Currently an associate making $265K all in doing PE in SF. Any side hustles I could do to boost that up? Weekends are free and I have money to invest in the hustle if it makes sense.
Thought about becoming one of these finance influencers (youtube, tiktok, blogs etc.) but not sure that can actually make real $ and comes with reputational risk (cringey).
Let me know
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Work in PE as well. I do woodworking as a side hustle. I enjoy it as a hobby so it’s good that I am able to invest in something that is also enjoyable for myself. Make anything from tables, cabinets and cutting boards. Good money if you find the right market.
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Franchising
How does one get into that? Especially with no / little spare time to actually oversee it / get involved in it?
Can always be the financial buyer of a franchise and hire a lead manager who you can give some % of the business to. I'm a huge fan of franchising. Would stay away from restaurant franchising though (low returns, 0 autonomy, very hands on, etc.)
I work in PE (about to make jump to VP level) but have been thinking about this as well. In spare time I look at small companies through regional brokers that I could potentially buy and operate. With an SBA loan you put as little as 5% down for a company that has cash flow of $500k-$1mm. Plenty enough to pay yourself and can buy some of these businesses as 2-4x cash flow. Lots of upside potential and have the ability to pay yourself a lot more if you’re willing to take the risk. Alternatively you could buy a company and find/install a manager to run it for you.
What kind of businesses are you looking at? The business I see from brokers are all restaurants, franchise, home improvement, catering, etc. All of which seems really high touch without scale (you can’t really afford to hire a manager with only one Jimmy John’s franchise for example). I guess all I need is scale.
Exactly the point. Hard to maintain growth/improving a company while being hands off with a full-time PE gig.
Fairly uncommon for senior PE guys to leave and buy these small businesses as sort of like a retirement from high finance but I'm sure it happens.
Would echo the above comments about this being difficult for someone in a full time PE position, but there's a really great podcast called "Think Like an Owner" you should check out. A recent episode covers someone making the transition from NY PE to small business owner, and there's a ton of practical knowledge to be gained there. Would definitely recommend for you to either decide whether going that route for your side hustle is feasible/something you'd enjoy or just to learn more in case you do decide to buy a small business.
Much easier said than done. Know someone at the VP/Principal level whose tried this and ended up deciding against buying out a small business. Operating even a small business isn't as easy as it may sound with a plug-in manager.
No one is suggesting it’s easy, but it’s a good use of your existing skill set, and can be done part time if you find the right manager.
i'm reading HBR guide to buying a small business atm, would definitely recommend it, I can send you the pdf. I'm also looking at franchises, going to a franchise exhibition this weekend.
Would be interested as well - can you PM me?
I looked into SBA loans, e.g. 7A I think its up to $5/7M. I think it has to be personally garuanteed as well, any idea if that is true? For the 5% down, are you certain about that? What’s avg rate and terms?
Lots of small franchises e.g. dunkin can be bought for $600K and generate ~$200K EBIT a year. If you could finance that with 5% down then you’d only be putting down $30K and assuming 5 yr loan term, you’d literally make your money back in a year and more. Seems to easy, let me know details
There are PGs on SBA loans
theres a franchise fee and min net worth requirements for Dunkin in the US. I like the pizza franchises personally.
How do you have the time to run the business while working full time? Hired a dedicated manager?
Yes- hire a manager and give him a couple points of equity, with bonus potential on growth targets
How much equity are we talking about? I honestly don’t know how much it’ll take to get someone motivated.
Would be a great structure if it worked. What kind of experience would you look for in the manager?
Acquisition structure very similar to a search fund. Has to be personally gtee'd
I think some of you are very optimistic about how easy it is to find a good manager. Small business hiring is much more difficult in a lot of ways. It gets easier ~$15m - $20m top line mark for most businesses, but below that and I think being hands off is largely unrealistic.
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