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Own business as vehicle for ER
Old 08-27-2007, 01:48 PM   #1
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Own business as vehicle for ER

Am I right in saying that having your own business is the quickest way to Early Retirement. I am 37 and have had a business for several years now which is starting to run on its own. Although my net worth is technically along way off from being able to support me in ER, my business should soon be more than capable of supporting me if I decide to stop working. I would think that the most important thing you could do is to try and start your own business which does not need you by the time you retire, this way you get a full income as opposed to a payout/income from some retirement fund. Also, I have the philsophy that if you work for someone, then they must be profiting out of you or it would not make business sense to hire you. I would think it is more of a risk to leave your life in somebody else's/corporates hands than to invest in yourself and at least have the possibility of acheiving your full profit potential which is not going to happen as an employee. Does anyone else agree with me on this one?
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Old 08-27-2007, 02:00 PM   #2
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I agree with you, except you need to make sure you are good at what you do to succeed and you need to be persistent.

Also, you still need to be able to LBYM and not necessarily increase your spending budget just because you keep earning more and more. This is probably the most stupid mistake people make as they see their yearly income go up whether you work for yourself or not.
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Old 08-27-2007, 02:53 PM   #3
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Also, you still need to be able to LBYM and not necessarily increase your spending budget just because you keep earning more and more. This is probably the most stupid mistake people make as they see their yearly income go up whether you work for yourself or not.
And that is a PEARL OF WISDOM in my opinion. Other than owning my own home, I am still living "like a student". I don't feel deprived because my spending is constant.

I don't know anything about running a business, though Frank (my SO) wants to do that after ER. He is thinking about buying and operating a laundromat.
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Old 08-27-2007, 03:02 PM   #4
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Old 08-27-2007, 05:14 PM   #5
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I just turned 30, and am just waiting on training for the buyers of my business. I am FI without the sale, but no way in hell I would "retire" and still own the business. My sales would plummet without me there, employee theft, employee quiting etc etc.

Not only that but you just never know if the next customer is going to walk in and sue you over something stupid.

Being self-employed is a great way to make money, but very very stressful (at least the food business is).

I would run your business for a few years more, save every penny you can, then Sell the business. That way when you retire, you will not spend every moment worrying about the business or if your employees are burning it down or something.
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Old 08-27-2007, 07:22 PM   #6
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Am I right in saying that having your own business is the quickest way to Early Retirement.
Not if you're not good at running a business.

I know this isn't exactly the point of your post, but seriously, I object to blanket statements like that. Running a business is fine if that's what you're driven to do, but there are plenty of people (probably the majority I would say) who have no business (pun intended) running a lemonade stand, let alone their own business. Hence, for those types, it would be a big financial mistake.

Not everyone can be leaders; the world needs worker bees too.
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yes but,
Old 08-28-2007, 11:43 AM   #7
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yes but,

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Not if you're not good at running a business.

I know this isn't exactly the point of your post, but seriously, I object to blanket statements like that. Running a business is fine if that's what you're driven to do, but there are plenty of people (probably the majority I would say) who have no business (pun intended) running a lemonade stand, let alone their own business. Hence, for those types, it would be a big financial mistake.

Not everyone can be leaders; the world needs worker bees too.
The thing is, I am not really a businessman, but I kind of figured it out as it went and although it was bumpy for a year or two it smoothed out as I started to figure it out. I have no financial background and just started reading up on the stuff as I needed it, but as I watch my investments not including my business grow slowly, i see the business is now making those returns look kinda sad and very slow. I read a few people on the forum wondering how they are going to retire on their meagre salaries that are growing slowly and having been there myself, I just thought my experience seems to be that the business is the quickest ticket. The funny thing is my my business has little to do with my career, it just seemed like a decent opportunity. The world does need worker bees, I agree, I figured this forum was more for those trying to get a better deal and exit the mainstream corporate world a bit earlier, and my experience is that it will happen faster if they have full control of their worklife as opposed to leaving it in someone else's hands.
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Good advice
Old 08-28-2007, 11:49 AM   #8
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Good advice

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Originally Posted by Bigritchie View Post
I just turned 30, and am just waiting on training for the buyers of my business. I am FI without the sale, but no way in hell I would "retire" and still own the business. My sales would plummet without me there, employee theft, employee quiting etc etc.

Not only that but you just never know if the next customer is going to walk in and sue you over something stupid.

Being self-employed is a great way to make money, but very very stressful (at least the food business is).

I would run your business for a few years more, save every penny you can, then Sell the business. That way when you retire, you will not spend every moment worrying about the business or if your employees are burning it down or something.
Thanks for the tip, its good to hear from someone who has been down this road before. The only thing is that I am making a very concerted effort to train people so that it runs itself. I am based in South Africa, so law suits are not a problem, its difficult and expensive to sue and the government does not like to hand out big judgements like the states, lawyers drive economy cars here. And what about bringing your kids into the business to keep it going, its popular to do that here. By the way, I used to be in the restaurant business, that is a nightmare!
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Thanks
Old 08-28-2007, 01:51 PM   #9
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Thanks

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I agree with you, except you need to make sure you are good at what you do to succeed and you need to be persistent.

Also, you still need to be able to LBYM and not necessarily increase your spending budget just because you keep earning more and more. This is probably the most stupid mistake people make as they see their yearly income go up whether you work for yourself or not.
Thanks for the tip, I am all for it, now just have to convince the wife that its called living according to your means as opposed to being a cheap you know what
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Old 08-28-2007, 02:53 PM   #10
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The world does need worker bees, I agree, I figured this forum was more for those trying to get a better deal and exit the mainstream corporate world a bit earlier, and my experience is that it will happen faster if they have full control of their worklife as opposed to leaving it in someone else's hands.
---

Well, this forum is for those who want to exit the mainstream corporate world early, but that doesn't mean we all do it by starting a business.

Lots of small businesses fail, so although in many cases it could lead to fast riches, in many cases it could lead to financial ruin/hardship. Not all of us are into taking that kind of risk.

Now, granted I am 38 and for me ER will be about 50, but I'm doing it the slow and steady way - saving 30% of my income, investing aggressively, and planning to collect a decent gov't pension at 57.

Lots of people on these boards have done it similarly.
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If you're cut out for it, I think owning your own biz is the way to go......
Old 08-28-2007, 03:12 PM   #11
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If you're cut out for it, I think owning your own biz is the way to go......

I currently am a 25% owner of a small biz. Bought into it because a personal friend who I could trust needed help with the financial side of the biz, and I wanted to see if I would be up to the task of owning my own biz.

Have learned a great deal, and if my corp job ever gets too bad, I think I could find a biz to run. However, I've got a really good corp gig right now.

I've thought similiarly as you, that I could run the biz for a few years and get it built up, and then have someone run it for me. I'd plan to still keep the books and oversee the strategy, but would have alot more time to myself. The problem is finding that person to run it that can be successful and that you trust.
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Old 08-28-2007, 08:26 PM   #12
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Sagenx,

I tend to agree with you that starting your own business is likely one of the quickest way to accumulate wealth other than winning the lottery. Unless you're a Fortune 500 CEO, the salary from a regular worker bee job will not allow you to make money as quickly as a successful business can. Stocks and real estate also will not realize a rate of return that a successful business can. Except for if you get lucky and invest in the next Microsoft, but then again, you could end up with the next Enron. Because mutual funds seek to mitigate risk by diverifying will not see high rates of return, but they are more likely to be steady.

However, like most things, higher rates of return carry higher risks. Also starting your own business will likely require much more w@rk upfront and possibly for the long run depending on the success of the business.

Having said that, I think the often quoted statistics about businesses failing are misleading. I also think that much of the risk involved in starting your own business can be minimized through proper planning and experience. As others have said, starting your own business isn't for everyone, but for those who have the drive and ability, I think it can be a good alternative.

I like the idea of not having to answer to a idiot boss and dealing with the BS office environment. I also like the idea of having a little more direct control over your destiny. I could get fired from my "good j@b" tomorrow, but right now my "good j@b" is allowing me to plow a ton of money into savings and retirement. If this gig goes away, or if I just can't take it anymore, I'd rather start my own business than find another j@b in the corporate world.

All this talk of work makes me want to take everything out of savings and go to Vegas and bet it all on black. Now that's the fastest way to wealth...and poverty :-)
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Old 08-30-2007, 03:37 AM   #13
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Am I right in saying that having your own business is the quickest way to Early Retirement.
Possibly. But there are a couple of considerations.

Some down-side stuff (in general terms).
  • Most businesses fail (risk) in the first few years.
  • You are probably signing up for 2 times your normal work hours (if it is a business looking for profit and growth).
  • If the business is really just your job... you just own a job and the risk. It is not likely to lead to FI.
The upside... If you succeed, you could become wealthy.
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Old 09-04-2007, 04:04 PM   #14
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Apart from early retirement, having your own business is the most liberating and exciting thing that you can do. Sure, lots of work, but at the beginning when you are in charge of every little decision, and ultimately the success or failure of it, those longer hours are much easier to put in when you are deciding on how those hours are to be spent rather than your employer. Flying by the seat of your pants is scary at times, but there is no better rush.

I am both surprised and thankful that the majority of people are willing to work for an employer and take what they give you because to be honest, I won't hire someone unless I'm earning a good deal of money each hour that they work.

I suspect that there is an entrepreneur gene as there are people working for me who are highly intelligent, and definitely hard working enough to be in business for themselves but choose to stay within their comfort zone and seem to be OK with allowing me to profit from their work. I don't understand it, but I like it....
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Old 09-04-2007, 04:39 PM   #15
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Apart from early retirement, having your own business is the most liberating and exciting thing that you can do. Sure, lots of work, but at the beginning when you are in charge of every little decision, and ultimately the success or failure of it, those longer hours are much easier to put in when you are deciding on how those hours are to be spent rather than your employer. Flying by the seat of your pants is scary at times, but there is no better rush.

I am both surprised and thankful that the majority of people are willing to work for an employer and take what they give you because to be honest, I won't hire someone unless I'm earning a good deal of money each hour that they work.

I suspect that there is an entrepreneur gene as there are people working for me who are highly intelligent, and definitely hard working enough to be in business for themselves but choose to stay within their comfort zone and seem to be OK with allowing me to profit from their work. I don't understand it, but I like it....
I agree completely. I lack all possible "entrepreneur genes", and never had any interest
in starting my own business. I turned down all promotions at work, retiring at 48 as
a peon-level programmer. I always viewed work as something I needed to do to get
$$$ until my investments could take over. Programming was always trivially easy
for me, so I could save all my enthusiasm and energy for all the other parts of my life.
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Old 09-04-2007, 07:20 PM   #16
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I suspect that there is an entrepreneur gene as there are people working for me who are highly intelligent, and definitely hard working enough to be in business for themselves but choose to stay within their comfort zone and seem to be OK with allowing me to profit from their work. I don't understand it, but I like it....
It's funny, because I see it the exact opposite. When I talk to my friend who runs his own company and hear about all the headaches he has to deal with, I'm glad I'm working for the man. I don't want to worry about having to install the phone systems or set up the network or pick a health insurance plan or take care of the multitude of mundane details that I'd be responsible for. Ugh. When I leave work, I leave work. And when I go on vacation, I go on vacation. Just let me do my job, give me my check, and let me go on my way.

I realize I could make much more money working for myself, but to me, the headaches wouldn't be worth it.
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Old 09-05-2007, 01:25 AM   #17
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It's funny, because I see it the exact opposite. When I talk to my friend who runs his own company and hear about all the headaches he has to deal with, I'm glad I'm working for the man. I don't want to worry about having to install the phone systems or set up the network or pick a health insurance plan or take care of the multitude of mundane details that I'd be responsible for. Ugh. When I leave work, I leave work. And when I go on vacation, I go on vacation. Just let me do my job, give me my check, and let me go on my way.

I realize I could make much more money working for myself, but to me, the headaches wouldn't be worth it.
We only say stuff like that to keep our peasants in check! Just kidding hehe. I must say that owning my own business was a utter pain in the ass. Utter constant stress, and you never have a real day off, where you can relax and worry about nothing.

That being said, I did not do something I loved. I did something I knew, and something I knew could help me with my goal of calling it quits at 30. It was 8 years of sacrifice, taking cheap ass to new heights, and staying focused everyday. Getting the wife to buy into a lifestyle of utter sacrifice and poverty vows until we could retire.

I could continue to do it, and work a few more years and have a few more bucks, but to me the stress just isn't worth it anymore (people drive me NUTS)

Was it all worth it? hell yea. I am really glad I was able to step away from the table also and not get consumed with the cash and become a slave to the money and keep working too.
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Old 09-05-2007, 02:00 AM   #18
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lawyers drive economy cars here. !
Huh? That doesn't compute. Whatsamatter with you guys?
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Old 09-06-2007, 02:15 PM   #19
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Huh? That doesn't compute. Whatsamatter with you guys?
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