If you set up as a limited company, you can take income as dividend which has better tax implications than PAYE salary, so you can actually earn a bit less income in the side hustle to match your salary.”

How to tell your boss you’re starting a business

Breaking the news to your manager will be a daunting conversation for many. But the right approach can make the conversation smoother and more productive for both parties.

There is no need for employees to apologise or behave as though they are doing something wrong. Put yourself into the shoes of your boss. They don’t care what you do at the weekend, they want to know that you won’t start to miss deadlines and cut down work hours.

Leah Brown started her consultancy firm, Leah Talks, whilst working full-time as a general counsel and company secretary. Brown says that, during the conversation with her boss, she was “very open that I was starting a business, but that I wasn’t sure what form it would take.

“I knew that as long as I was fulfilling my contractual obligations and avoiding conflicts of interest, it would be okay. I had no qualms about being transparent despite being on a fixed term contract, and chose not to make my contract permanent when given the option.”

That initial meeting is also a good opportunity to present senior leaders with a business case for why they should allow employees to take on a side job.

Chiefly, monetising a hobby is a great way to improve worker wellbeing. It’s rare that people will start a business in something they hate, and being able to engage in a new creative outlet will give employees a break from day-to-day work.

Workers might also learn valuable transferable skills by working a side gig, which will ultimately mean they perform better in their main employment.

Sarah Jordan is founder of Oxford based sustainable underwear brand, Y.O.U Underwear, and recent winner of the Simply Business’ Business Boost Initiative. Having launched the idea as a side hustle in 2016, Jordan says she would be really excited if any of her existing team told her they were starting a business.

“Now I know the drive and resilience it involves, I would love more of those skills in my team”, she tells Startups.

Tips for balancing your side hustle alongside a job

Even if your boss has no gripes with your decision to start a business – and you leave their office with a rubber-stamped approval – employees can be sure that a good manager will be keeping an eye on how the news impacts their performance.

That’s why it’s crucial for budding business owners to keep up with work commitments. Don’t allow your secondary job to come at the expense of your primary source of income.

Side hustlers might not have the luxury of being able to commit to their venture full-time. But with proper planning, they can ensure they are managing their time as efficiently as possible.

Brown puts all this concisely: “plan your time, prioritise your full-time job, schedule rest time, and spend as frugally as you can. Push out the time horizons of expectation for your side hustle as far as you can. It will stop you from feeling overwhelmed.”

Another tip is to define how you’ll divide your time and energy – and communicate how you’ll reinforce those boundaries to bosses. If you need to keep evenings free, for instance, explain you won’t be available to answer work emails or attend events past a certain time.

Solanki affirms the importance of carving out time for your side hustle. But equally important, he stresses, is taking time for yourself.

“Juggling a side hustle and day job, my work/life balance went out of the window at the start. Late-night and weekend work is standard and I’ve also had to put holidays on the back burner,” he reveals.

“Organisation is vital – if you have a family, you must create dedicated quality time for them too where they have your full attention.”

Hustle up?

Deciding whether to tell your boss you’ve started a business is a bit like working out whether you tell your manager you’re interviewing for a new job. As long as you’re not breaking any laws, it will depend on your unique working relationship.

Still, if you can, keeping managers clued into your venture is the best way to invite an open and empathetic leadership style. It will form the basis of a support network you’ll likely need to rely on once you start putting your business plan into action.

Nervous side hustlers can also be comforted by the fact that their position – poised at the beginning of an exciting new business journey – is one that employers will be familiar with.

“As an employer you can never be angry or annoyed with a staff member for realising their dreams,” says Hurley. “Especially if you’ve done it yourself and can relate to everything they’ve been through and will go through.”

Interested in starting a side hustle? Read our guide to the top 100+ cheap small business ideas to run alongside your main job.