2 ms·
> I define this at least as "supports more than one person's salary in perpetuity," Only if you ignore the costs of risk. Let's say you hear that 90% of busin
by robocat 1y ago
> I define this at least as "supports more than one person's salary in perpetuity,"
Only if you ignore the costs of risk.
Let's say you hear that 90% of businesses are financial failures. What is the profit hurdle you need to exceed before you could declare success?
Zombie businesses (one person just earning a living) are common and often the income doesn't cover the risk premium (e.g. of one year of opportunity cost wages/ladder working as an employee). If you're doing a business, then in theory only the financial returns matter. There are non-financial returns (pride, control, yadda yadda) but those apply more to hobbies than businesses (not that I think anything is wrong with starting a hobby business if you're honest with yourself about motivations).
I think the VC rule of thumb is that one investment needs to do better than 30x return over 10 years to cover the losses on the rest of the portfolio. Therefore as an individual unless you get over 30x the return (versus lost wages) then you are under water? i.e. if you quit a $50k/yr job for a year, then only when you're earning $50k/yr AND have gained $1.5 million more then have you broke even.