Comments on: Small Business Entrepreneurship Better than Bogleheads or Mr Money Mustache?

By: JoeD

JoeD — Thu, 16 Nov 2017 21:06:46 +0000

Just found your blog today while doing a search on a financial topic I was interested in.

Then I saw this post and for the most part was thinking, “Yes, yes, yes!” as I was reading it.

Putting aside the fact that I don’t think this is an either/or decision (i.e., one can run a small business AND still use the Bogleheads method of investing assets), the power of having your own small business is not mentioned enough in financial retirement circles.. Frequently on blogs that mention “save, save, save” I also point out “or earn, earn, earn”.

Owning my own business (started 3 years ago) has been a financial windfall that I never could have imagined when I was just a normal “wage slave” of corporate America.

P.S. Your reason #3 is not to be underestimated.

By: Steve

Steve — Mon, 09 Oct 2017 18:09:12 +0000

In reply to Chicago CPA.

Hello Chicago,

I’ve got a lot of posts here for CPAs (obviously). But we don’t have much autobiographical stuff up. To answer your question, though, the only “other” CPA firm I worked at was Arthur Andersen… and then twice I’ve started a firm… (one in the 80s and once around 2000)…

It is hard to bootstrap any business of course. Even professional service firms.

Steve

By: Chicago CPA

Chicago CPA — Thu, 05 Oct 2017 21:29:42 +0000

Steve,

Great write-up (as usual). I hope this isn’t too far off topic, but have you previously written about how you started your CPA firm? I’m familiar with your background as an author/publisher, but was unclear if you had worked at a small CPA firm initially or just went on your own from the beginning.

By: Steve

Steve — Wed, 04 Oct 2017 15:22:35 +0000

Failure rates matter, I agree,
But seems to me we need to look at lots of other factors too as noted above.
Also, it seems to me like the issue of failure rates applies to all sorts of pursuits and also to other routes to financial independence.
E..g., any high probability professional or vocational option is probably pretty low reward. And won’t many high reward professions and vocations maybe have high failure rates? (I remember telling my dad, a physician, that it didn’t make sense for me to follow in his footsteps and go to medical school because in those years, the odds of getting in were so low… His argument then was, “yeah, you can’t think that way… you can be in the 30% or whatever that gets accepted.”)
Also, while I totally believe in the Bogleheads investment philosophy’s potential, looked at through one lens, that seems like something nearly everybody fails at (because it’s so darn hard to be a disciplined saver.
But all the said, I do agree that failure rates matter.

By: Curtis Lee

Curtis Lee — Wed, 04 Oct 2017 12:06:04 +0000

In reply to Steve.

Lots of good reasons exist for not taking on the role of small business owner. But conventional wisdom about failure rates, in my opinion, isn’t one of them.

Lots can be said about failure rates, but four big issues I think we need to consider:
1. Failure rates vary tremendously by industry. Here’s a link to one article that provides some neat charts and data:
http://review.chicagobooth.edu/entrepreneurship/2017/article/surprising-numbers-behind-start-survival-rates
And then the thing to note is that other researchers have found an even wider range of failure rates and success rates.
2. The definition used for failure may not be the same thing as saying the entrepreneur ends up with nothing to show for it. Someone who makes, say, $200K a year for five years and then stops counts as a failure. But maybe that’s not a failure.
3. An entrepreneur isn’t limited to a single attempt. He or she can “go to bat” two or three times… if one wants to use that 50% failure rate, that suggests the chance that at least one attempt will succeed is very high.
4. Unlike passive investments, the entrepreneur has tremendous control over many of the variables that determine success.

P.S. Some of these issues are expanded on in this other blog post:

http://evergreensmallbusiness.com/your-real-odds-for-business-start-up-success/

By: Steve

Steve — Wed, 04 Oct 2017 02:36:49 +0000

They say that most small businesses fail. So you can spend 3-5 years living frugally and working hard, and you are more likely to end up with nothing to show for it.