How much can you make realistically in entrepreneurship?

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How much can you make realistically in entrepreneurship?

Like what sort of size business, what industries (revenues, no. of employees) to make a certain amount?

Stories welcome....

Comments (55)

Jul 19, 2018

..

Jul 19, 2018

I was thinking more businesses that arent famous and never will be. For instance having 5 small restaurants.

Jul 19, 2018

6 figures I would say - there are guys online saying you can make 6 figures a year from your laptop writing a few e-mails or managing a business's social media.

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Jul 19, 2018

You can also realistically make 0. :)

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Jul 19, 2018

You could actually make in the negatives as well

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Jul 19, 2018

According to indeed, the average entrepreneur pays themselves roughly $58,000. Some people weren't meant to work for themselves. Roughly 75% of millionaires own their own business and I don't know the statistics for self-made billionaires but I'd have to think that all are self-employed to a certain extent. You can only become so rich working for someone else. If you go off on your own, you are in control of making as much as you want.

Most Helpful
Jul 19, 2018

it depends on the specific industry. A while back, I was in commercial banking and had some lower revenue Clients, this is what I can recall:

  • Industrial Firms with $10-15M rev, I've seen Owners' make $500K+ pretty regularly all-in. In most cases if the business has $5-7MM Rev, the Owner is usually making at least $200K, usually closer to $300K from what I've seen.
  • I've also seen professional recruiting firms where there's maybe $3-5MM rev and there's multiple people making $500M+. This is pretty common for any professional service such as engineering consulting, etc. High margins and very low costs.
  • Low margin businesses like trucking, Owners' are usually making $300-400k with $12-15MM rev. depending on how well the Company's run.
  • You'd also be surprised with how much restaurant Owners' can make, especially when they founded their own chain and have 3-10 locations. On the low end they're making $150-200k, on the high end I've seen two owners' of 8 ice cream locations make consistently $800K - $1MM a year, or $1.6MM-$2MM profit for the entire business on about $10MM in rev.
  • I've also seen a commercial snow plow company with I believe $10MM rev or so with the Owner bringing in $800k+
  • I've seen a promotional products company with ~$7MM rev where the Owner is making $500K+

I'm from the rust belt so I couldn't give you figures for tech related companies

In short, these modestly successful blue collar type business Owner's can make a lot more than most professionals..... you really need to make it to the Exec level in most cases to surpass these business owner's income. Important to note that they also tend to live in VERY low COL cities where $500-750K buys you a mini mansion with 4,000-5000 sq ft

It's a good life

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Jul 19, 2018

I just got me a shitty little ecommerce business and making like 300K a year now on 600K revenue. Life's good.

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Jul 19, 2018

Can you elaborate? I'm in university and really considering starting an online sales company

Jul 19, 2018

That is indeed the life my man

Jul 23, 2018

How do you compete with Amazon?

Jul 21, 2018

I assume these are just the salaries they pay themselves or distributions they dividend to themselves. A good life indeed. These guys / gals also own the majority of the equity in their business. If the opportunity comes to sell, an EBITDA multiple of anywhere from 4x to 10x depending on the industry and business profile could leave them with a nice lump sum after many years of hard work.

The chief benefit of being a well paid owner vs a well paid employee is that you can sell your business (or hire someone to run it), but you can't sell your job.

Jul 19, 2018

Yeah those general numbers include salary plus distributions. Most don't take over a 100-200k salary, a majority of their earnings are distributions.

from what I've seen, most of these types of businesses won't go more than 4-5x EBITDA. Nevertheless, still great. You won't see much PE in companies will less than $1MM EBITDA and I think normally 2-3mm+ is the sweet spot where they get more looks

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Jul 23, 2018
BBDreamin:

* I've also seen a commercial snow plow company with I believe $10MM rev or so with the Owner bringing in $800k+

FTW if he doesn't work summers and it's purely snow removal generating the 10

Jul 19, 2018

Forgot to mention - commercial roofing contractor with revenue of $20MM a year, Owner makes ~$2.5MM a year all-in

Jul 21, 2018

loser mindset

heister:

Look at all these wannabe richies hating on an expensive salad.

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Aug 9, 2018

Don't have a great idea, don't want to drop the start up capital, extremely high risk, there are a lot of reasons to start a company and many more reasons not to

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Aug 9, 2018

The idea's the big one among people I know. You might have the money and whatnot, but unless you have something you actually want to do it's a non-option.

Aug 9, 2018

Execution takes primacy over the idea, imo.

I win here, I win there...

Aug 9, 2018
I Am Batman:

Execution takes primacy over the idea, imo.

I don't care how you execute the Waterproof Towel, the shit isn't going to sell...

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Aug 9, 2018
I Am Batman:

Execution takes primacy over the idea, imo.

True. But with absolutely no idea, there's nothing to execute.

Aug 9, 2018

But the amount of money varies depending on the business. A manufacturing business may require much more start up $$ than an online site.
I found this very interesting:
http://www.wallstreetoasis.com/forums/article-abou...

Jul 21, 2018

I'm 25 and will net out $1M+ personally this year. I've also been working 80 - 100 hours since I was 18 though. YMMV.

It's a slow burn but once you get the fire going things can get really good really really fast.

Jul 21, 2018

What's your business?

Jul 21, 2018

Diversified D2C brands and eCommerce retailers. Most of my cash comes from the former. My main business runs @ 35%+ EBITDA margins which is glorious.

Funniest
Jul 23, 2018
LaNoob:

How much can you make realistically in entrepreneurship?

Like what sort of size business, what industries (revenues, no. of employees) to make a certain amount?

Stories welcome....

There was a guy named Jeff who wanted to sell books online. He's now worth $140B.

Jul 23, 2018
TechBanking:
LaNoob:

How much can you make realistically in entrepreneurship?

Like what sort of size business, what industries (revenues, no. of employees) to make a certain amount?

Stories welcome....

There was a guy named Jeff who wanted to sell books online. He's now worth $140B.

Definitely best answer here.

Trying to answer what realistic earnings are for an entrepreneur is the same as asking how much you can make from trading with your own money. You could be the guy under the bridge that guessed wrong and now you are broke or you could be the billionaire who can buy anything his heart desires. It all comes down to a good idea and great execution, if you can get those 2 together then you probably will have at least a somewhat successful business.

As for those giving out specifics, in my opinion the most valuable part of owning a business is the ability to run expenses through it - nothing like good pretax income.

Jul 24, 2018
bl00211:

As for those giving out specifics, in my opinion the most valuable part of owning a business is the ability to run expenses through it - nothing like good pretax income.

I'd say the best part about owning a business is being able to do whatever you want, whenever you want, however you want.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Jul 23, 2018

I think this is a hard question to answer, but in my experience, most business owners are making somewhere in the 6 figure range, which I know is broad.

Something to throw in here is that the hardest part is getting any business going and on solid footing. It doesn't matter if it's a restaurant or a trucking company. Once you have experience and a few years of decent financials, you have access to capital and a network. From there I would say, your income potential is almost unlimited. The question becomes how hard do you want to work, are you able to take that "next step" (i.e. moving from the chef and GM of your restaurant, to learning to delegate so that you can open multiple locations), and are you willing to take the risk.

I think the majority of small businesses stop once their initial idea becomes successful in whatever terms that means to them. And there is absolutely nothing wrong with that.

Actually, now that I think about it, that's where I am in my practice (independent PWM). I am completely happy financially and my schedule is spectacular. I share an assistant and office space with another FA who is in a similar spot and mindset. I have enough brand presence, leads, and a system in place that I could probably launch 3 new FAs and darn near guarantee them success (and make more money for myself). Ken Fisher would. Ric Edelman would. I'm just not that guy.

Food for thought.

+1 SB for the "guy named Jeff that wanted to sell books online." I laughed!

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Jul 24, 2018
wrapfee:

I think this is a hard question to answer, but in my experience, most business owners are making somewhere in the 6 figure range, which I know is broad.

Yes, but not exactly.

Most SUCCESSFUL business owners are making that.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Jul 23, 2018

Depends on how you run your company, I've only seen three types of situations where an entrepreneur/owner makes a shit ton of money.

  1. You run your expenses through the company (CEO buys "company car")/ pay yourself an above market salary
  2. Unwarranted Dividends
  3. The company gets bought out
Jul 23, 2018

I would say think about two things when starting a business:

1.) What do you want to do/sell (ultimately, what will be your margins)
2.) Can you legitimately run a business

The first is all about how much turnover you need and the second is all in your ability to do the backend things. I think of lot of small businesses/entrepreneurs fail because they have an idea, and are maybe good at one or two elements of business, but can't tie everything together.

For example, if you watch "The Profit" on CNBC, there's an episode where Marcus works with a guy who designs T-shirts and sells them out his shop. I'm sure the guys passion was design first, then marketing. Probably down the list where things like pricing, inventory management or budgeting. So they didn't really get done.

To be successful, you have to at least be competent to figure that stuff out.

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