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I couldn't start anything from scratch so I bought the damn thing. That was my MBA. If I failed, I would consider it a sunk cost of education. People spend 100K
by codegeek 6y ago
I couldn't start anything from scratch so I bought the damn thing. That was my MBA. If I failed, I would consider it a sunk cost of education. People spend 100K on a good MBA. I spent less than that on the business I bought. Happily running it for 6+ years now with a bootstrapped team of 15 of us. Ok, some advice now:
There are 3 ways:
1. Join a startup and go from there. Learn how things work in the startup world. You are only 23. It wouldn't hurt to work for a startup for 2-3 years and you may get somewhere after that.
2. If you strongly believe in a specific idea, then try to execute on it now. Like you said, you don't have much to lose. What an awesome position to be in. However, you will most likely fail based on statistics and the fact that you don't know what you don't know yet. You are 23. You have to learn a lot of things in the world.
3. Buy an existing business like I did. This obviously requires capital but you could buy a small say 1K MRR SAAS product/side project. You will have some things already setup at a small scale and you can go from there. Very hard though for someone who has never run a business BUT frankly, this is one way to force yourself into it.Think of the capital/investment as the cost of an MBA.
I would say 1 is the easiest, 3 is easier relatively but needs capital and 2 is the hardest.
Also, don't beat yourself up for not being able to start. Instead, find out what you can do TODAY to get to that destination of doing your own thing. If that thing today means joining an existing startup, do it. If that thing today means hanging out with similar minded folks who are already doing this, do it. If that things today means learning how to code, do it. Do something TODAY. How do you eat an elephant ? One bite at a time. Surround yourself with people who are doing what you want to do. It is hard to find them but try. Good luck!!
- awillen 6y agoWhat kind of business did you buy? I've been looking into that, but it's tough for me to pull the trigger just due to fear of the unknown (e.g. if I buy an ecommerce business and the supplier immediately goes out of business, will I be able to find a new one?).
- codegeek 6y agoSAAS business. I don't understand the physical e-commerce business so I unfortunately am not the right person for those questions.
- Pandabob 6y agoOut of interest, how much capital would one roughly need to buy a 1K MRR? I'd assume the valuation would be some multiple of the revenue with some combination of growth rate?
- awillen 6y agoIf you want to check out pricing on some low-revenue businesses, try Shopify's marketplace: https://exchangemarketplace.com/ https://exchangemarketplace.com/. Much more ecommerce than SaaS, and there's some crap in it, but it'll give you an idea of multiples (which are very low at that size).
- Pandabob 6y agoThanks this seems great!
- codegeek 6y agoFor very small businesses, I would generally not go beyond 2-3 years of multiple on revenue max. But there are many other factors. For example, how old is the business and what is the track record ? There is a big difference between doing 1K MRR for last 18 month vs even 3K MRR for last 2 months. I personally want to see at least 3 years of hard work. Anything less is too risky since the business hasn't gone through the ups and downs enough and frankly it is not enough grinding for me. But thats my criteria. There may be some gems out there that are younger and still worth a look. I have a lot of interest in the business buying/selling space and one day I will be doing this professionally :). For now, trying to grow my bootstrapped SAAS to 5 million in ARR.
- talhof8 6y agoActually I currently work at a small startup (just got thru the 1-year cliff), and kind of saw it crash. Not only business-wise, but also management-wise. The shit kinda hit the fan to the point that the atmosphere got really toxic. The stuff I witnessed opened my eyes for the less sexy, more mean things happening in the tech world. It got me to worry I could easily repeat those same harsh mistakes, making me question whether it's worth it.