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I live in Canada and I'm planning to start a company. My question is not about the Business Plan, the initial funds needed or how to hit the market and make money.

I currently have a relatively good paying job. I have no debt, I'm able to buy what I need and want, and I'm saving some money, etc.). Though I am ready to make some concessions in the beginning, I am a little worried about the impact it will have on my financial life.

Is there a better way to start a company without losing too much money or stop earning too much money, compared to the life of an employee?

  • Where is the money going to start the business? Will is be assets that you can salvage or expenses that are gone if the company doesn't succeed? – D Stanley Sep 10 '18 at 21:01
  • Mainly gone... I will buy as little material as possible (it's basically services company, so I am investing in basic office furnitures, my life cost - I still need to eat :) -, and I will pay my providers services, but these costs should be covered by customers purchases (I am buying when it's sold)). – mithrop Sep 10 '18 at 21:21
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    Could you start it as a side business so you don't "give up your day job" and lose that income? – D Stanley Sep 10 '18 at 21:37
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    You don't sound very committed to this idea. You don't want to invest any significant amount of money in it, and you don't want to spend too much time working on it. – Simon B Sep 10 '18 at 21:47
  • @DStanley I think I could be able to make a POC without leaving my day job. However, I won't be able to sell it only the evenings and week ends :) – mithrop Sep 11 '18 at 15:16
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If you don´t want to risk your personal wealth, work with someone else´s money!

Start some form of company with limited liability and find investors to provide the necessary funds. Work for that company and pay yourself for it. Don´t forget management liability insurance.

This sounds very simple, but there are a few things to consider:

  • Not risking very much yourself does not send a very convincing message to investors, so it may be hard to attract any.
  • Investor relations takes a lot of work. Time you don´t have for running the actual business
  • Sharing the risk means sharing the returns. You´ll work, in part, to make someone else rich.
  • Investors will have a say in your company. Depending on setup they may even have the final say, so you can end up getting kicked out of your own company.

Also be prepared that you will need more money in the future and there will come a time where you have to decide if you increase your own risk to get that money or not. If you are not prepared to go "all in" that can mean killing your business after already having invested years of your life into it.

  • Using other people’s money imposes a fiduciary duty on the OP that puts even more pressure on his ability to stay in his current job. – Lawrence Sep 11 '18 at 11:56
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    @Lawrence: If you are paid a salary out of the new company, which is funded on investors money you won´t need to stay in your current job. Of course there is no perfect solution - you can´t eat the cake and have it too, so to say. I´ve been there and done that! You will have more than enough pressure, either way - that is for sure! – Daniel Sep 11 '18 at 12:54
  • That’s an interesting compromise. :) – Lawrence Sep 11 '18 at 12:57
  • Thank you so much for your vision. Love to see the compromise. I need to chose which one I am ready for, but it's cool to know that. – mithrop Sep 11 '18 at 18:11
  • @mithrop: In reality, most startups run on a combination of both personal risk and investor money. I wish u luck in making the right choices for yourself, and a lot of stamina to see your idea through! – Daniel Sep 12 '18 at 7:28
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It depends.

If the business is scalable, you can try starting on a small scale. A colleague of mine did that, and last I heard, their business is now booming. Both spouses were salaried employees at the time, and one spouse continued to be a salaried employee. So it's possible but, from my observations, at least, it's the exception rather than the norm.

Running your own business requires focus. Nothing moves properly unless someone orchestrates the business - and as a startup, that 'someone' has to be the founder(s) because that's where the vision / direction comes from.

Now, that doesn't mean you have to give up your day job as (say) a software architect to run a consulting business, but sooner or later, someone will want to meet you during office hours or a problem will crop up and you will need to be on hand. This will impact your day job.

It's possible in theory to continue working as an employee while starting your own company, and we can even point to people who have done it, but something will have to give. If you use your after-work time, you're giving up the weekend get-togethers or family time. If you get someone else to do it, you give up a measure of control - and it'll almost certainly cost more.

Also, the risk appetite of a salaried worker and that of an entrepreneur is normally quite different. Regardless of how good business gets, there can always be slow periods ... but employees still get paid.

Pulling all this together - the entrepreneur has blue-sky potential, but the risk is commensurate.

The way you phrase your question suggests that you value the stability of salaried life and you're wary of jeopardising that. Treat the business prospect like any other investment: quantify how much capacity you are willing to provide in time and money, then see if that's enough to get things moving, perhaps alongside others who likewise are willing to commit quantified amounts of their own time and their own money.

  • Thank you for your answer! I am actually ready to leave the stability on my salaried life but afraid of losing quality of life (by not paying paid). Stability is not my main concern, cash flow is. I understand that cash flow cannot be consistent if I start a company: nice to know nobody find a solution for this :) Thank again for your vision, very much appreciated! – mithrop Sep 11 '18 at 18:13
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    Scalability is key. My partner and I started a business while we were still employees with the permission of our separate employers. It was done on the extreme cheep and what we wanted to do was of no interest to our employers. It was a small tech manufacturing company with an answering machine and facilities that were mainly a table is a spare room. We grew it gradually and were eventually able to quit our jobs and go full time in the biz. Key is tight control and maintaining high profitability. We retired from it several decades later after an average growth rate of 40%/year. – doug Sep 12 '18 at 6:03
  • Congratulations, @doug, that's the way to do it! – Lawrence Sep 12 '18 at 6:22
  • @doug nice story! Also, it's great to have your employers permission. Did you still work full hours for them ? – mithrop Sep 12 '18 at 12:27
  • @mithrop Yes I did. For 5 more years as it turned out. There was a project they needed my skill set for that I also wanted to do. I eventually had to leave because the, now more mature startup, needed me more than after hours could do. By that time we had a total of 5 employees and a real office and facilities space. – doug Sep 12 '18 at 15:54

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