Career/Life Advice Needed - When to start a business?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Post Reply
toys4tots16
Posts: 21
Joined: Mon Feb 03, 2014 12:31 pm

Career/Life Advice Needed - When to start a business?

Post by toys4tots16 » Thu Nov 08, 2018 2:56 pm

This community is filled with incredibly smart, generous folks, and I’m hoping that you all can give me some much-needed career/life guidance.

A bit of background first:
• Personal: Spouse and two kids (under 5) living in MCOL area.
• Financial: Household income is ~$500k, NW is ~$1.5M which includes equity in paid off home. Annual expenses are ~$90K
• Career: I work in corporate innovation at a fortune 500 financial services company, and my wife works in a small family business.

Question:
• Should I start my own company now or stay in the corporate gig for ~3 more years and then start a company?

Considerations:
Financial:
• If I stay where I am today, we should have enough to “FIRE” in ~3 years. This would alleviate any pressure to “put food on the table”.
• Our expenses will also drop as kids age out of daycare

Passion & skills:
• Starting my own company is a lifelong goal of mine, and something I will regret if I never do
• My skill set is such that I am I confident I would be successful at identifying an opportunity and turning it into a profitable business
• A big question in my mind is if I want to build a high-growth “start-up” company or simply a lifestyle small business…

Circumstances:
• With small kids and my current job, I do not have time to start a business while still employed (and yes, I realize this is the preferred pathway, but it simply will not work for me)
• I’m not overly enthusiastic about my job right now and feel I could be doing “more” with my life. Plus, I HATE all the bureaucracy and politics.

Thank you in advance. This is incredibly important to me so any feedback you can give is greatly appreciated.

helloeveryone
Posts: 163
Joined: Sun Sep 04, 2016 5:16 pm

Re: Career/Life Advice Needed - When to start a business?

Post by helloeveryone » Thu Nov 08, 2018 11:25 pm

toys4tots16 wrote:
Thu Nov 08, 2018 2:56 pm
This community is filled with incredibly smart, generous folks, and I’m hoping that you all can give me some much-needed career/life guidance.

A bit of background first:
• Personal: Spouse and two kids (under 5) living in MCOL area.
• Financial: Household income is ~$500k, NW is ~$1.5M which includes equity in paid off home. Annual expenses are ~$90K
• Career: I work in corporate innovation at a fortune 500 financial services company, and my wife works in a small family business.

Question:
• Should I start my own company now or stay in the corporate gig for ~3 more years and then start a company?

Considerations:
Financial:
• If I stay where I am today, we should have enough to “FIRE” in ~3 years. This would alleviate any pressure to “put food on the table”.
• Our expenses will also drop as kids age out of daycare

Passion & skills:
• Starting my own company is a lifelong goal of mine, and something I will regret if I never do
• My skill set is such that I am I confident I would be successful at identifying an opportunity and turning it into a profitable business
• A big question in my mind is if I want to build a high-growth “start-up” company or simply a lifestyle small business…

Circumstances:
• With small kids and my current job, I do not have time to start a business while still employed (and yes, I realize this is the preferred pathway, but it simply will not work for me)
• I’m not overly enthusiastic about my job right now and feel I could be doing “more” with my life. Plus, I HATE all the bureaucracy and politics.

Thank you in advance. This is incredibly important to me so any feedback you can give is greatly appreciated.
my preference would be to work three more years to secure the FI. But in those three years do as much as you can to get your company to start up as soon as you hit FI. That will give you the freedom to give it your all to your new company without the stressor of providing financially. ie: all your decisions will be what’s best for the growth of the business rather than what can help me being home money. Just my two cents. Not a business owner and not in a position where i can secure my FI in 3 years

User avatar
Watty
Posts: 14368
Joined: Wed Oct 10, 2007 3:55 pm

Re: Career/Life Advice Needed - When to start a business?

Post by Watty » Fri Nov 09, 2018 12:49 am

toys4tots16 wrote:
Thu Nov 08, 2018 2:56 pm
I’m not overly enthusiastic about my job right now and feel I could be doing “more” with my life. Plus, I HATE all the bureaucracy and politics.
I have never run my own business but I would suspect that you could be going from the frying pan into the fire and might have a lot more to deal with in dealing with customers, employees, accountants, backed up toilets and things you can't even think if now. Each of your customers will also have their own bureaucracy and politics that you will need to deal with.

With two kids under five that could also take a lot of time away from your family too. If you have more kids while you are trying to start a business that could be a challenge too.
toys4tots16 wrote:
Thu Nov 08, 2018 2:56 pm
• My skill set is such that I am I confident I would be successful at identifying an opportunity and turning it into a profitable business
• A big question in my mind is if I want to build a high-growth “start-up” company or simply a lifestyle small business…
Don't kid yourself, most startups do not succeed and even if you have the skills things out of your control, like a recession or illness can scuttle your plans. You may have to fund it for years until it does take off so you will need to have deep pockets to support the business for a significant amount of time. Many startups fail because funding runs out, not because the founders give up.

It can also take a very long time for a for a startup to succeed or fails and it could still be struggling in 10+ years.

With a family you should really become pretty much financially independent before trying something like that.

In your planning it would also be good to have college funds set aside for the kids before your try something like that.

I'm not really sure what a "lifestyle small business" means to you but becoming truly financially independent then working on some low stress part time business you enjoy that could be make sense.

time>money
Posts: 5
Joined: Mon Mar 30, 2015 3:24 pm

Re: Career/Life Advice Needed - When to start a business?

Post by time>money » Fri Nov 09, 2018 6:55 am

It sounds to me like you suspect you should stick it out and attain FIRE, especially as you expect it only to take 3 more years. But since you dislike your job, that is an unappealing prospect. How about looking around for a position that would pay enough to still get you to FIRE, but is more in line with your interests — one that won’t leave you feeling so unfulfilled? It would be good if you could identify some specific businesses you might want to start, and then find something in one of these actual areas. Even with sharp business skills, there are countless ways specific businesses can take you by surprise and wreak havoc with your plans. Aside from rental real estate, I have had three businesses over the past twenty years. One was, and still is, quite successful. Another was a benign dud, costing me time but not quite losing money. The worst was a disaster, in which I was stuck with more stress than my worst job and also ended up losing some money. Overall, I’m glad I have been a business owner. The freedom and financial returns have been great even factoring in the two losers, but it has been chastening for me to see that even as a seasoned and successful entrepreneur I made dumb decisions when I should have known better, and I was not as immune to panic and cognitive distortions as I arrogantly expected to be. YMMV My advice is to keep the big income until you really are FIRE, which would include a large cash cushion for your new business.

Cigarman
Posts: 292
Joined: Fri Jul 12, 2013 5:12 am

Re: Career/Life Advice Needed - When to start a business?

Post by Cigarman » Fri Nov 09, 2018 7:16 am

When you start your own business, what would it be? I did this 20 years ago and have not looked back. I found my passion to be taking care of customers and not wanting to rely on other employee's so I am a one man business. You should ask yourself the following questions:

1. What am I passionate about and what business would allow me to follow my passion?

2. Where do I want to be 5 and 10 years after starting the business?

3. Do I buy a franchise or start one of my own? If it is a franchise, can you work at one to see if you like that industry?

4. What is my exit strategy. My FIL once told me that business, like marriage, should be entered into knowing that one day you may need a divorce!

There are a lot of aspects to forming a business that many people get caught up in the details...I am more of a "just do it" type person so I decided one day just to cut the cord from having to deal with bosses, employees, etc. How does that look in your world. A friend of mine took 6 months to set up a similar business and got so caught up in doing everything "right" that he failed to do the single most important thing: obtain customers.

In my opinion, there is never a good or bad time to start one...it all rests on your talents and abilities. I would though, at the very least, form the corporation now so when you are ready to go you can jump right in.

daggerboard
Posts: 120
Joined: Tue Jan 24, 2012 2:16 pm

Re: Career/Life Advice Needed - When to start a business?

Post by daggerboard » Fri Nov 09, 2018 8:33 am

toys4tots16 wrote:
Thu Nov 08, 2018 2:56 pm

A big question in my mind is if I want to build a high-growth “start-up” company or simply a lifestyle small business…

Thank you in advance. This is incredibly important to me so any feedback you can give is greatly appreciated.
I am working as an executive in a corp environment now, but have two start-ups and a lengthy stint in mgmt consulting under my belt.

If I were you, I would wait until you hit FIRE - 3 years is near-in.

Why do you want to build a biz?

To create? To help ppl? Occupy yourself productively in a fun way? => Lifestyle biz
Get rich? Get famous? Become "serial" entrepreneur? Become an early stage investor? => Venture-backed startup

I was CEO of a venture-backed startup for 3 years, after that I went into mgmt consulting. All my colleagues in consulting were groaning over the work load and stress, I felt like I was on a vacation post startup. I worked the same hours as the others, but I no longer would wake up in the middle of the night wondering if I would make payroll that month or if I could close the next round before we ran out of money in xxx days or whether the pivotal customer would sign etc etc. The emotional stress as a leader in a start-up can be severe and totally different from "regular" corporate work stress. Your job also becomes your life much more so than in the corporate world - I would travel with my girlfriend (now wife) on trips abroad, but I would always work in a least a couple customer or investor meetings wherever I was. There was no weekend, no vacation, work was life and life was work. And if shit goes sideways you take it very personal. You are the embodiment of the company, and you need the right mental health & stability to handle that. Dont underestimate these dynamics, its not for everyone.

Based on what I am hearing I'd do something life-style. But I'm not sure which itch you are trying to scratch.

Nowizard
Posts: 1593
Joined: Tue Oct 23, 2007 5:33 pm

Re: Career/Life Advice Needed - When to start a business?

Post by Nowizard » Fri Nov 09, 2018 8:54 am

Time and money to sustain a start-up are critical issues. A business plan can provide a probable answer to the latter, the former is more personal. In my case, being an available father was crucial during the early years. Though there are numerous, valid ways to define that, it meant not taking the time to start a business until the children began at least first grade and there were no plans for additional children. Though impatient at times, the additional time led to overall consideration of nuances that would affect what became a successful, small business spanning 25 years. Not to be negative, but be certain that you and your family are together on the what and when. From a strictly business point of view, making it a priority can negatively affect the overall progression of your life just as it will enhance it if you plan accordingly.

Tim

carolinaman
Posts: 3289
Joined: Wed Dec 28, 2011 9:56 am
Location: North Carolina

Re: Career/Life Advice Needed - When to start a business?

Post by carolinaman » Fri Nov 09, 2018 9:06 am

Achieving FIRE in three years is huge. I highly recommend that you do that.

Starting your own business is challenging and risky, even if you are highly capable such as yourself. Despite your best efforts you may not succeed and you may lose your investment capital. Keeping your current job for 3 years will give you time to plan for your own business and you can hit the ground running once you achieve FIRE.

About 30 years ago I was a senior VP in a tech startup. Our company grew quickly and several of my colleagues left and started their own businesses. My boss was one of them. He had excellent management skills, partnered with another guy with like skills, and positioned themselves in a fast growing part of the tech business. They even took business from our largest client. They look poised for success but somehow they went bankrupt in less than 5 years. I never understood how they screwed their business up, but they did. Conversely, a couple of other managers left and started their own businesses in more mundane and competitive aspects of tech and were successful. The morale of this store is that startups are risky and uncertain. I understand your itch to run your own business, but do it after you have achieve FIRE.

smitcat
Posts: 1989
Joined: Mon Nov 07, 2016 10:51 am

Re: Career/Life Advice Needed - When to start a business?

Post by smitcat » Fri Nov 09, 2018 9:09 am

toys4tots16 wrote:
Thu Nov 08, 2018 2:56 pm
This community is filled with incredibly smart, generous folks, and I’m hoping that you all can give me some much-needed career/life guidance.

A bit of background first:
• Personal: Spouse and two kids (under 5) living in MCOL area.
• Financial: Household income is ~$500k, NW is ~$1.5M which includes equity in paid off home. Annual expenses are ~$90K
• Career: I work in corporate innovation at a fortune 500 financial services company, and my wife works in a small family business.

Question:
• Should I start my own company now or stay in the corporate gig for ~3 more years and then start a company?

Considerations:
Financial:
• If I stay where I am today, we should have enough to “FIRE” in ~3 years. This would alleviate any pressure to “put food on the table”.
• Our expenses will also drop as kids age out of daycare

Passion & skills:
• Starting my own company is a lifelong goal of mine, and something I will regret if I never do
• My skill set is such that I am I confident I would be successful at identifying an opportunity and turning it into a profitable business
• A big question in my mind is if I want to build a high-growth “start-up” company or simply a lifestyle small business…

Circumstances:
• With small kids and my current job, I do not have time to start a business while still employed (and yes, I realize this is the preferred pathway, but it simply will not work for me)
• I’m not overly enthusiastic about my job right now and feel I could be doing “more” with my life. Plus, I HATE all the bureaucracy and politics.

Thank you in advance. This is incredibly important to me so any feedback you can give is greatly appreciated.
Other than all of the other very good observations and comments I would point out that you may be ready to FIRE in 3 years based upon your current family goals and expenses but starting a business will likely be a serious draw on cash and credit for up to or even more than 2 years after you begin. That would drive your FIRE numbers below water for quiet some time even if the business is reasonably successful.
Matching a well thought out and conservative 2-3 year start up budget will likely give you a different view to consider.
FWIW- we have started a few small business's these past 20 years and it always takes more time and cash than you would imagine.

LarryAllen
Posts: 1122
Joined: Fri Apr 22, 2016 9:41 am
Location: State of Confusion

Re: Career/Life Advice Needed - When to start a business?

Post by LarryAllen » Fri Nov 09, 2018 9:11 am

Why do you only have $1.5m net worth with $500k income? Seems low. I would stick it out a few more years. I would also drill down carefully on the expenses to be sure they are accurate to include health care for example. Good luck.

smitcat
Posts: 1989
Joined: Mon Nov 07, 2016 10:51 am

Re: Career/Life Advice Needed - When to start a business?

Post by smitcat » Fri Nov 09, 2018 9:13 am

carolinaman wrote:
Fri Nov 09, 2018 9:06 am
Achieving FIRE in three years is huge. I highly recommend that you do that.

Starting your own business is challenging and risky, even if you are highly capable such as yourself. Despite your best efforts you may not succeed and you may lose your investment capital. Keeping your current job for 3 years will give you time to plan for your own business and you can hit the ground running once you achieve FIRE.

About 30 years ago I was a senior VP in a tech startup. Our company grew quickly and several of my colleagues left and started their own businesses. My boss was one of them. He had excellent management skills, partnered with another guy with like skills, and positioned themselves in a fast growing part of the tech business. They even took business from our largest client. They look poised for success but somehow they went bankrupt in less than 5 years. I never understood how they screwed their business up, but they did. Conversely, a couple of other managers left and started their own businesses in more mundane and competitive aspects of tech and were successful. The morale of this store is that startups are risky and uncertain. I understand your itch to run your own business, but do it after you have achieve FIRE.
I agree - about half of small business startups survive the initial 4 years. We utilized both the SBA and the SBDC in our area pretty extensively in planning and funding stages . They were a large help and they are free.

smitcat
Posts: 1989
Joined: Mon Nov 07, 2016 10:51 am

Re: Career/Life Advice Needed - When to start a business?

Post by smitcat » Fri Nov 09, 2018 9:16 am

LarryAllen wrote:
Fri Nov 09, 2018 9:11 am
Why do you only have $1.5m net worth with $500k income? Seems low. I would stick it out a few more years. I would also drill down carefully on the expenses to be sure they are accurate to include health care for example. Good luck.
They are in their late 20's and have had pay raises recently.

LarryAllen
Posts: 1122
Joined: Fri Apr 22, 2016 9:41 am
Location: State of Confusion

Re: Career/Life Advice Needed - When to start a business?

Post by LarryAllen » Fri Nov 09, 2018 9:26 am

I missed their age. I would definitely work the corporate gig longer. Life is long and full of twists and turns. Keep stock piling that cash while you can.

Thegame14
Posts: 360
Joined: Mon May 07, 2018 11:53 am

Re: Career/Life Advice Needed - When to start a business?

Post by Thegame14 » Fri Nov 09, 2018 9:31 am

it is only 3 years, so you should wait and get the security first, then you can start a business with more of a lifestyle/passion project instead of the need to put food on the table, and 3 years will go by quickly once you have an end goal in mind, plus take all your vacation time before you leave, I tend to not be able to do that and get paid out eventually, but you might as well use it.

Bruce T
Posts: 12
Joined: Wed Mar 28, 2018 8:34 pm

Re: Career/Life Advice Needed - When to start a business?

Post by Bruce T » Fri Nov 09, 2018 9:49 am

If you can FIRE in ~3 years, then I suggest sticking to it either w/ present position or - as suggested above - an alternate position more aligned with your interests & job satisfaction ... and in the mean time:
1. develop a business plan (or three).
2. identify & cultivate relationships with others that can contribute to your startup's success - even the skinniest "one man band" needs complementary skills - that can either be partnered with (at risk), hired, or outsourced... getting some structure and process in that area will help your startup success immensely.
3. consider (if suited to your startup interests) acquiring the assets of an existing business or a franchise - either of those can jump-start your process in many ways and are matters you can evaluate as time allows in the interim... how that pans out may help you sort out timing to start up.
4. make sure that your spouse (and others that matter) are on-board with the plans... family unity is very important in what could be risky/stressful situations.
5. if your new business is geographically sensitive, make sure you are in the geography that you want to be in (and that will be successful for the business) ... the interim period and a potential job change could contribute to getting alignment on that.
6. set and track SMART goals to keep yourself interested/motivated/moving forward.
7. have fun planning and executing ... having done 2 successful startups and M&A's/exits ... I can tell you that whether it's fun or not makes all the difference and is largely under your control! If it's not fun, ask yourself "why not" and make changes...
Best wishes for success!
Bruce

JuniorBH
Posts: 94
Joined: Fri Jun 09, 2017 12:54 pm

Re: Career/Life Advice Needed - When to start a business?

Post by JuniorBH » Fri Nov 09, 2018 2:12 pm

If you can FI in 3 years, that seems like a no-brainer. Completely understanding that it's easier for someone else to say "three years is a short time" when they aren't in the daily grind. However, knowing you're FI should actually help with starting a business since decisions won't be made based on how to pay the mortgage this month but rather what's in the best long-term interest.

toys4tots16
Posts: 21
Joined: Mon Feb 03, 2014 12:31 pm

Re: Career/Life Advice Needed - When to start a business?

Post by toys4tots16 » Fri Nov 09, 2018 5:03 pm

time>money wrote:
Fri Nov 09, 2018 6:55 am
It sounds to me like you suspect you should stick it out and attain FIRE, especially as you expect it only to take 3 more years. But since you dislike your job, that is an unappealing prospect. How about looking around for a position that would pay enough to still get you to FIRE, but is more in line with your interests — one that won’t leave you feeling so unfulfilled? It would be good if you could identify some specific businesses you might want to start, and then find something in one of these actual areas. Even with sharp business skills, there are countless ways specific businesses can take you by surprise and wreak havoc with your plans. Aside from rental real estate, I have had three businesses over the past twenty years. One was, and still is, quite successful. Another was a benign dud, costing me time but not quite losing money. The worst was a disaster, in which I was stuck with more stress than my worst job and also ended up losing some money. Overall, I’m glad I have been a business owner. The freedom and financial returns have been great even factoring in the two losers, but it has been chastening for me to see that even as a seasoned and successful entrepreneur I made dumb decisions when I should have known better, and I was not as immune to panic and cognitive distortions as I arrogantly expected to be. YMMV My advice is to keep the big income until you really are FIRE, which would include a large cash cushion for your new business.
This is a great suggestion. Gaining some specific subject matter expertise in a relevant industry could jump start a new business, but I could still get paid to learn it. I'm going to look into this option more.

toys4tots16
Posts: 21
Joined: Mon Feb 03, 2014 12:31 pm

Re: Career/Life Advice Needed - When to start a business?

Post by toys4tots16 » Fri Nov 09, 2018 5:08 pm

daggerboard wrote:
Fri Nov 09, 2018 8:33 am

Why do you want to build a biz?
Honestly, its probably to prove that I can. Today, I work in corporate innovation which means I'm building businesses with the business as well as engaging with start-up companies, and there is this unspoken perception that "true innovators" are entrepreneurs. Corporate innovators don't meet that criteria...

toys4tots16
Posts: 21
Joined: Mon Feb 03, 2014 12:31 pm

Re: Career/Life Advice Needed - When to start a business?

Post by toys4tots16 » Fri Nov 09, 2018 5:10 pm

Thegame14 wrote:
Fri Nov 09, 2018 9:31 am
it is only 3 years, so you should wait and get the security first, then you can start a business with more of a lifestyle/passion project instead of the need to put food on the table, and 3 years will go by quickly once you have an end goal in mind, plus take all your vacation time before you leave, I tend to not be able to do that and get paid out eventually, but you might as well use it.
It seems the consensus opinion is to wait the 3 years, which makes senses as it really does de-risk the situation quite a bit.

Scrapr
Posts: 185
Joined: Sun May 09, 2010 9:19 am

Re: Career/Life Advice Needed - When to start a business?

Post by Scrapr » Fri Nov 09, 2018 11:58 pm

toys4tots16 wrote:
Fri Nov 09, 2018 5:08 pm
daggerboard wrote:
Fri Nov 09, 2018 8:33 am

Why do you want to build a biz?
Honestly, its probably to prove that I can. Today, I work in corporate innovation which means I'm building businesses with the business as well as engaging with start-up companies, and there is this unspoken perception that "true innovators" are entrepreneurs. Corporate innovators don't meet that criteria...
what is a Corporate innovator? Business Development?

Do you have an ability to sell? Small business owners have to sell. No way around it. Have you done that?

I would wait the 3 years then try the start up. But, just to make it challenging for yourself...don't touch your pile of money. Bootstrap it. More small business have failed because too much money than not enough. If every dollar is valued then difficult decisions have to be made. It's like a crucible

There is no better feeling than looking back over a career and looking at what you have accomplished. Make sure your wife is all in. When you have to attend a meeting at 7:00 pm and can't tuck in your kids stuff gets real. Then get up & out at 6:00 am and hit the ground running. Then wake up at 3:00 am and figure if you have enough for payroll in the morning. then have an employee quit and you have to cover his job & your job. It's not even Wednesday yet.....LOL

User avatar
vitaflo
Posts: 1000
Joined: Sat Sep 03, 2011 3:02 pm

Re: Career/Life Advice Needed - When to start a business?

Post by vitaflo » Sat Nov 10, 2018 1:00 am

toys4tots16 wrote:
Fri Nov 09, 2018 5:10 pm
Thegame14 wrote:
Fri Nov 09, 2018 9:31 am
it is only 3 years, so you should wait and get the security first, then you can start a business with more of a lifestyle/passion project instead of the need to put food on the table, and 3 years will go by quickly once you have an end goal in mind, plus take all your vacation time before you leave, I tend to not be able to do that and get paid out eventually, but you might as well use it.
It seems the consensus opinion is to wait the 3 years, which makes senses as it really does de-risk the situation quite a bit.
The consensus opinion comes from people who don't own businesses. I do (I own two of them). My opinion is go for it. I'd go for the lifestyle small biz over the startup. A startup is the fastest way to lose all your money. A lifestyle small biz gives you the power to set direction and build a team you want and who actually wants to work for you, without the pressure of investors or lackeys who just want to work in a get-rich-quick scheme (startups).

I wanted to start my own biz for a long time. I took an extra couple years to lay the groundwork before I jumped ship and did it. Glad I did, best decision I ever made. Unlike you my net worth at the time was $0. 8 years later my NW is higher than yours.

If you have the itch, I say scratch it. My experience is most people who own businesses (even successful ones) are in over their heads and just not very smart, yet they somehow make it work. It doesn't take much to stand out and be successful. Of course, your mileage may vary.

Post Reply