Own Business or Corporation

[KYG]

I currently work for a large corporation, building clientelle for them but I have no equity or ownership of the book of business. I also signed a non competition agreement which would be enforced if I left.

I could start on my own, have ownership of the clients, have my freedom but I would take a 50% pay cut initially which kind of bites. Maybe in 5 years, I could be where I am today or higher but there are some risks involved.

Has anyone here left a big company to start their own company and if so, any regrets.

 

[LaCreme]

business

I currently work for a large corporation, building clientelle for them but I have no equity or ownership of the book of business. I also signed a non competition agreement which would be enforced if I left.

I could start on my own, have ownership of the clients, have my freedom but I would take a 50% pay cut initially which kind of bites. Maybe in 5 years, I could be where I am today or higher but there are some risks involved.

Has anyone here left a big company to start their own company and if so, any regrets.

Hey that is a nice one..
Big company has all the tools you will need to do the jobs.
They provide the computer or what ever program and they make it so much easy for you..
When is for your self is more stuffs to think about..like hire people ..ect..
but the result is if you do good all the money is for you..(smile)

Maybe you should start part-time and see for your self ontil you get more stable...

Good Luck

 

[jjinvan]

I currently work for a large corporation, building clientelle for them but I have no equity or ownership of the book of business. I also signed a non competition agreement which would be enforced if I left.

I could start on my own, have ownership of the clients, have my freedom but I would take a 50% pay cut initially which kind of bites. Maybe in 5 years, I could be where I am today or higher but there are some risks involved.

Has anyone here left a big company to start their own company and if so, any regrets.

a 50% pay cut but owning your own incorporated company is about the same after taxes as a salaried position working for someone else...

If you're smart and/or have a good accountant

 

[visiting]

a 50% pay cut but owning your own incorporated company is about the same after taxes as a salaried position working for someone else...

If you're smart and/or have a good accountant

Not that easy JJ.... not that easy....

When your own your own, you have lots more expenses, who cares if you can deduct them, you stil have to pay them, so not paying taxes on the profit is sort of pointless, as you don't have any. KYG the best advice I can give you is do your homework, there are many little things that add up. When people work for large companies they often don't see the actual expenses, many which may be petty, but they add up.

example If your selling products, starting your own business will take CASH, as most of your suppliers, will want to get paid upfront, and since you are going to want to do business with your old customers, you will have to give them credit, as they know you they will expect the same if not better terms than in past relationship..... Then it could go 1 of 2 ways, your customers who want to help you will pay you faster, or the others that even if they are your friends, will figure they can pay you a little later, as you will understand... remember you are friends....


KYG, I would say you need to ask yourself the following questions. depending on your age. What do you want to get out of it? If you are 25 years old, single, no kids, Heck go for it!, If your 60-70, and you have a good paying job, why bother? It all depends on the quality of life you want. so ask yourself, these questions. Will it impact your hours worked/income? for how long? If it flops(worst case), and you don't make any money, can you still manage, what about if you go bankrupt? Can you afford to loose assets? What is your long time goal? What do you need to get their?

 

[Guardian Angel]

I currently work for a large corporation, building clientelle for them but I have no equity or ownership of the book of business. I also signed a non competition agreement which would be enforced if I left.

I could start on my own, have ownership of the clients, have my freedom but I would take a 50% pay cut initially which kind of bites. Maybe in 5 years, I could be where I am today or higher but there are some risks involved.

Has anyone here left a big company to start their own company and if so, any regrets.

If you are young and five years is a small time compared to how long you would expect to work, then that would be a better scenario. Consider the lost wages for five years. Will you finally make enough money to equal and surpass what you would have earned if you stayed put?

The other consideration is will your company be loyal to you for long term employment. There is always an advantage to working for yourself in that you are in control.

My vote is if you have more than 20 years to work before you retire, then now is the time to make the move.

G.A.

 

[jjinvan]

Not that easy JJ.... not that easy....

When your own your own, you have lots more expenses, who cares if you can deduct them, you stil have to pay them, so not paying taxes on the profit is sort of pointless, as you don't have any. KYG the best advice I can give you is do your homework, there are many little things that add up. When people work for large companies they often don't see the actual expenses, many which may be petty, but they add up.

example If your selling products, starting your own business will take CASH, as most of your suppliers, will want to get paid upfront, and since you are going to want to do business with your old customers, you will have to give them credit, as they know you they will expect the same if not better terms than in past relationship..... Then it could go 1 of 2 ways, your customers who want to help you will pay you faster, or the others that even if they are your friends, will figure they can pay you a little later, as you will understand... remember you are friends....


KYG, I would say you need to ask yourself the following questions. depending on your age. What do you want to get out of it? If you are 25 years old, single, no kids, Heck go for it!, If your 60-70, and you have a good paying job, why bother? It all depends on the quality of life you want. so ask yourself, these questions. Will it impact your hours worked/income? for how long? If it flops(worst case), and you don't make any money, can you still manage, what about if you go bankrupt? Can you afford to loose assets? What is your long time goal? What do you need to get their?

I was speaking only of the difference in net pay, assuming that it was accurate and took all expenses etc into account.

Personally I just switched from salary to corp temporarily and when I go back to salary I"m going to do it as a contract with my corp instead of 'employee' status.

 

[sdw]

I currently work for a large corporation, building clientelle for them but I have no equity or ownership of the book of business. I also signed a non competition agreement which would be enforced if I left.

I could start on my own, have ownership of the clients, have my freedom but I would take a 50% pay cut initially which kind of bites. Maybe in 5 years, I could be where I am today or higher but there are some risks involved.

Has anyone here left a big company to start their own company and if so, any regrets.

You should start now if you are young and not hog tied into the company pension plan. I know quite a few people who regret staying with a job because they didn't want to lose their pension rights. In the modern business environment you are not guaranteed that you will be able to realize the full promised value of those pension rights. You are only promised that what you paid into the fund will be returned to you.

To me, that makes the yes/no decision tree pretty simple.

The major questions are skills and finance related:

Realizing that you can not directly compete with your soon to be ex-employer, are your skills transferable to a non-related business?

Do you have enough money to fund your living expenses for one year? Without borrowing money or cashing in your retirement?

Can you borrow enough to fund your business expenses for one year? There is a difference and this is why you separate personal and business finances.

I am a believer in the adage that if you can sell drill bits you can sell cars or any other item. I also believe that a manager doesn't have had to wield a hammer to manage carpenters.

However, are you a salesman? Can you sell a product completely different than what you sell now without using the tools provided by your employer? All businesses are serious about non-competition agreements because it costs too much to build up those tools to just allow people to steal the benefit or their use.

Are you a Leader? When you work for yourself, you have to guard against working too hard because your mind becomes dull and non-creative. You also have to guard against working too little because you will fail in your goals. Leaders and good managers understand this. Very many people don't. Whenever I hear someone complain about how hard someone I am satisfied with works, they go on my "not a leader/manager list". It's amazing how many people who smoke, eat 2 hour lunches and have 4 coffee breaks a day think that they can whine about how hard someone else works.

 

[Thais]

I am a believer in the adage that if you can sell drill bits you can sell cars or any other item. I also believe that a manager doesn't have had to wield a hammer to manage carpenters.

However, are you a salesman? Can you sell a product completely different than what you sell now without using the tools provided by your employer? All businesses are serious about non-competition agreements because it costs too much to build up those tools to just allow people to steal the benefit or their use.

From the experience of closely dealing with a number of successful self-employed people, and a generation of young graduates, there are a couple words I wanted to add.

Yes, if you are a salesman you have the tools and skills to sell anything, from drills to cars. But... are you passionate about what you are selling? Do you really believe in it? People tend to pick up on this. Both customers and employees.

From what I have seen so far, that passion is a also necessity for success, in addition to a comprehensive and well thought through business plan.

 

[ThighMan]

Interesting and insightful comments from sdw as usual.

But as to a non-competition clause, those aren't anything to be taken lightly. However, their was a recent court case dealing with this issue in of all places Cranbrook, where a couple of financial advisors with non competion clauses switched firms and contacted the clients. The Supreme Court of BC effectively said that one can't really own clients, they can just retain the rights to the files associated with them. And thus the institute from which they left, ended up losing the case. So if you're in a similar situation you may wish to seek legal advice on this.

Further to Iwannarocu's note: The effectiveness of an non-competition clause depends on whether you are an employee, manager or owner. If you are a salaried employee, the non-competition clause is usually not worth the paper it is written on. The courts have ruled many times that an employer cannot put a restrictive covenant into an employees contract if it prevents him/her from working in an occupation to which he/she has been trained. However, if you are a manager (usually need to be senior) or if you own the business and sell it with a restrictive covenant, then it is a different story.

This is basic first year business common law and can be found in any business law textbook - I hope it helps.

Of course - anyone is free to disagree with me if they wish.

 

[Burnaby_Guy]

Been there, done that

I left the Big Company that I worked for about 8 years ago (I had worked there for 2 decades) to start my own company. There are definitely pluses and minuses to both types of employment. Don't forget that when you are an owner:

1) You cannot collect EI (except under some circumstances)

2) When you apply for loans, mortgages, etc you have to disclose that you are a company owner and may have to give copies of the company financials as well as your own.

3) When the company has a "bad" financial year, so do you!

4) Not all businesses have the same benefits for the owner. Check into this one first. (Some allow company cars, some do not, etc. Check with your accountant for this one)

5) You have the added stresses of not only completing your own work, but you are also responible for others paychecks. Sometimes you do not get a paycheck so that the other who work for you and the suppliers who supply you get paid.

There are probably other things, but you should weight it all out. It may be better than you think, or it may be worse!

Burnaby Guy