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Start business or keep working for the man? 30yo
Old 01-30-2014, 02:14 AM   #1
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Start business or keep working for the man? 30yo

Hi everyone,

First time posting but I've been reading for months. Thanks for the insane amount of advice, I've learned way more than I thought I would! Also I only have 1 friend I can talk to about money so this forum helps.

I'm a pharmacy manager, having a quarter life crisis and debating buying my own pharmacy or finishing out working at my current job. My current job is not bad - easy, good schedule and vacation time, but the salary is low for a pharmacist (nonprofit, private would be ~10-15k more). And due to megacorp (nonprofcorp?) bureaucracy I can't run the pharmacy as well as I'd like.

I have an option to buy a local pharmacy. Pharmacies are not cheap. It would require a loan of approx 750k. Down payment of 10% which I will have by the end of the year. But the potential is big - plus a potential passive income for FIRE.

I have strong experience so not too worried about it succeeding. Pharmacies have a high success rate in general. But philosophically is the reward worth the risk and long hours/stress, being tied down, or would it be better to work at the current job and spend my time enjoying life? Anyone do something similar? Or should I be focusing on something entirely different? Any advice is helpful and welcome.


My goal is to reach FI when I'm 44 and house gets paid off. No DW, no kids yet but both those may be happening soon. And I switched to a trad 401k last week and will max it out this year.



Me: 113k/yr
saving ~50k/year
spending: 36k/year

Assets:
50k roth 401k
30k vanguard (65% stock, 35% bonds)

Debts:
18k student loans (2.1% variable)
172k left on 220k house (1 year in a 15yr 2.625%)
no credit card or car debt
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Old 01-30-2014, 05:13 AM   #2
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Hi Taste,

Here is a list of pros & cons of starting your own business:
The Pros and Cons of Owning Your Own Business

Good luck in whatever you decide!
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Old 01-30-2014, 06:29 AM   #3
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I am now 54. I left a large firm and opened my own business 25 years ago. Financially it turned out to be a wonderful decision. I am not in your field. However, I don't have to tell you that your field is dominated by Walgreens, CVS and Rite-Aid. Not to mention that every large supermarket now also has a pharmacy. Everyone still loves their local non-affiliated pharmacy if one exists. However before making such a large investment (and signing personally on Bank loans and leases) you must consider the risk of a big chain opening up in close proximity to your store. As many have found, it will be difficult to compete. Is it possible that the chain could buy your store--possibly if the site were large enough and the traffic count acceptable. Owning your own business can be very lucrative, however, go in with your eyes wide open.
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Old 01-30-2014, 07:25 AM   #4
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Look ahead to your own industry and decide if big business will rule. In my health care they are cutting co pays if you buy generic, use mail order and buy from certain chain stores.
On the other hand, the chain stores are very competitive for my business.......you know the potential future better than anyone on this blog. I'm retiring from owning my own business. 20 years ago it was all individual owners, today, many of my competitors are being bought up by the big guys. The big guys can negotiate better purchasing, advertising costs and provide better employee benefits. But........each industry, each retail field has their own challenges and opportunities. Be prepared to work hard, file a number of government reports, the paper work is huge for most small business owners.

Now that I've pointed out the negatives let me tell the positives as well. I live in a beautiful home, have a slug of retirement cash, can afford anything most middle class people would want, and am the envy of family members that worked for the big companies. I worked hard and was very, very lucky. And, I'd do it again.......but I'd look closely before I chose what business to buy or start. You know the drugstore business......we don't......good luck!
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Old 01-30-2014, 09:19 AM   #5
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Originally Posted by phil1ben View Post
I am now 54. I left a large firm and opened my own business 25 years ago. Financially it turned out to be a wonderful decision. I am not in your field. However, I don't have to tell you that your field is dominated by Walgreens, CVS and Rite-Aid. Not to mention that every large supermarket now also has a pharmacy.
I have to say that I would hesitate with regards to owning an independent pharmacy. It seems to me that this field is changing so rapidly that it would be very hard to compete.
Personally the things I look for in a pharmacy all favor the big chains. The pharmacy must have a drive through. After being spoiled with the iPhone app that my big chain pharmacy has I wouldn't even consider switching to another pharmacy that did not have something similar. It is just so convenient to refill prescriptions without have to make a phone call. If there is an emergency, I can get a refill or new prescription filled at a store in the same chain that is open 24 hours. I don't have to worry about the "morals" of an individual pharmacist preventing them from filling a prescription I want.
I really think that people will demanding these features.
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Old 01-30-2014, 09:47 AM   #6
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. However, I don't have to tell you that your field is dominated by Walgreens, CVS and Rite-Aid. Not to mention that every large supermarket now also has a pharmacy. Owning your own business can be very lucrative, however, go in with your eyes wide open.
+1

I would stick to the current plan. Good salary, good savings rate.
Maybe start another related job on the side.
It could be a temp service that provides some service all these shops need. Could be contract people, certain supplies, services. Most towns have one corner with at least 2 of the above mentioned.
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Old 01-30-2014, 10:07 AM   #7
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I suggest reading the Millionaire Mind by Thomas Stanley. One of the key ingredients common to success for most small business owners was to have a low competition business. Thomas Stanley himself said that his first love was writing history but he didn't go into that as the field was too crowded. So he wrote about how people became millionaires, as at the time it was an uncrowded field.

The pharmacy business is all moving to corporate owned. Where smaller companies might still have a chance might be something less mainstream, like supplements or herbs. Personally I'd go with something niche, not in a corporate dominated space, and online for low overhead.

I would consider sticking with the good job for now, work up a side business, save all those profits, and then leave the secure job when you can live off the investment income from the side job profits or the side job income, or a combination of the two. If you can keep a day job with a pension all the better. Then you will eventually have the pension income in addition to the portfolio and side income.
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Old 01-30-2014, 11:53 AM   #8
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DW went into retail business when I had health issues from work when we were in late 30s. Money was good but the work was driving her crazy, and it reduced her face time with DS & me. After 8 years of running the business, we called it quit b/c the money wasn't worth the stress, and I didn't want my DS to grow up wondering where's his mom most of the time. Had we continued with the business, we would have retired by now. But at what cost? My wife never worked an hour since then but we don't regret it.
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Old 01-30-2014, 12:19 PM   #9
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Quote:
Originally Posted by Taste View Post
Hi everyone,

First time posting but I've been reading for months. Thanks for the insane amount of advice, I've learned way more than I thought I would! Also I only have 1 friend I can talk to about money so this forum helps.

I'm a pharmacy manager, having a quarter life crisis and debating buying my own pharmacy or finishing out working at my current job. My current job is not bad - easy, good schedule and vacation time, but the salary is low for a pharmacist (nonprofit, private would be ~10-15k more). And due to megacorp (nonprofcorp?) bureaucracy I can't run the pharmacy as well as I'd like.

I have an option to buy a local pharmacy. Pharmacies are not cheap. It would require a loan of approx 750k. Down payment of 10% which I will have by the end of the year. But the potential is big - plus a potential passive income for FIRE.

I have strong experience so not too worried about it succeeding. Pharmacies have a high success rate in general. But philosophically is the reward worth the risk and long hours/stress, being tied down, or would it be better to work at the current job and spend my time enjoying life? Anyone do something similar? Or should I be focusing on something entirely different? Any advice is helpful and welcome.


My goal is to reach FI when I'm 44 and house gets paid off. No DW, no kids yet but both those may be happening soon. And I switched to a trad 401k last week and will max it out this year.



Me: 113k/yr
saving ~50k/year
spending: 36k/year

Assets:
50k roth 401k
30k vanguard (65% stock, 35% bonds)

Debts:
18k student loans (2.1% variable)
172k left on 220k house (1 year in a 15yr 2.625%)
no credit card or car debt
Someone who is on this board at a pretty early age is serving notice that he wants a good, relatively easy life and a strong chance at an early out. This is pretty much what you now have. I can't think of another career that pays that kind of money, and makes fewer hard demands or involves less risk than being an employee pharmacist. To take on a lot of debt and an unknown amount of risk in this situation seems not wise.

Ha
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Old 01-30-2014, 12:26 PM   #10
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First, I agree with others that an independent pharmacy sounds like a big risk at this time. But you know this business better than we do. But, are you sure?

Second...

Quote:
Originally Posted by Taste View Post
.... My current job is not bad - easy, good schedule and vacation time, but the salary is low for a pharmacist (nonprofit, private would be ~10-15k more). And due to megacorp (nonprofcorp?) bureaucracy I can't run the pharmacy as well as I'd like. ....
Looking at the positives, I'd guess there's a pretty small minority of people who would describe their current job as 'not bad - easy, good schedule and vacation time'. That's a heck of a lot better than having a lousy schedule, lots of 'on call' time, off ours conference calls, vacations cancelled for emergency projects (fire drills), etc.

I'd say every business/agency has bureaucracy, and starting your own business may just expose you to more of it (that you are isolated from now).

Personal choice of course, but at $113K with an 'easy, good schedule', I wouldn't be too jealous of someone making $10-$15K more if it likely means a trade off some of those conditions. If the shoe was on the other foot, I'd probably be glad to give up $10-$15K in exchange for my free time and flexibility. An ~ 10% salary delta is not as big a deal life-style wise at $113K as it would be at more modest salary.

I'd think long and hard about a change at this time, and maybe learn to appreciate what you have (sorry if that sounds preachy, don't mean it to be, but I think you may have that 'grass is greener' syndrome we all have from time to time).

BTW, my son is currently starting his second year of a residency at a highly regarded teaching hospital after earning his PharmD. Not sure yet what he will be doing long term in the field.

-ERD50
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Old 01-30-2014, 12:28 PM   #11
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Originally Posted by haha View Post
Someone who is on this board at a pretty early age is serving notice that he wants a good, relatively easy life and a strong chance at an early out. This is pretty much what you now have. I can't think of another career that pays that kind of money, and makes fewer hard demands or involves less risk than being an employee pharmacist. To take on a lot of debt and an unknown amount of risk in this situation seems not wise.

Ha
+1. The debt part is what scares me the most about all of this.

More to the point, if you continue on your present track will you meet your ER goal? What does firecalc or the tool of your choice say your odds are?
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Old 01-30-2014, 12:32 PM   #12
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Originally Posted by haha View Post
Someone who is on this board at a pretty early age is serving notice that he wants a good, relatively easy life and a strong chance at an early out. This is pretty much what you now have. I can't think of another career that pays that kind of money, and makes fewer hard demands or involves less risk than being an employee pharmacist. To take on a lot of debt and an unknown amount of risk in this situation seems not wise.

Ha
I cross-posted with this, so I'll add my agreement.

It's also worth noting that while retail Pharmacists make a very good buck, they can get absolutely terrible schedules. Weekends, nights, holidays, and if the big chain tells you you need to fill in at some store with a high crime rate, in the middle of gang turf fights, well, I don't think you have much choice. Personally, I just can't see doing that after putting in the time, effort, and brain power to earn an advanced degree.

I'm hoping my son can land a safe and sane hospital or research position, and this residency should lead to that. He was ready to go retail, and I just couldn't understand that - but it's his (and his wife's) life.

-ERD50
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Old 01-30-2014, 12:46 PM   #13
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If you decide not to buy the pharmacy, then perhaps your best bet would be to change jobs and get paid what you are worth and save like mad.
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Old 01-30-2014, 03:24 PM   #14
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Wow, thanks everyone. Didn't expect this many replies so quickly

Yes if I continue my current course I will be able to FIRE at 44. I did the math a month ago, factoring in some additional things and firecalc was 97%.

I feel very fortunate where I am with a high salary job. I earn almost double what my parents combined made, they are frugal and recently ER'd at 60 and 61 (if that qualifies as ER). I also understand I've had some luck to be where I am too. However I'm not sure if comparing myself to others situations is a good reason to not take a potential opportunity, especially if it would allow me to ER earlier.

I'm definitely having some sort of quarter life crisis... the thought of doing the same thing for 14 more years is kinda depressing. I'm not complaining, I know a lot of people have it much worse than i do. But it's still depressing.

daylate thanks for that tip. I like the idea of putting in a couple more years here before branching out. Maybe a better opportunity will come along too. Plus I become fully vested in mid 2015 so more reason to stay

Erd50 good luck to your son. 2nd year residency will land him a really good spot. You are right, most pharmacy jobs are pretty bad the only good thing is the money. But he will be able to specialize and have a lot more leverage.
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Old 01-30-2014, 04:51 PM   #15
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Just a couple thoughts...I recently just had a niece and cousin start their pharmacy careers. I think it's definitely a great field to go into but I certainly wouldn't call it easy or low-stress. Congrats on landing a great job and I wish you much fun in watching your salary rise! . My niece is working in a hospital setting and my cuz is working a retail store. Both settings have pros and cons. Not for the faint of heart, that's for sure!

My DH and I owned both a hardware store and funeral home in small town Minnesota. We sold the hardware store about 5 years ago and the funeral home about 2 years ago. My DH owned and operated both as I work in a different field. The money was awesome and my DH was so proud to serve his community by being an honest and caring business owner. However, at what cost? Our kids were growing up without having a father around. I worked part-time before all the kids were in school but then went full- time when the youngest started kindergarten. Life became pretty stressful at that point and we knew we had to make a change, so we sold. No regrets now.

Good luck in whatever you decide to do!
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Old 01-30-2014, 05:09 PM   #16
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the thought of doing the same thing for 14 more years is kinda depressing. I'm not complaining, I know a lot of people have it much worse than i do. But it's still depressing.
You mentioned earlier that marriage and children may be in the near future. If that is the case you may find that those become more central to who you are than the gig. I am 41. I remember life before I got married and had kids. Its different now. That is not an endorsement to take that path just to take a different path. You gotta make sure the wife part of the equation is the right choice.
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Old 02-01-2014, 04:45 PM   #17
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Thanks everyone for the honest feedback. Its given me a lot to think about.

I'm think I'll take it easy for now and maybe look at buying a business in a couple years.
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Old 02-01-2014, 04:56 PM   #18
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Thanks everyone for the honest feedback. Its given me a lot to think about.

I'm think I'll take it easy for now and maybe look at buying a business in a couple years.

Just some food for thought, but I usually hear of more people getting rich by building a business and then selling it rather than the other way around. There are many businesses you can start with just sweat equity.
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Option #3
Old 02-01-2014, 07:05 PM   #19
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Option #3

Since lifestyle is important to you, check out Medical Science Liaison jobs with the pharma industry. You need a "D" degree which you have and the salaries are very good. Salaries start around 120k and can be up to 200k with several years of experience and a job jump or two. The autonomy is fabulous: work from your home office, make your own schedule/appts and get either a car or car reimbursement. Great work life balance.
They can be challenging to break into but once you do, jobs are aplenty.
PM me if you want more details.
PF
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Old 02-01-2014, 07:41 PM   #20
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I am risk adverse, so I agree with the majority of people posting here. I would stay in your current job and not take on such financial risk. I know that when you are young, it seems like forever until you are 44. Believe me, time will start to go so quickly, that you will wonder where the time has gone. Congrats, for being so young and having such a good job!
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