Out of curiosity, I was wondering what's stopping you from starting your own business? I always contemplate the idea of trying it out for a year or so and if doesn't work, I think I can easily find my way back to banking. Personally, what's holding me back is the opportunity cost on the short run given how much money we make. Lifestyle would definitely take a huge hit.
Obviously it's a high-risk move but then again if we don't try this in our 20s then when will we? We probably have more savings than most employees our age, so starting an ecom store or building a product shouldn't necessarily be a financial burden.
Would love to hear other perspectives on this.
Update (1): actually decided to start a business a couple of months ago and we’re live! still in banking but I thought updating this thread every once in a while with updates on how it’s going would be fun :)
You need a good idea, for one.
It's amazing to me how many people have this idea of entrepreneurship that is basically "I decide to start a business and then it exists." Especially when the alternative is a high paying finance job. My guess is the average person who has been working on Wall Street for 5 years is making far more than the average person who has owned their own business for 5 years.
If you want to start your own business you need to have an idea that markedly improves on whatever exists in the marketplace right now. That isn't easy to do. Sure, the last decade saw a proliferation of people found their own startups and sell them for tons of money (though again survivorship bias is at play), but that had less to do with inherent value and more to do with cheap credit.
So yeah... "trying it out for a year or so" isn't how it works. You dedicate years of your life to getting a business of the ground, or don't do it at all
I hear you, but trying it out for a year or so could mean that this gives you the time to assess whether there's a market for your product or not and if there's potential for the business in general. A successful business that makes good money requires much more than a year (at least in most cases).
What I disagree with is that you have to have an idea and that your product needs to improve whatever is out there. I don't think that's necessarily true. Putting software aside, business has become more of a marketing (and borderline "bullshit") game. You can take Liquid Death as an example. They're literally selling canned water and they were valued at $700 million a couple of days ago. Gymshark is another example. Incredible brand, but it's literally just a sportswear company.
Is it an incredibly risky play? Yes absolutely. But some people would love to look back someday and think that they've at least tried to build their own thing regardless of the outcome.
The point is that we're looked at as the relatively intelligent version of society and most of us are well-off at a young age with great CVs. I fail to see how going back to employment, if it all fails, would be hard. If anything, you'd have great stories to tell about how your experience went.
Marketing like GymShark does is incredibly difficult and its own skillset to be clear. Same with what LiquidDeath did. They built an incredible brand very, very quickly in an incredibly hard space. F&B is one of my personal "no fucking way" cats lol.
My man, a year is barely enough time to get processes in place and start building a client list. You spend a year essentially laying the groundwork for the next five years. I hear what you're saying about assessing a market, but in a year's time you won't even have feedback!
So they're better salesmen and promoters than their competitors. That is their advantage. Also... I don't know enough to vet this, but I somehow doubt that is the whole story. You need an edge, was my point.
OK, but that's a qualitative outcome, not a quantitative one. If you want to be on your deathbed and not regret trying to go into business on your own, that's a fine wish, but that doesn't help with actually being successful. If your idea is "I want to own my own business" and that's the beginning and end of it, you're going to fail. You need a product, a pitch, a service. Something that puts you above anyone else.
As someone who hires, I don't think "I went on my own for a year to try and build a business and failed" is a great story in and of itself. It's a good launch point for a good story... but if the reason you failed was you were disorganized, or lazy, then that's going to be a net negative you could have avoided by not bringing it up in the first place.
Long story short, I don't think entrepreneurship is worthwhile if you are viewing it through the lens of "it's a resume builder." It is objectively worse than actually building relevant experience in a field.
This is the most important point. Obviously everyone would want to be their own boss and make a ton of money at the same time, but that's generally very hard to do. Depending on what the business is, either the idea has to be good, or you have to find a better way to do something that people actually want. Yes, there are a lot of boring businesses out there that can be improved (laundry services, vending machines, etc.), but it's still a lot of legwork that many underestimate. Of course it can be done, people do it every day, but it's like everything else: it's not a walk in the park.
Another thing is that you have to be comfortable with taking on more risk. Generally more of your personal net worth will be tied in that business, which can be great if you're Elon Musk, or complete shit if you were a farmer during the Dust Bowl. You have to be comfortable knowing that you're probably not going to see profit for awhile, that you can make payroll, that lenders aren't breathing down your neck, that you don't have a tax or mechanic's lien against you, that your vendors are happy, that your customers aren't pissed and returning merchandise the list is endless.
A lot of times people say that "oh if you fail, that's ok, just do it again." Declaring bankruptcy, unlike in The Office, is not a joke (nor is identity theft) and can have potentially unforeseen serious personal financial and legal ramifications. This is not to dissuade entrepreneurs, but like with everything, you have to be comfortable with the risks.
This is an excellent point which very few people on these boards actually understand. Working on Wall Street gives people an extremely warped view of what "risk" constitutes, and as far as I hear anyone discuss it, they seem to confuse it for "opportunity cost."
Starting your own business means pouring everything you have into it. You don't understand "risk" until you realize that not hitting your sales targets or closing a deal means not paying rent and not having anything to fall back on. Most people don't have the stomach for that kind of risk, which is why most of the folks on this forum want to go into IB or finance - it's the safest, least risky career path out there. At some point, though, creating generational wealth or a company that is worth a lot of money means taking a risk; sacrificing the day job that pays you $400,000 a year is a hard thing to do, logically speaking, so it's not surprise that few Wall Street folks end up actually being entrepreneurs.
The only thing I disagree with is the good idea.
I can't tell you how many successful businesses I see where the idea / business thesis is terrible.
Like?
I’ve started 4 LLCs in the past 12 years. For the first one, I left my corporate job to work on it full time, but I never fully got it off the ground.
Part of my weakness is generating sales and a pipeline and also raising money. It’s easy to be a cog in the wheel at a large company. They have sales teams and you can just do your own part of the work.
Once I left my corporate job, it was harder to go back to a corporate position than I thought. Even if there are no gaps in your resume, having a gap in finance does make it harder to get interviews and offers.
Finally, the likelihood of making it with your own small business is slim. Pros: freedom, unlimited income potential, you keep all the profits. Cons: you wear all the hats and have to do all the admin work as well. It could be a few years before you turn a profit.
This needs to be repeated a million times. Most people on this site are intelligent, and hard working. Most of them will be good at something. The problem is that entrepreneurship requires being good at everything. That is exceptionally difficult, unless you have the money to contract that out, which is why it's much easier to make a go of it if you come from money.
Or find a partner(s) to fill in your weaknesses - but that requires sacrificing a lot of upside and freedom, which are the main reasons to go out on your own anyway
I think there are plenty of entrepreneurs who are “good enough” at a lot of things and good or excellent at a few. I’ve known plenty of middle market business owners and most are good to great at sales or operations or some other important facet of what they do, so that merely being ok at the other stuff is acceptable. Friends who’ve done search marvel at the blocking and tackling that isn’t done e.g. no CRM, no sales team just word of mouth.
starting a company is insanely hard - I left my last job to try and bootstrap a software company it was hard to get the product built and insanely hard to sell the product - much harder than I thought that it would have been - it was a humbling experience.
btw I failed if that wasn't clear from the first comment. I only was able to secure a handful of meetings with companies to discuss selling my product to them, but none of the meetings that I had really panned out and I went hard at trying to sell the product for a while.
What do you think was the biggest reason the meetings didn't pan out?
Sorry to hear that but I'm sure it was a great experience nonetheless. Did you go back to being full time?
yeah idk it was mostly just a waste of time and I don't have much to show for it. but my last job was a total bullshit job (had like 1 hour of work to do everyday, was a terrible fit for my personality) so it's not like I would have been doing anything that career defining if I didn't quit that job to try and start my own company. I'm trying to find a new job right now but it's kind of rough since I have a bad resume and not a lot of skills.
Contrary to the above, the "good idea" thing is total bullshit. Barely matters. 100% in the execution.
Let's do some simple math.
You, a PE monkey, are making $500k/yr.
You start a company and magically bootstrap to $10m year (this is really fucking hard). It takes you 4 years.
Your co nets 15%.
So you have $1.5m...but you need to reinvest a lot of that to continue growth. Probably $1m - $1.3m...
Now, best case, assuming you are a god-tier entrepreneur, you net $500k a year but sweat your fucking ass off and take tremendous risk on.
Equity value I personally consider worthless because it's so volatile and can implode at any minute until you get to $100m+ in rev or ~$10m - $15m in ARR for your avg SaaS co. Plus, in PE, you accrue carry over time which ends up being $$$ and is sort of comparable, but much safer. IE my NW probably dropped by ~40% - 50% this year purely because multiples have contracted so much. Your standard LMM co in consumer with $2m in EBITDA is not an 8x anymore...lol
I think you need to be someone with a natural love of what comes with entrepreneurship. Personally, I would find it hard to work much without the motivation that comes with running your own co. Kind of love the stress now.
Ignore the math and explain to me why anyone is buying your product in the first place. You could have the best product in the marketplace and you'll have to hustle your ass off to make ends meet, as you say. If your product is shit, then why is anyone buying it at all, regardless of your effort?
I understand that the point you are trying to make is that entrepreneurship is an exceptional amount of work and sweat and tears. I don't contest that. But don't you dare sit there and tell someone they don't have to have a good idea or product in order to make shit work. Being just another widget maker means you're never going to get to UHNW status, never going to make it, which is the whole fucking reason to start a business. You want to upside of a huge payday for owning 100% of your company and you want the flexibility and freedom that comes with owning your time. If you aren't better at your niche of the market than your competitors, you'll never make it big and you'll always be slaving away to stay relevant.
Either do something better, or make something better, or don't bother. Especially when the alternative is making six figures guaranteed for the rest of your life in a field like finance, where the work and the hours are easier.
Not trying to be mean about it, but how many companies have you scaled or started? How many broke $10m in rev? How many broke $1m in rev?
Product is iterative. Getting started instead of sitting around in wantrepreneur mode is what matters. Your first few companies will suck. Unlikely to go anywhere. But you'll learn what it takes to make a "good" company through the process. The problem is, you can't learn that by sitting around thinking about business ideas. Literally, classic n00b trap.
RE: "Being another widget maker". You learn how to put a twist on it while you iterate on product from customer feedback. You rarely stumble upon magical PMF...lol. The main co I am working on now will have gone from ~10% EBITDA margin -> 30%+ because of PMF tweaks + operating improvements for example. You only figure that out once you're in the driver's seat.
I'm a PUSSY - that's what's stopping me.
I think most people just aren't cut out for entrepreneurship.
I'm just starting my journey but the 1st step I took was to network with already successful entrepreneurs. Many of them were on their 2nd or 3rd company.
An interesting common trait I found was that all of these people are constantly searching for new thoughts and always cooking up at least 1 side project.
I kinda new I'd be a good fit because I immediately cliqued with these people and just had so much fun being around them.
I used to have all sorts of side projects in high school & college. Some of them businesses and some of them "student-run orgs". After graduating college, I still picked up other 'entrepreneurial' side projects to keep me engaged and I got really depressed when I tried to focus 100% on my job because it seed like I was just following a path someone else has paved, which felt really restricting and uncreative.
If you have an entrepreneur's gene (I mean this in every sense of the word. You're almost born with the proclivitiy to be entrepreneur), then there are always clear indicators.
Have you always enjoyed paving your own path and venturing into the unknown? I don't mean that in you invent something completely new, even if you're doing something same, you can have a different process or a different way of thinking about it that is original.
What's far more interesting to me is buying into an existing and established cashflow generating business that meets an obvious need. It can be as mundane as a laundromat business. The hard part is finding the right opportunities and doing sufficient diligence about why the person is selling and any potential hidden shortcomings.
Yeah the key is to buy enough of these businesses in a portfolio to be diversified somewhat if one business has financial issues.
Totally x1000.
I've been softly looking into low effort steady cash flow business to buy so I can have some sort of steady income in case my venture just flops.
Couple candidates I have are: 1) laundromats, 2) liquor stores in an area about to be gentrified, 3) levering up and buying a house to be a landlord/AirBnB host....
Honestly taking ideas at this point..
Have you looked into beauty stores or pet shops? I’m personally looking at those and would love to hear opinions on them.
Check out this website: SEARCHFUNDER - Search Fund Community Hub
It's targeted towards search funds acquiring small legit businesses (not just a single laundromat location for example), but they have some smaller deals on there and it'll help you brainstorm.
The businesses are big enough to reduce risk (obviously there's a lot of risk in single location retail businesses -- what if the housing project next to the laundromat gets bulldozed and relocated etc.), but also small enough that a single person could acquire it with some outside investors.
Not a side venture though, most of these require full time commitment.
I'm starting to realize that a lot of people who commented already are either talking about old-fashioned and asset-intensive businesses or the extreme opposite (software).People are killing it today by literally sourcing products from China or some factory in the US, private-labeling them and selling them online. I can name so many F&B and health and beauty brands that killed it by simply having good marketing strategies (Magicspoon, Gymshark, LiquidDeath, RXBAR, Athletic Green's, Dr. Squatch and the list goes on).Before anyone mentions this, obviously most ventures fail. Just like most applicants don't get that banking job. It's how the world works.
Honestly the 1st day free of my corporate job after being on someone else's schedule for over 20 years (school, work) felt like Braveheart freedom. It was so sweet. I could do ANYTHING I wanted all day every day. Literally the best feeling in the world.
What did you do? I too would like to break free from the bondage of committing myself to giving the Man full control of 60% of my life. While I toil away under the clock they come in when they please and don't ask anyone permission to make appointments. They can take that 9am muay thai class while I sit at my cubicle staring at a screen making them money. What good is money when there is no life to spend it on?
I started a design company. Financial design for businesses and modern art design (abstract large scale art).
I grew up poor. So, I always think. Would i pay for that? And 95% of the time my answer is nah.
Sir, this thread is about Entrepreneurism.
OP was asking what's stopping me from starting my own business. My response is appropriate.
I have ideas but then I assume there's no market. Or, that it's too small. I thought of Huel but I wondered who the fuck would pay for that.
I have an idea for something else. A few other things but I don't have the $$$ or know how, or maybe I'm over-estimating the know how. Perhaps good execution would work...
e-commerce store? do you mean selling stuff on amazon? what are you planning to sell? amazon has everything with a lot of established sellers. if you start reselling some random shit, you 1) won't attract customers because you don't have a track record, 2) nobody will discover you, cause all sales will be directed at larger sellers, 3) you won't be able to make money cause you don't have the economy of scale established competitors have.
build a product? lol. if it was that simple. you would need to dedicate like 5+ years learning coding full-time, given you have the talent and persistence. after that you need an idea. what kind of product doesn't yet exist that will fill some demand? then you'd need to find your way to the market. there are a lot of great product that are never discovered by anybody. overall, you'd need to dedicate your life to learning and working on something that nobody will discover with 99% probability.
and you want to give away your $300k+ paychecks that you get for nothing (talking to people) to do above? yeah, sure kid, go ahead.
If everyone thought this way, people would stop building companies and products. Again, you don't have to build the next innovative product to have a successful company. I gave several examples previously of companies who sold pretty simple products but either had great customer service or excellent branding. Think of Chewy for example, they're literally the Amazon for pet products and they made it big.
We can both obviously name 5-7+ ride sharing companies that copied the Uber/Lyft model and still made it big. They didn't invent a product that has never been discovered before.
You also don't to spend 5+ years coding full-time, this is why co-founders exist. Again, we can both name a shit ton of companies where the CEO wasn't the person behind the code. That's pretty normal.
Dont even need to think as big as Chewy
You can generate inbound leads on social media platforms, cross collaborations, advertising, Etsy, Amazon, etc. A lot of this can be done pretty low risk and low cost until you have a market for your product and then you can iterate from there. Don't get me wrong it's not easy, I certainly havent accomplished anything personally in this space, but posts like the above deserve a pile of monkey shit for just being outright uninformed.
Guy was way too product and idea focused. You need to be execution focused. The right person can make and scale a business selling coffee cups. The wrong person can have a perfect idea and go nowhere with it.
people who don't have a chance to make it in corporate will be trying their luck in starting companies. let's say you didn't go to college or went to bad college or partied in college and didn't graduate or graduated with 2.0 GPA, now you don't have a chance for good life through corporate jobs. so all you can do is try to create some business. and for every top school grad with 3.5+ GPA, there are hundreds of people like that. so of course there will be people starting companies.
but if you are one of these lucky people who ended up in IB/Consulting, then it makes zero sense to leave it behind just so you can start from the level of people with no degrees and no opportunities.
There are literally thousands of successful ecommerce businesses that dont build anything 'new'.
Branding is 90% of it. You can make 200k+ making flipping dog bandanas and dog leashes if you know what you're doing. Potential is huge and you just need a very tiny slice of the pie. The above doesnt involve building code, or getting a patent for a new product. Unable to generate demand? Give me a break dude what a defeatest mentality. There are brands that dont exist being made today that will be worth 7 figures by 2023 and 2024
there are already successful established companies selling dog bandanas and leashes on amazon - how are you gonna take market from them? theoretically it's possible, but I just can't imagine it being realistic.
lol at talking about trying to start a business and cash out at 8 or even 9 figures.
If you have the entreprenuer gene then you'd be happy with your own business that has a run rate of 50-100k a year.
Forget about starting a business. Think about buying a business and trying to grow revenues or increase profitability. You’d be starting out with existing clients/customers instead of starting at revenues of $0 and no customers. There are a ton of businesses owned by baby boomers that will need to be sold or either shut down. There’s going to be a ton of opportunity in the next 5-10 years for those that are willing to look for it and seize it.
It’s not that easy. I’ve had friends go down the search fund/ETA route. Take a look at the Stanford Search Fund Study, roughly one third of searches do not acquire a business. These are people who went out and raised capital and subsequently looked full time. Many good businesses are also in geographically undesired areas, how many people on here are on being two or more hours from a tier two city e.g. Kansas City or Raleigh?
Sure, it’s not that easy, but it’s not impossible. What are the parameters for the search? I’m not talking about $10-20M businesses, I’m talking about $2M or less. The kind of businesses that can be bought for 2-3x yearly cash flows with some possible owner financing as well. Check out bizbuysell.com. I’m willing to bet there are plenty of these businesses within 20 miles of you.
I’m also surprised to see that no one is discussing perhaps the most obvious avenue of entrepreneurship. Striking out on your own, you don’t need a brilliant idea imagine just doing business brokerage marginally better than the usual schlocky folks that inhabit that realm. There are very few people doing business brokerage with an ex investment banking pedigree, it seems almost universally to be entrepreneurs who successfully exited. I would venture this is some of the most common type of entrepreneurship learn a profession or trade and eventually go out on your own.
Everyone that I know that started a successful software startup went to an ivy league school/Stanford. And I know many people that tried. Harvard/Stanford grads can raise money from VCs much easier than regular people. It's literally the same racket as finance hiring, where they only want top grads. Go to top school, work a few years, raise seed -> hire -> raise series A.
Entreprenuership =/= software start up.
Sure if you want to scale a business to 100M+ that's the best approach, and that requires pedigree, a real team, network for funding, etc. But vast majority of successful entreprenuers dont fit that bill
I'm just saying, VC style startups have nearly the same entry requirements as top hedge funds. Unless you already have traction and users/are a real business already.
This thread is unbelievable. You don't need to make the next gymshark, chewy, or some 100mm ARR Venture-backed saas company. I guarantee you the owners of the tanning salon and firehouse subs in the TJ Maxx strip mall of your 10,000 population childhood hometown make more than 95% of people in finance ever will. Literally just open any small business that isn't stupid
100% people on here are so ignorant sometimes. They think they need to invent the next iPhone. Plenty of plumbers, electricians, tree removal service owners and fast food franchisees making more than them.
The wealthiest (outside of a few ceos) that I grew up with owned mortgage brokerages, RIAs, insurance agencies and construction companies. None of them had Ivy backgrounds but many made more than most MDs and had the option to exit and retire whenever they wanted.
Completely agree with this. I’ve personally known a few people who own/ owned residential construction firms and made mind boggling money. One person who owned a ton of sandwich shops who is quite wealthy. The only billionaire I’ve had a real conversation with made his wealth from a food product.
There’s lots of micro SaaS companies around generating tons of money. If you (or someone you trust) knows how to code and sell/ market (or some combo of that), it’s ridiculously easy to pump out ideas. Working on a quick idea right now, also ideating on additional ideas.
Just use Clerky for your legal set up and open a business bank account and you’re golden. Your CapEx is almost 0 and OpEx can be a couple grand at the outset then maybe a hundred bucks a month in AWS bills until you scale up. The goal, with B2B at least, is your scale is built by paying customers so you’re not burning cash that you aren’t getting in revenue.
AWS doesn’t care about pedigree or experience. They’ll take your money regardless. Customers dgaf either. Just execute.
It's because most on this site either are in college still or are like 1-3 years into a banking stint and lack real world experience. Nose to the ground so much in life to focus on grades -> internship -> great job -> MBA, etc. that they dont even interact with the real world and are shocked to learn that you wont ever get truly rich working for someone else outside a small handful of careers.
Not that wealth should be main motivation of being an entreprenuer. But funny to see all these wannabe hot shots when someone owning 4 to 6 McDonald franchises in Columbus Ohio make more than they likely ever will
I intend on starting my own within the next year. I’ve only been working in finance to essentially gain some real world skills before attempting the leap. My thought process is to attempt entrepreneurship now before my career grinds all the ambition out of me. I intend on taking a slightly different approach than starting from scratch though.
I am working on building an app from scratch, but then to sustain myself until that either fails or takes off, I plan on acquiring a smaller company that can be fairly autonomous and cash flows well. There are tons of sites out there that have lots of options for acquiring out there. My logic behind this is essentially the same as you. If I don’t try it now, I’m not sure if I ever will. I also assume that given our career field, in general we tend to be either equally as intelligent or more intelligent than a lot of Business owners out there, and if they can make it work, why can’t we?
Do you have q technical background or are you learning app development from the ground up?
It's a cool dream, I don't have one. I make videos in TikTok and earn money from it.
How many followers do you have?
The average entrepreneur only makes $60k/year. You're better off buying businesses that cash flow, then rinse and repeat. You'd still be a business owner and you'd still be your own boss.
I already have my own business but most pro would tell you on average it takes about ten years to make huge profits. In my case it takes time to bring that in, so I still need income from my day job but believe me i am counting the days.
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