Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
What kind of business did you start? By yourself or with partners?
How did it end up? Still going? Did it not work out?
How long did it take for you to be profitable?
Did you ever think "What in the H*** did I get myself into"?
- Anything else you'd like to add? Thoughts? Opinions?
--------------------------------
I recently, in the past few months, have started my own solo Paralegal business. For the most part it's going well. I have a few lawyer/law firm clients to my name. Work can sometimes be slow coming in, but as I prove I am good and do good work for them they have told me it'll come in more often, so I'm looking forward to that. Everyone is super nice and helpful, so I've gotten lucky.
The biggest adjustment has been the pay. Not that the pay is bad necessarily, I've negotiated my own rates for different assignments. However, I worked full-time at a few law firms for roughly 10 years. I was so used to a steady bi-weekly paycheck coming in no matter what. Now I am at the mercy of my clients fulfilling my invoices. Everyone I work with is a good person and I really enjoy them, so I'm not worried about them fulfilling the invoices, however they aren't always quick to do so. So, my pay is more sporadic. Not totally a bad thing, but when you're used to a paycheck coming in bi-weekly, it's an adjustment to get used to.
I sometimes get in my head and think hmm. I'm getting married soon, I want to have kids - Is this going to be worth it? Should I have just stayed put in a corporate setting? But, I'm just starting out, so I need to be patient and grind at this.
On the flip side, I LOVE working when I want (as long as I meet the given deadlines) and not having stupid policies and dumb meetings that could have been emails and office gossip like you find in workplaces. I love that I can meet a friend for lunch on a week day, go for a walk when I feel like it (I work from home), and blow up my own bathroom if needed (LOL)
Anyways, for business owners, tell me about it!! I'd like to hear what others have done, been through, and how things have turned out and any advice one may have.
I don't run a business but I definitely think a solo business is something more people should do.
Running your own solo business is total accountability. You screw up a job? All right, well it's on you.
Plus cutting down on overhead puts more $ in your pocket and people can 'theoretically' work less hours. I know it doesn't work out that way.
My company takes 71% of my billable rate and still tries to whip me harder. So when you get 100% of that, I don't care how many toner cartridges you have to replace you should be able to make that work.
OTOH, I'm convinced now more than ever to never, EVER be an owner of a company where you have people working for you. It's either you taking advantage of people or people taking advantage of you...
I sometimes get in my head and think hmm. I'm getting married soon, I want to have kids - Is this going to be worth it? Should I have just stayed put in a corporate setting? But, I'm just starting out, so I need to be patient and grind at this.
Marry a doctor, and all will take care of itself ... trust me on that.
1. Specialty retail with some B2B wholesale fulfillment. My employer was going out of business, and I formed a partnership with some other managers to resurrect the profitable parts of the previous business.
We were profitable within the year. I sold my equity stake after 5 years, and they ran the business for another 4-5 until the remaining partners decided to retire, at which point they shut it down. At peak we were operating 2 FT retail locations, a small distribution warehouse, and 4 seasonal locations. Staff count varied, but up to 24 people during busy season, 6 or so at slow times.
Definitely had concerns at various times. UPS went on strike for weeks at a critical season for me, one of my big clients had a major re-org which caused chaos for a bit, my landlord’s business exploded and lawsuits started flying.
2. My ex- started a small manufacturing/arts business. It was a hobby business for a couple of years, then we got serious and built space and purchased some capital equipment, vehicles, etc. it was profitable a year after that, and she is still running it 25 years later. I think she has one manufacturing space, one retail space, and 3-4 part time employees.
3. Partnership with 2 other people. I put in a small amount of money and business management expertise, they were going to be the operational side. They never got serious about it, and it folded a couple of years later because they found out that running a business was hard work. I lost something under $5,000 and a fair bit of time.
4. Current business is a home business run by my wife. Broke even after 18 months, and it was doing a decent replacement income type of volume until COVID struck. It is erratic now, but still providing a bit of positive cash flow, equivalent to a decent paying PT job.
Simple is better in my opinion, unless you want to really run a large corporation. At that point you are no longer doing the thing you love, you are being a manager. If you can run a paralegal business replacing your current income plus 20% or so as a premium, supplying your healthcare and other insurance, and being able to take vacations, I would consider that to be a success. If you try to expand, you may find your gross income climbing, your expenses climbing even faster, and the managing people problems exploding. You might be doing 10x the volume you are doing now, but only making 50% more income with a lot of extra aggravation.
I started a high end ecommerce furniture business. I had worked in the industry for a number of years and had all the right contacts. I built the website myself, but listing all the product with proper photos and SEO was insanely time consuming. Still, I was selling and growing, but too slowly. I made the decision to go back to work while also running the business... It simply became way too stressful trying to balance both so I closed up shop.
I also have a side hustle of buying random items at auction and selling them. This is the easiest business to get into in my opinion. Takes almost no money up front, you can do it all online minus having to pickup your items, and you can just sell on Facebook marketplace or craigslist and have the people pickup from your house. The next step up would pretty much be getting a little store front and opening a pawn shop and keeping the shelves stocked with cheap auction winnings.. but the Margins can be insane, get an entire table full of 50 random little items for $2 and then just sell them for $3 a pop. Or win a lawn mower for $100 and sell it on craigslist for $750.
I don't run a business but I definitely think a solo business is something more people should do.
Running your own solo business is total accountability. You screw up a job? All right, well it's on you.
Plus cutting down on overhead puts more $ in your pocket and people can 'theoretically' work less hours. I know it doesn't work out that way.
My company takes 71% of my billable rate and still tries to whip me harder. So when you get 100% of that, I don't care how many toner cartridges you have to replace you should be able to make that work.
OTOH, I'm convinced now more than ever to never, EVER be an owner of a company where you have people working for you. It's either you taking advantage of people or people taking advantage of you...
Depends what you want out of the business. If you simply don't want to have a boss, then solo owner/operator is the way to go. But I think when people think of starting a business, they usually think about something they can grow and eventually sell. Or if not sell, hire someone to manage it so that it can continue to provide them passive income. A solo business usually has limitations to how much you can grow, unless it's something that's somehow automated and you receive recurring revenue from your clients.
Depends what you want out of the business. If you simply don't want to have a boss, then solo owner/operator is the way to go. But I think when people think of starting a business, they usually think about something they can grow and eventually sell. Or if not sell, hire someone to manage it so that it can continue to provide them passive income. A solo business usually has limitations to how much you can grow, unless it's something that's somehow automated and you receive recurring revenue from your clients.
First of all, thanks to everyone for your reply thus far!
As for the quoted, that's one of the main reasons I like my solo business. I don't want to have a boss anymore and if I can support myself and future family on it, then I'm living the dream! I never want to have employees or anything, I'm too particular on things getting done a certain way for these clients. But that's just me. The rest of what you mentioned makes sense. A lot of people want it to grow and rake in the money for sure, ideally when they can step away and just count the money coming in. That's what my Uncle did with his landscaping business. Made millions, then sold it but still has a stake in it. Genius.
At the ripe old age of 23 I started an accounting firm with a partner and former colleague who was my supervisor. Financially it was a failure. I was too young to secure clients. I was too green to handle the full range of activities of people my age starting firms. I also priced work too low as my partner's main contribution was building up of a back-office overseas where he was from. They sucked. Like, literally the worst accountants of all time. I was not strong enough to correct them timely. I stopped taking work as all of my time was devoted to fixing what went overseas, much less expanding the range of offerings horizontally into new areas (i.e. payroll processing, SALT compliance etc.) that were wanted, and had won work on cost. We broke up, the entire back-office was sacked and he moved to Florida to try again where he's had modest growth over the years to become a solid 10 person accounting firm. I went back to the job. The backoffice, ironically, all used their experience with an "American international accounting firm" to go land nice jobs in banks overseas. Failure points - Chiefly myself. I was a solid promising young accountant, but being able to work in a firm is different than essentially leading one. I failed to see the large difference in offering work (A-Z) vs performing work (assigned tasks). I was also undercapitalized, the back office language gap and performance was truly awful and besides cost I had no incentive to get people to switch.
Residential Real Estate - This is one of the least consuming businesses, but as property prices dove in the last recession, I realized I could be cash flow positive with 15 year loans at existing rent rates that were climbing up for some reason. No brainer. Not much learned, but it's my biggest windfall.
Consulting - Re-entering the race, not as a firm but as a consultant utilizing connections over the years. I realized I liked project based work (ERP conversions, GAAP implementations and technical memos, program development etc.) better than the mundane day to day and became a consultant. You have to be careful on the type of work you accept, but (this year aside) I make more now than I did as a Controller...though I'll never be able to run further up the ladder to the big positions. (I'm ok with that)
Cell Phone - Wife's first US business. She had worked different roles for cell phone stores previously. However, she partnered with a dry cleaning agency that was too big to support a suite space alone and sold cell phones and subscriptions. We finally tossed the Verizon signs last night as we get set to move. The model was essentially you buy a stock of phones and give one away in exchange for signing up a customer...and a commission is paid to you later. If you sell accessories along the way...great. As cell phones went from a novelty to a standard, the commissions started to shrink, the phones got more expensive and the terms longer.
Dry Cleaning - The business-woman who had the other part of the store wasn't much of an agency owner. She didn't do any of her own alterations and mostly used it to pursue the business of finding the right Mr. As the outings became more frequent, my wife started essentially doing some of both businesses and eventually bought her out. The other lady went on to take over a hair salon her matron had acquired. In the first month, my wife doubled the revenue of the store, did alterations and eventually phased out the cell business altogether. We're in the middle of a move currently to a "right-sized" space. But I stay home while she charms a construction crew into getting things done, and come in to help once they leave. She makes a decent living from it.
The only thing I'd say for would be entrepreneurs is to make sure you know everything you can about your would be trade. The buck really stops with you from emptying the trash to getting compliance done. Don't be afraid to muck some of the ancillary things up so long as your core is solid. So many people want to open restaurants (for example) and know almost nothing about them except their mom tells them they cook well. The other thing is that it becomes much more difficult to get good loans once you don't have that nice fat W-2. Even if you make the exact same topline, your gross W-2 vs your Net Schedule C is going to be different. So have your house already bought before you make the switch.
Simple is better in my opinion, unless you want to really run a large corporation. At that point you are no longer doing the thing you love, you are being a manager. If you can run a paralegal business replacing your current income plus 20% or so as a premium, supplying your healthcare and other insurance, and being able to take vacations, I would consider that to be a success. If you try to expand, you may find your gross income climbing, your expenses climbing even faster, and the managing people problems exploding. You might be doing 10x the volume you are doing now, but only making 50% more income with a lot of extra aggravation.
I can't rep you again for a bit, but this is really true. I've little interest in a payroll (if I need more people for a project I have them contract 1099 with the client) or the insurance or the on/off of things. My wife has tried training people to take over the store and simply given up...opting for higher prices for volume control instead.
Of course, there's a trade-off in all of that, which you've shown. A business may be profitable for awhile and then it comes time to decide if you're in it longer and need to change or out to do something else. No shame either way.
Consulting - Re-entering the race, not as a firm but as a consultant utilizing connections over the years. I realized I liked project based work (ERP conversions, GAAP implementations and technical memos, program development etc.) better than the mundane day to day and became a consultant. You have to be careful on the type of work you accept, but (this year aside) I make more now than I did as a Controller...though I'll never be able to run further up the ladder to the big positions. (I'm ok with that)
I have done a little bit of this as well. Nothing significant, I have never made more than $10k a year, mostly as a few odd things dropped into my lap.
The risk with this is that you are essentially putting all of your eggs in one basket. As a consultant, you have only yourself to rely on, and if things go bad, they can go really bad. Being responsible for your own health insurance and such is fine as long as the cash keeps flowing in, but if you actually get sick for a period of time, your cash flow and health insurance come to a grinding halt. Having a few employees who can carry on without you, if you have a decent manager, mitigates this risk somewhat.
The other temptation is falling into a long term consulting gig with a big client. I know a couple of people who did this in the dot.com era. They were pulling down $250k annually, and it was not worth it for them to maintain a large portfolio of clients. Then things get bad, that client drops them, and they are without revenue, and without a portfolio of active clients generating future leads.
I am not saying one way is right and the other is wrong, I am merely pointing a few things out for consideration. No matter what you do in life there are risks.
Quote:
Originally Posted by artillery77
I can't rep you again for a bit, but this is really true. I've little interest in a payroll (if I need more people for a project I have them contract 1099 with the client) or the insurance or the on/off of things. My wife has tried training people to take over the store and simply given up...opting for higher prices for volume control instead.
Of course, there's a trade-off in all of that, which you've shown. A business may be profitable for awhile and then it comes time to decide if you're in it longer and need to change or out to do something else. No shame either way.
Yes, as I noted above, there are trade-offs. Knowing what those are can help minimize risks, as business owners can make more intelligent decisions. Your point on using pricing as volume control is also a good one. My ex had that problem early in her business. She was pricing her products too low, and people did not perceive them as being worth purchasing, because they were under the comparable items. The assumption was that there was something inferior.
She matched the market, and her sales boomed. She could not keep up. So she raised her prices so that she was the premium vendor in her small market, and while unit sales dropped, profit jumped again. Entrepreneurs should not necessarily aim to be the bargain alternative. It can be much more profitable being the premium option.
Quote:
Originally Posted by artillery77
The only thing I'd say for would be entrepreneurs is to make sure you know everything you can about your would be trade. The buck really stops with you from emptying the trash to getting compliance done. Don't be afraid to muck some of the ancillary things up so long as your core is solid. So many people want to open restaurants (for example) and know almost nothing about them except their mom tells them they cook well. The other thing is that it becomes much more difficult to get good loans once you don't have that nice fat W-2. Even if you make the exact same topline, your gross W-2 vs your Net Schedule C is going to be different. So have your house already bought before you make the switch.
Exactly. Knowing a business can be the difference between making a 10% profit and a 5% loss. Or a 50% loss. Don't go into a business that you do not know, it can eat you alive.
As for W-2 earnings, you can mitigate this a bit by creating an LLC or sub-S. This way you can show income from a corporation. Although banks can tell from your tax returns that you own the corp, for some reason they seem to be more willing to loan against it rather than a sole prop. At least that is my personal experience, but I know nothing about banking, so don't take my opinion as anything definitive.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
(LOL)
