Most FIRE aspirants want to work in a field of deep interest to them after achieving their target corpus. Starting a Lifestyle Business based on one’s passion is a common post-FIRE goal for many as they understand that it is a terrible idea to disturb the compounding of your retirement corpus by withdrawing from it for monthly expenses before actually retiring in old age. In fact most of the Early Retirees from the U.S are making money post-FIRE from blogging/writing books about FIRE, selling products online, consulting or running assorted businesses. So let me talk about how to prepare yourself for the plunge after you achieve your target FIRE corpus.
It is now 5 years since I started my small software business. The best part is I now get to learn all the things I wanted to learn in my previous jobs like strategy, marketing, customer support etc. The bad part is I was not prepared for the ground realities of starting a business despite my background in the same tech domain and working as an early employee at a tech startup. So I want to share some of my learnings in retrospect so you can learn from my mistakes.
TABLE OF CONTENT
Lesson 0 : Being an employee is much easier than being a business owner
You might think that taking orders from your boss at work is stifling. But wait till you start taking orders from a hundred different bosses a.k.a customers once you start a business. That’s the view from the other side of the green grass! An employee just needs to do their assigned work, can take weekends & holidays off and be assured of a regular salary. As a small business owner you have to do all the unassigned work, cover for any employees who are on holiday and ensure regular salary payments from out of irregular business income on top of ensuring business growth & customer happiness. This means working insane hours every day including on festivals, holidays, weekends and weeknights. So if your goal is to have a relaxing and predictable lifestyle post-FIRE I don’t understand why you would start a business when you can be an employee!
Lesson 1: You need capital to start a business. Your FIRE corpus does not count.
We had 7 years of expenses saved up when I started the business in 2013. That freed me up from needing a regular income while getting the business off the ground. But I could not grow the business through hiring or marketing because I was using profits from the business for household expenses. That left us little money to re-invest in the business and grow profits. For the longest time I was proud of making money without investing money like “other” people in non-digital businesses. But now I realise that I should have saved separately for business expenses like hiring & marketing. Otherwise you will get caught in a classic trap where you are not making enough money because you can’t hire people to grow the business AND you can’t hire such people because you are not making enough money. Income from business in the early days will not be enough to hire people or cover other necessary business expenses. So such expenses have to be initially funded from savings until you become profitable.
Even if you plan to start a one-man business like consulting you will have business expenses big and small like air travel, laptop, shared office space, software subscriptions, high-speed internet, freelancers to help you with custom client needs, up-skilling courses, “no-cost” projects for potential clients etc.
In conclusion: Your FIRE corpus is only a safety net. For business operating expenses you need to save extra as per your business plan.
Lesson 2: Don’t start a business without spouse’s support
Will your spouse agree to the extra hours you work on weekends bringing in very low income in the early days compared to your day job? What about the life goals of your spouse like having a baby or buying a house? If you don’t get them on board with multiple serious conversations way before you quit your job, your business will be in serious trouble. In my case Sugandha was very supportive of me and shielded me from prying questions about how much money I made in my business in the early days 🙂
Lesson 3 : Best if your spouse stays in their job to meet expenses
We were taken aback by the massive lifestyle downgrade of starting a business especially since we had both quit glamorous jobs that provided a lot of perks. Our downsized lifestyle reminded us of the time we were struggling to get settled in our careers in our 20s. To prevent this type of shock and related stress, I recommend that your spouse continue in their job until you establish yourself in the business after a few years. This way you are not worried about meeting household expenses while also trying to get the business to make enough money.
Lesson 4: It can take even 2 years to get the business up and running
The first year will most likely be a washout as you run around setting up the business and be too busy to measure ROI. Only in the 2nd year you and everyone will wonder how the business is doing after 1 year and you will become very focused once you observe the lack of forward movement! At my day-jobs I used to day-dream about how hard I would work once I quit the job and started working for myself. In reality my productivity actually decreased a lot in the first year as I got overwhelmed with business to-dos and life events. Instead of working harder, I got lazy cutting myself all kinds of slack. At one point I even started doing consulting & working on other startup ideas instead of focusing 100% on the business just because I thought I had a lot of free time now. If you have free time without turning a profit then it means you are not working enough 🙂 No one was watching me so when I cut myself slack then naturally the business did not grow as fast as it did in my day-dreams 😉
Lesson 5: You need a good amount of luck if you are doing this the first-time
SavingHabit.com used to be a startup idea of mine. I converted it into this blog after the startup idea failed like the 20 ideas before it. I lucked into my current software business (more details on this in Lesson #8). This business was the only one that continued to grow even when I neglected it chasing shiny startup ideas. If you want to make guaranteed money then focus on providing better solutions in plain old boring industries where people are already paying money for sub-standard solutions instead of brand-new , world-changing, pie-in-the-sky ideas.
Lesson 6: Once established your business can give you double-digit returns!
There was a brief period in the business when profits were steadily increasing that it felt like I was giving myself a raise every month. I could now understand the attraction of running a business…. answering my own rhetorical question from Lesson Zero on why anyone would punish themselves by starting a business. Running a business can be extremely rewarding personally and financially if you are willing to put up with all the stress, hard-work, uncertainty and constant threat of losing everything you built overnight. Because every time I felt like I had “made it “, without fail some major problem would threaten the entire business because I was not paying enough attention to customers and competition.
Lesson 7: Hire People to help you
There is no need to do everything yourself from customer support to marketing to technicals even in the initial days. Trying to do everything to save money will only delay your business turning profitable. Some people like to know a little bit about everything so they can better manage the people they hire. Especially if you are setting up a lifestyle business you need to hire people to handle the daily & holiday workload so you are free to focus only on growing the business while enjoying a decent quality of life. Of-course you need money for all this which is what I pointed out in Lesson #1.
Lesson 8: Set up the business while still working in a job
The best way to set yourself up for success is to get the business to profitability while you are still working in your day-job as long as there is no conflict of interest.
- This way it is easier to convince your spouse by showing real revenue numbers.
- You won’t waste 2 years of your life this way like in Lesson #4.
- Also if the venture fails to take off you will still have your day-job to fall back. Nearly all my failed startup ideas were started while I was still working and boy! was I glad I had a job to go back to after those failures.
- Most importantly your job will provide the cashflow to afford all the mistakes in the early stage. After you quit your job you will start counting pennies for expenses big and small and won’t feel like spending freely even on essentials.
How I started my business while still working: One day a co-worker of mine left the company where I was working to join his relative’s business. I was curious so I googled the industry and found people charging a lot for simple solutions yet offering pathetic customer support. I decided to replicate one such software solution as a personal challenge. I then reached out to a former colleague specialising in marketing offering a cut of any profits. After a month of frenzied coding I had the software up and running. I would wake up early in the morning and code for 2 hours before leaving for work and code for 2 hours at night post-dinner after getting back late from work. We priced the software for cheap once ready. After a month of trying different approaches to market the software there were still zero sales. I was so disappointed after 2 months of hard work that I was ready to pull the plug and shut everything down. As luck would have it we had our first sale 2 weeks after that! From there we grew in fits and starts. But the important point is that when I was sent out of my day-job later that year and landed in India, I already had a tiny business that was making money however little.
As you can see above, Luck played a major part in my success. Also notice how I gathered skills needed for the new domain and a business partner while I was still in the day-job. If you are in the right day-job it will expose you to great skills and great co-workers who will collaborate with you in the future. Take advantage of your day-job to save money and gather skills, network etc. You can even assemble the entire team needed for your business by using your salary income.
Bonus Tip: Line up items like Life Insurance, Credit Card etc that require a high current income to qualify before you quit your job. Because you may not have a high business income in the early days. That is one of the big mistakes I made & regret.
Lesson 9: Find a Mentor
For the longest time I resisted asking anyone for business advice because I was afraid they would tell me something that I already knew I should be doing. Being loss-averse I was too cautious in trying out new ideas for the business and I did not want anyone pointing out the obvious flaws in my approach. Luckily a college senior of mine who specialised in marketing would call me up regularly on his own and inquire about the business and share his solutions. In retrospect I’m very grateful for his generosity with his time and advice. He’s been sort of an unofficial mentor for my business. I recommend actively seek out a mentor to whom you can frankly crib about the state of your business and seek active guidance. The right mentor is like a good gym trainer or a GPS-enabled map. They can help you reach your goals faster. If you don’t know any mentor then hire a consultant who is an expert in the business domain. Don’t hesitate to spend money for the right advice. To avoid hesitating save up money specifically towards such business expenses like I say in Lesson #1.
Lesson 10: Handle Stress positively
If you have read this far, you can see how the journey is a lot of ups-and-downs. Constant worry about the business can take a severe toll on your emotional well-being and spill-over to affect your near-and-dear ones. In my case reading the book How to Stop Worrying and Start Living by Dale Carnegie helped me.
CLICK BELOW TO BUY THE BOOK ON AMAZON ↓
Also I practised letting negative thoughts slide by meditating for 5 minutes first thing in the morning daily. Sugandha was into Vipassana meditation so she helped me with this mini-breathing exercise which is called Anapana I believe. This article Meditation for Lazy People is a good start. Pick what works for you whether it is exercising or spending time with your family. But kill stress before it kills you.
Please share your tips in the comments below for those who want to start a business post-FIRE.
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I am 37 and have been working for the last 13 years or so. I was contemplating on how to go about starting something on my own and stumbled on this great post online. Thank you for such honest and insightful thoughts.
I really enjoyed reading this. I think you are living what most of us simply dream of doing. There is saying that grass is greener on the other side. But you guys did great in showing that all that glitters isn’t gold. There is a lot of hardwork and swings one goe through.
I think one realization that i would love to see you folks write is around “how much is too much for an individual”.
I enjoyed reading it. Thanks for sharing the journey and May God Bless the little Angel.
Thank you saket! Interesting point- We will talk about it someday…
[…] Tips For Starting A Business After Early Retirement […]
Nice blog & insightful article. Enjoyed reading your blog.
I believe most of these points hold true even when you don’t consider “early retirement” factor.
Thank you N. We are glad you enjoyed reading it. I think you posted this comment a while back, but it went to our spam folder for some reason. We just noticed it.
Thanks for dropping us a line. How did you learn about us?
Yes most of the things we write are good to know even if you are not perusing early retirement.
Happened to stumble across your blog while looking for fellow FIRE aspirants. (I too write a bit on http://www.beingfinwise.com.)
Really liked your approach, transparency and philosophy which you share on your blog.
How nice! We will chk out your blog! When are you planning to retire?
I never intend to “retire” as such (need to keep on doing something or other!) but want to achieve partial financial independence in around 5 years(that’s like when I am 40!) I believe that this “partial” financial independence can give lot of flexibility.
All the best N. yes FI is very liberating!
We are so educated reading this part of your blog, only that we wish we had read it 4 years earlier. Already been there and done the bungled it.
We can actually write a blog about what not to do in business when planning a FIRE.
Thanks for making the relevant points.
What were your key take aways from starting your own business?
Lovely article. I doubt I’ll ever have the guts to do this myself but it’s nice to live vicariously through others. I think you said you took the jump into the unknown with 5-7 years worth of expenses saved. That’s incredibly brave. Kudos to you.
At what point did you finally start feeling confident – “this is going to work. It’s sustainable?”
When we look back our own courage surprises us. 2017 onwards we fell more comfortable and settled. But I guess we were pretty confident about making it work throughout (we are again pleasently surprised at the confidence we had in us). We did feel fear and other emotions during this course though. Doing business is very different to job so we are still learning to deal with ups and downs in business
Good article. The initial hurdle is the biggest in getting the business to be up and running.
I have been precisely trying this (while on job) to take up additional freelancing work but then I am unable to provide time and justice to both.
I am in the FIRE boat myself and hope to be independent in about 4-5 years time from now.
Thank You Mahesh. Yes. Freelancing even part time is time consuming. We tried it once.
Thank you. How did you learn about us? We are glad you are enjoying our blog posts. Did you read safe withdraw rate post?
Hi there.Apologies for the late response!
Heard about you guys through a TOI article and yes,have gone through the SWR article. I have been questioning the applicability of the rate in a universal context given that the number is derived based on the American market .
You guys have done a great job of reverse engineering the derivation to suit the Indian context.
Thanks, we will soon publish a blog post on sequence of return risk. It is an extension to swr.
Hi Guys,Came upon this website right when I was despairing about the lack of Indian POV in the FIRE community.Have been binge reading your posts and have been loving your content.
Hats off for keeping up a steady stream of articles despite having a li’l one recently.
Keep up the good work☺