Thoughts on starting own advisory firm?
I love corporate finance in all its forms—financing, acquisitions, and strategic transactions. I also enjoy digging into the other sides of a business: operations, accounting, and the mechanics of how everything fits together. I’m comfortable building financial analysis from scratch and don’t see much value in being “guided” step by step. I’ve read the textbooks, but I also know when to discard theory in favor of what actually works.
The real question is whether I should take the risk of starting my own advisory firm. The idea would be to cold call companies, run a quick diagnostic of their financials, and highlight where they could improve. I could also take a restructuring angle—identifying loss-making segments through management accounting analysis, then proposing financial or operational solutions, even M&A where relevant.
Would this be a good idea, or just a waste of time? It would mean skipping the IB path entirely, which to me only makes sense if you’re chasing “optionality” (translation: you don’t know what you want).
For context, I find IB brain-dead, and PE doesn’t excite me either—you’re still an employee, waiting on uncertain carry years down the line. Public markets aren’t my cup of tea.
True wealth comes from ownership. Even if I never make “fuck you money,” the independence of running my own firm and controlling both my work style and schedule is far more appealing—and, frankly, more intellectually stimulating.
Curious to hear your views.
What makes you think that anybody would hire you to do this work for them? You would spend almost all your time trying to source clients with very little time actually spent doing the activities you want to do. Perhaps not impossible, but I don't think you've thought this through.
As in every business, getting clients through the door is the hard part, so I agree it would take me months to build some visibility in the market.
The value is that in many of those smaller markets, not many firms take the initiative to dig into a company and approach them with ideas on what they could improve. Most already have recurring clients and prefer to sit in their offices and wait for people to come to them through publicity. But a manager might not even realize he has issues that would justify visiting one of those advisory or consulting shops, so I step in and advise on the problem proactively. The fact that I identify the issue and meet them to explain it already shows I have the ability to see what is working and what is not, and that alone is proof of competency.
He might pass on me the first time, but down the road, suppose he has some financial concerns, because I was probably the only firm who ever got in touch with him, I might be the one he calls.
If you were a CEO and a 20 something rando started emailing you about how to improve your business how would you respond?
I applaud your confidence and you'll need that to be successful starting your own business. Genuinely not trying to be difficult or negative on the idea. I'm inherently sceptical and just think it will be harder than you suggest.
Some additional thoughts: you will need to convince them to provide you their confidential financial information and have them agree to pay you some amount for the work you do. The way I see it, the company will already have its own CFO / FD / controller / etc. and they won't be keen on you looking through things. If they don't, unclear if they have the budget or scale to bring you on. If they do agree for you to look, I'm not convinced it'll be an amount that makes sense for you financially. Even if you're only charging several thousand, I suspect they'll be reluctant to pay for something they probably already know, e.g., loss-making business unit loses money, or the usual management consulting advice of increasing revenue / reducing costs.
I don't mean to rain on your parade, but the first post was spot on. Why would someone hire you? To have an advisory firm, you need credentials, experience and be able to add unique value. How do you think you compare to those?
MM business owners are wildly protective about sharing financial information and data, even with established, reputable firms. They aren't going to jump out of their seat at the chance just because you email them.
There is an increasing pool of financial consultants working the sector. There are accounting firms with sizable outsourced financial, accounting, operational, IT and management consulting practices along with a burgeoning boutique model of interim, part-time CFO type resources.
Why would a business owner hire you over them?
Ya I was a little confused on this as well. Are you saying you want to try and start this up right out of school with zero professional experience? If that is the case, this plan will go no where. It would be hard enough to do this even if you had 5 years of experience, but coming straight out of school it will be next to impossible. Why would someone hire you?
If I misunderstood your post and you do have applicable experience, then that changes things.
Waste of time for all the reasons mentioned above.
My advice - if you genuinely enjoy finance, advisory, and entrepreneurship, you should cut your teeth in IB and then look to start a small/main street M&A advisory shop. Most of these "advisors" are a joke, yet are able to charge egregious fees on extremely simple mandates. The reason I suggest first cutting your teeth in IB is so that you can get paid to learn, build credentials, and lastly lose some hair on your head and grow some hair on your balls so people can actually take you seriously and trust you with their life's work.
Good luck.
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What is the downside of trying? Maybe finding a mentor-ish professional who has some idea of how to best position yourself? I'm kind of against the naysayers - it's always said to never tell people your plans because there will always be people projecting their personal feelings/issues to tell you why you can't do something.
Young people, and smart finance students, are ambitious, creative and resourceful. Is there a way to do this as a side hustle? I am now more in the alternatives space, and I see so many people who didn't fit the mold or just knew what they wanted to do and created their own thing. Some failures and misstarts, of course. But what you are talking about creates an ASSET, not just a job.
I think it's exciting and what's the worst that happens, you have to create a resume that shows that you gave a period of your life to trying something entrepreneurial??
To start, I don’t know what stage of life/career you’re in, but I’ll assume different things based on how you wrote. Additionally, nothing I say is meant to shut you down. My experience: I’ve cofounded a company, and I m currently doing advisory work (won’t say specific type but there is a name for it) across 20-30+ venture backed startups/companies, many of them with valuations in the 8–9 figure range (I won’t go into the specifics of my current role how, where, etc). Everything I say will be based on this background. I understand there may be things that aren’t necessarily universal.
Some of what you’re saying in the post may make sense from an outside perspective, but in practice it’s not how sh*t actually works. It’s the fact that a lot of what you’re thinking is based on extrapolation’s and things you read or learned in school. Like the reality of Private companies and building businesses is nothing like a textbook (in my experience). Your dealing with people and shit is also really flawed. Especially even building financials or accounting. It’s not what you think.
The reality is extremely different than you may realize. In my experience most companies (worth doing this for) are focused on whatever actually generates revenue and literally everything else doesn’t really matter until it’s about 10 minutes from becoming a dumpster.
You have no place or the knowledge base and it’s something you learn with exposure. You shouldn’t start an “advisory firm” since your base understandings are way too far from reality.
I’ve seen people who were previously in IB or buyside roles go and do things like cfo work. For key decisions makers, founders, executives, etc in a small company (10–50 people), not much is completely standardized, everything is case-by-case, and best practices get thrown out the window something is on the line. You think you’re going to go in, do a quick analysis, and tell founders where they’re wrong?
Reality: most operators don’t give a f**k about your analysis of their financials. They care about making payroll next Friday, keeping a pissed-off customer from churning, or figuring out why their top sales rep just quit. Revenue is oxygen, and everything else is a distraction until it’s on fire (I’m being 100% serious).
Even the financials you seem to think are clean and objective? They’re messy as hell and are nothing like what you think. You also often can’t even build whatever you think you would. Furthermore many companies just care about cash basis for tax purposes. The financials many times are made for the irs. Anything you do with that is useless and to think you can just convert it to accrual is crazy (with no actual accounting experience). Half the time the accounting is literally duct taped together from QuickBooks and spreadsheets, with certain things done in a way that would make a textbook cry. And yet that’s reality, and companies still raise money, grow, and sometimes even exit on that foundation.
The truth is you don’t have the exposure yet. You don’t know how ugly, nonlinear, and situational this world is. And until you’ve been in the place where the bank balance is dropping and you’re staring at a vendor bill you can’t pay, you won’t even be able to see reality clearly, let alone advise others on it.
If ownership is what you want, great. But right now, you’re using a map of mars to navigate manhattan.
Suggestion: Start an actual company/business, join a startup, join an actual advisory firm, cfo firm, etc.
I could’ve continued writing this post, but to save myself from wasting more time try to communicate what I’m saying by using parts of what you wrote.
“I love corporate finance in all its forms—financing, acquisitions, and strategic transactions.”
That’s fine, but loving corporate finance has little overlap with what it takes to actually help a smb/startup company. Corporate finance is abstracted, polished, and downstream of operations. In a 20–50 person company, the “strategic transaction” is whether they can get a bridge loan before payroll, not whether to optimize WACC.
“I also enjoy digging into the other sides of a business: operations, accounting, and the mechanics of how everything fits together.”
Operations are often full of broken processes, undocumented info, staff turnover, vendors ghosting you, and a CEO putting out five fires at once. For accounting half the time the numbers are wrong until 2–3 revisions later. Furthermore, what wrong or right means may not be comprehensible to you atm.
“I’m comfortable building financial analysis from scratch and don’t see much value in being guided step by step.”
Analysis is not reality. When it comes to banks, creditors, investors, etc it’s valuable.
You can model anything in Excel, but when the data is garbage, late, or contradictory, your “scratch analysis” means nothing.
“I’ve read the textbooks, but I also know when to discard theory in favor of what actually works.”
Knowing what to discard requires having touched reality, not having read about it. Right now, you’re discarding hypotheticals, not experience.
“I could also take a restructuring angle—identifying loss-making segments through management accounting analysis, then proposing financial or operational solutions, even M&A where relevant.”
Restructuring isn’t a spreadsheet exercise. It’s political and painful. You’re dealing with actual people and they won’t just let you do this Willy Billy!!!!!!! This is a theme across anything you do. You have no idea how meaningful the manifestations of this is. I once had meetings for restructuring comp packages across an entire saas type company, from back office to executive. The initiative was directed at cost savings. The head of hr I think basically had to give 3 plans that would be presented to the company’s board. I met with her prior to the board meeting. Two out of three lead to zero change, last plan was actually more expensive. In the two zero change plans she literally mapped out comp that basically pays seniors and execs higher weight comp or straight up just increase weight strictly to exec comp, the last plan was then non senior and sales roles. She wasn’t stupid, she did it so that I would have to go around speaking to people figuring what to do. Then people would know to look at me and my boss if they weren’t happy . The role is FULLLLLLLLLLLLL of situations like this.
You can’t identify “loss-making segments” by spreadsheeting alone—you have to know which people will be pissed, which customers you’ll lose, which investors will stop the whole thing, and which fires you’ll set off by cutting.
Would this be a good idea, or just a waste of time? It would mean skipping the IB path entirely, which to me only makes sense if you’re chasing ‘optionality’ (translation: you don’t know what you want).”
IB is “brain-dead” to you, but the truth is it at least gives people exposure to transactions, pressure, and understanding of key businesses leaders decision making and incentive structures. Skipping it for starting an advisory firm when you have no real world operator experience isn’t brave,
it’s reckless.
“True wealth comes from ownership. Even if I never make ‘fuck you money,’ the independence of running my own firm and controlling both my work style and schedule is far more appealing—and, frankly, more intellectually stimulating.”
True, but ownership is earned. If you want to own a name and ein number it’s easy. Creating something from nothing is like nothing you’ve probably ever experienced. Delusions of certainty don’t help either. Independence sounds appealing, but there’s a lot more to it. You only get the upside of ownership after you’ve had the downside of responsibility. And the ups and downs all happen at the same time in perpetuity.
A lot of what I’m saying may sound exaggerated, and some things get simplified in how I’m putting it but that’s kind of the point. The gap between what you think this looks like and what it actually is can’t really be closed with textbooks, models, or outside observation. The exaggeration is there to show how much you don’t see until you’ve gone inside it.
Sorry for all the writing errors lmfao
Starting your own shop is a grind but worth it if you can’t stand being someone’s excel monkey in IB. The hardest part is the legal setup and compliance stuff that kills your soul.
When I kicked off my project in Chicago, I wasted so much time with paperwork until I just linked up with Attorney Karen Brady. Way easier than trying to DIY the legal side while also cold calling.
If you have the stomach for the risk, just go for it. Worst case you go back to a corporate job with a cool story.
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