Entrepreneurs of THP

I didn't see another thread about this, please merge of it exists.

I've been kicking around some business ideas (again) and wondered who else on THP has taken the plunge into starting a business? Maybe this thread could help some others who are on the fence as well.

What challenges did you come up against; financing, venture capital, marketing, talent, sales?

Were you able to quit your job and focus on your business, or was it just for side income to support your golf habit?

I have done it on 2 occasions.
Both times I have been very fortunate that with tons of work and hours, I was able to make them pan out.
The first time is similar to your career now and it was a lot of work and it became something pretty darn good.
The second time was, well, here.
Neither time did I source for VC, as I started both on my own, created my own cash flow and then built from there, instead of giving up equity.

While I didn't technically start my current business (my dad did), I've been there every step of the way since it left the house.

Financing was extremely hard to come by on one machine but the second was much easier.

Finding good help is near impossible.

Wearing 14 hats gets very old for me personally but it's what I signed up for and the benefits are nice.

I want to golf or take a vacation? I do it. Need to leave early or come in late? Just do it.

My advice would be to avoid taking money or giving away equity at all cost. Start small, build up cash reserves but maintain your position. Part of the reason for breaking out of a corporate structure is about not answering to someone else, the minute you owe cash you are answering to someone. Also, consider your business as a future liquidity event, go to market with something that can be nurtured, grown, and sold. I've lived through this twice where I rolled into larger organizations, did 50/50 deals (cash/stock), stayed until the stock ran up then exited. Once you've proven you can build a brand you can always do it again.

I did it twice, both times on my own with my own money. Both times I had no other source of income other than savings and what the business generated. Know I consult with two entrepreneurs helping them get their business up and running successfully. My best advice, network, network, network....talk to as many people as you can in the industry your in. Ask as many questions you can, even the ones you think are dumb.

My wife and I are doing it now, self funded, self ran, and it sustains itself which is more than we expected. We feel as though we have a great brand and a wonderful coffee, my wife is slowly getting in to it full time and we think if thing continue the way they are it will be a great small business. It's exciting to pave your own path and learn different paths to success.

Have started and sold 8 businesses. Have bought and sold many more than that. It all started from an insurance brokerage I started when I was 21. Worked nights to finance it. 11 years later it has given me the opportunity to fund other things I wanted to do. Some people like to flip houses, I do the same with businesses.

My wife and I have never taken the plunge into an actual small business but we did start buying rental properties shortly after we got married in 1994 and were wise enough to take out 15 year loans on the properties. At times it's been a pain getting calls for a plumbing leak or a broken microwave but now that we are 50 years old nearly all the 6 properties are paid off and we are getting ready to start selling them starting this summer. Because of the equity built up from these rentals we will be able to retire at 53 or 54 and be financially independent. I hope my youngest doesn't mind her mom and dad both being around all the time when she is still in high school!

My wife has already started planning her own HR consulting business after we retire that would keep her busy as much or as little as she chooses. Right now she's planning on working 40 or 50 days a year and see how it goes. The going rate for an HR consultant with her expertise is $2,500 per day so I'm very supportive.:act-up:

tahoebum said:

My wife has already started planning her own HR consulting business after we retire that would keep her busy as much or as little as she chooses. Right now she's planning on working 40 or 50 days a year and see how it goes. The going rate for an HR consultant with her expertise is $2,500 per day so I'm very supportive.:act-up:

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I work with HR executives (Executive search for HR) daily, and it's fascinating to see how far that function has come in the past few years both in scope of responsibilities and comp.

JB said:

I have done it on 2 occasions.
Both times I have been very fortunate that with tons of work and hours, I was able to make them pan out.
The first time is similar to your career now and it was a lot of work and it became something pretty darn good.
The second time was, well, here.
Neither time did I source for VC, as I started both on my own, created my own cash flow and then built from there, instead of giving up equity.

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Are you still involved with the first one? What I do now is a big part of the reason I'm contemplating something different. Different industry, potentially better cash flow consistency, much higher upside and without the personalities I currently report to. Cost of entry is high though.

TeedUpThoughts said:

Are you still involved with the first one? What I do now is a big part of the reason I'm contemplating something different. Different industry, potentially better cash flow consistency, much higher upside and without the personalities I currently report to. Cost of entry is high though.

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No sir. I sold that firm over 10 years ago. Did consulting work for 2 years and then started THP.

JB said:

No sir. I sold that firm over 10 years ago. Did consulting work for 2 years and then started THP.

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That's great. We will have to share war stories at the next THP event I make it to.

I wouldn't call it entrepreneurship, but I've have started and sold one, and am currently looking in to starting another one.

The first one was really small, a booking agency for DJ’s when I was about 18. I had a couple of DJ friends who were tired having to deal with shady agents and club owners, so a friend and I decided we could do a better job for less money. Was pretty easy, as that kind of business doesn’t require a lot of money to start up, as the DJ’s were our products. We took care of bookings, payments, travel arrangements, taxes and pretty much whatever they asked us to do.

Because it started out as helping friends, and we worked for a more than reasonable fee (perhaps too low) we always kept our day jobs. When I started my current job, I was no longer able to combine the two. All-nighters were no longer an option, and the economic situation affected the number of bookings. While we were already thinking of a way to end the business, we got an offer to sell, which we happily accepted.

I’m currently looking in to developing student housing. There is a huge shortage in this area, so there’s a lot demand. I’ve been in contact with the municipality for a while now, and they have piece of land for sale which suits my needs. I’ve found a construction company that is able to create what I want as well. My biggest issue: I don’t have that kind of money. The banks are not willing to give me that much. I’ve been talking to some possible investors, but I’m not willing to accept their terms. One of the main reasons for doing this is not having to answer to people and making my own decisions, and if you accept their money, you have to answer to them, and have to take their thoughts in to serious consideration.

I’m now thinking of starting on a small scale by buying a property which I would be able to get mortgaged, converting it to several units, and build my empire from there. Given the ridiculously low rates we have right now that might be the best option.

TeedUpThoughts said:

That's great. We will have to share war stories at the next THP event I make it to.

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Happy to.

I started a business fresh out of high school while going to college. Lots of challenges but made me grow up quickly and taught me a ton. Funding wise I was extremely lucky as I had College Scholarships to cover tuition so with the college account my parents/family had started I was able to put that into the business to get it off the ground. I had some help from some great friends along the way as obviously being that young I was still learning my way let alone the business world.
The biggest thing that made me successful in that venture was trusting the right people.

I sold the company about 5 years ago now and honestly while a ton of perks existed I don't have any plans to go into business for myself anytime soon again. Maybe in the future someday though.

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my mother started our firm 28 years ago, this year will be 14 for me. she started it when i was very young, so i've seen the good times and bad. also specific to my industry is the opportunity to work with so many start-ups, typically mom-and-pop outfits. here are a few observations:

1- the best way to make a million dollars is to start with two million dollars. having the capital yourself gives you freedom of control and lead time to grow it to what you want it to be. it's also typical that someone with money also has walking around sense to not go too far down a rabbit hole/money pit before admitting defeat. and in this game, there's A LOT of defeat.

2- owning your own business =/= free time. dovetailing onto 1 above, if you don't have the cash to hire people to tend to the non-income producing tasks like bookkeeping, controller, janitorial, maintenance man, it guy, etc, you end up wearing a lot of hats. and your day is spent putting out fires more often than it is killing food.

3- you (probably) don't know what you don't know. doctors come to mind for this one. you can spend 8+ years learning how to be a great physician, but nobody tells you how to run a business. surround yourself with competent professionals and advisers and LISTEN TO THEM. and a secondary part of this is be VERY CAREFUL using the "success" of those around you to gauge how successful you think you will be. i can't tell you how many times friends talk about mutual friends who are clients and say, "john is making a ton of money in his business," where i know how much john makes and it ain't no ton. people let you see what they want you to see.

4- there's an "it" factor. i admit that i don't have "it." but i have a subset of my client base and referral network of people who just know how to make money. they have no idea what's going on in the trees, but they can see the forest and make it flourish. they say things that make sense but they're not revolutionary, you've heard it all before. but for some reason they just keep making money. start something, sell it, rinse and repeat. it's incredible and imho unteachable.

5- use the rule of 2 (or even 3) like a home renovation. my rule is, when a contractor tells me something is going to cost $x, i budget 2 * $x because they always find something. it always takes longer, and it always costs more. in a small business, if your internally-prepared prospectus says it will take 2 years to turn a profit, bank on 4, then analyze your current capital needs and access as well as the opportunity cost of what you're giving up (salary, benefits, vacation time, etc) by starting this.

i know a lot of that is probably pessimistic. as mike mcdermott says, "you can't lose what you don't put in the middle; but you can't win much either." the more informed you are going into this, the better.

TeedUpThoughts said:

I work with HR executives (Executive search for HR) daily, and it's fascinating to see how far that function has come in the past few years both in scope of responsibilities and comp.

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Yes, who would have thought 25 years ago the prominent role HR plays today in every large company. She's at the top of her field now as a VP at a large company in Silicon Valley in charge of the HR function for 60,000 employees. She enjoys her work now more than she ever has. The funny thing is she was an English major in college and had no clue what she wanted to to so she became a flight attendant for Pan Am after college before stumbling into the HR field.

tahoebum said:

Yes, who would have thought 25 years ago the prominent role HR plays today in every large company. She's at the top of her field now as a VP at a large company in Silicon Valley in charge of the HR function for 60,000 employees. She enjoys her work now more than she ever has. The funny thing is she was an English major in college and had no clue what she wanted to to so she became a flight attendant for Pan Am after college before stumbling into the HR field.

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It's funny, I hear how people "fell into HR" on almost every call I have. Now, it can be argued that it is the function that drives most businesses, especially ones where people are responsible for producing profits (services, innovations, etc.). The trend now is to promote more CEO's from the top HR job than the top finance or operations role because of this very thing. But I digress from the topic at hand. Best of luck to your wife, and your burgeoning coffee business!

I went out on my own when I felt like I was being exploited & over worked for the pay I getting compared to other employees. Times where lean at the start but I persisted until a sales rep from something different stumbled upon me. It took me to the point of having too much work. I actually had to trim down the clients due to getting a bit burnt out. Now I have maybe a 1/2 dozen clients with 1 requiring so much attention I don't need any others. Now I work as required and can get lots of golf in without much issue. As long as it isn't 'mission critical' I can go play a round and go have a look see next day. I didn't go looking for money or anything else to get me going.

tahoebum said:

My wife and I have never taken the plunge into an actual small business but we did start buying rental properties shortly after we got married in 1994 and were wise enough to take out 15 year loans on the properties. At times it's been a pain getting calls for a plumbing leak or a broken microwave but now that we are 50 years old nearly all the 6 properties are paid off and we are getting ready to start selling them starting this summer. Because of the equity built up from these rentals we will be able to retire at 53 or 54 and be financially independent. I hope my youngest doesn't mind her mom and dad both being around all the time when she is still in high school!

My wife has already started planning her own HR consulting business after we retire that would keep her busy as much or as little as she chooses. Right now she's planning on working 40 or 50 days a year and see how it goes. The going rate for an HR consultant with her expertise is $2,500 per day so I'm very supportive.:act-up:

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My wife and I are considering going this route ...

I've taken two startups from founding to exits. Imo, the advice of not giving up equity is not always good. If getting outside funding allows you to do something that you couldn't do otherwise, the result might well be that the value of your diminished share is bigger than what you started with. Investors sometimes bring in other good as well. Would you rather own 100% of a 1M company with just you or 65% of a 5M company with better expertise?