If you are thinking of starting on your own, partnering is probably one of the most important things that can make or break your venture.
And am pretty sure you have concerns and doubts about ownership and how do you allocate it fairly between the founders? And who exactly is a founder?
Tough question to answer. Joel Sposky has done a fabulous job of answering it in detail here. I tend to agree on most things including on that of not treating a non-full time partner as a founder.
You might know already that I run Tapprs, an online photography & travel equipment rental place.
Thought I will share my view of the economics of running such a business, at least at a small scale such as it is now. Tapprs is still in the validation phase, but the numbers shown here should be relevant even if scaled up. All numbers are actuals, except for revenue.
Disclaimer: I have no accounting background and there could be mistakes on my part. Please do point it out if you find any.
Initial funding:
Assume that the operations began on June 1.
As the sole owner, I put in Rs 1 lakh as equity capital. This is free money (don’t have to pay interest on it). And then I lend Rs 2lakh to the business from my pocket which I charge an interest of 12% annually (realistically, no one would lend to such a business without collateral and interest rates will be much higher). That means Tapprs would have an interest payout of Rs 24000 every year on it until paid back.
|
Source of Funds |
Amount |
| Equity capital | 100,000 |
| Loan capital @ 12% | 200,000 |
| Total | 300,000 |
Use of funds:
Tapprs needs to start. For which, I do these transactions on June 1.
| Item | Expense |
| Purchase of equipment | 200,000 |
| Domain | 450 |
| Total Initial Expense | 200,450 |
So, at the end of the day, my balance sheet looks like
It’s been 3 months since I quit my job.
And I can relate to a quote by Derek Sivers I read recently.
“Most people over-estimate what they can do in one year, and under-estimate what they can do in 10 years.”
To start with, I guess I had too many options to choose from and hence, had been facing a problem of plenty. Naturally, that meant dissipated attention.
Deciding what to do next is not easy and I have been behaving like a flip-flop. Here, here and here.. I have had different opinion. Initially, I thought I would do something related to my hobbies. Then, after some deliberation, decided against it and thought my interest in personal finance and analytics (my regular job) were worthier things to work on. If not my own startup on Analytics, perhaps a job in a startup, I felt.
‘Why do you want to get into equipment rentals?’
A financially savvy friend of mine asked me.
Few of you might know that I handle Tapprs as a hobby venture.
Equipment rental, esp dealing with equipment like photography gear is
I spent an hour or so today reading about Shree‘s pan India cycling trips. He’s a guy I admire a lot not just for his cycling.
It certainly made me think if I should give a shot at long duration bicycle touring.
Also, it only made me wonder if all this hullabaloo about starting my own business really fits my bill, given that I have much wider interests in cycling, travel, photography, birding, books, finance, coin collection, etc. I have always taken my hobbies seriously and I realize that I would have to scale down if I were to do anything on my own, even if its something very simple like running a book library.
Last year, I travelled without much ado in USA, Borneo and in India. This year, ever since I started thinking about starting on my own, there has been only one single trip to Goa. And much to my dismay, I haven’t blogged about my TFN trip in its entirety.. the last 4 days are still pending! Bad!! I’ve been spending almost all time on trying to figure out what start-up I want to get involved in.
I know these are initial days when the jigsaw is fully scattered. But I am yet to figure out a way to fit in the pieces.
While I would love to tell anyone that I run my own start-up or even a small business like a library, I am wondering if I will still enjoy my other hobbies the way I did in the last few years. This is a primary concern and has been holding me back from attempting anything serious.
At the same time, I am thinking more on the lines of passive income creation.
Those avenues that let you create an income stream wherein you don’t have to put in ‘time’ beyond a certain point so that you can enjoy life without interruption. No, am not talking about those 4 hour workweek stuff which sound short sighted to me. I am talking more about a lifestyle thing.
While my investment portfolio is the only passive income (or any form of income these days :-)), I am wondering if I should spend some time on other options too.
An active line of business needs some more serious thinking.
PS: The ticket to Sikkim remained as wait listed much to my dismay. So, I am now wondering if I should take a flight instead.. though that costs around 10k to Bagdogra. The other option is Uttakhand via Delhi. I haven’t decided yet.
It’s been a while since I blogged.
After quitting from work on Mar 11, things have been very slow. I tried to accomplish too many things and naturally ended up not doing much. Here’s a quick update on things.
Travel:
The only travel I did in this period was a quick trip with wifey to Goa and a visit to my in-laws place, Shimoga.
The plans to travel to Andaman didn’t materialize.
Tomorrow, hopefully if my waitlisted ticket gets confirmed, I will be travelling by train to Sikkim (New Jalpaiguri and then by bus). I have plans to visit Varanasi too, if time permits.
Start-up plans:
The start-up ideas haven’t materialized yet and am finding it hard to decide as to what to pursue. Unlike many people who quit with a particular reason to pursue, I had quit without any reason, but with just an idea to do something new in life. I guess the process of figuring things out could take much longer than I had anticipated. And yes, by far, I had under estimated how soon I would set things rolling.
Consider this widely discussed / over referenced scenario.
There is an explosion you are a witness to. Three men are injured.
They are lying injured on the ground. If they do not receive medical aid, all three will bleed to death.
Which of the following do you feel is the best rescue option?
What was your answer? 1 or 2?
Today is my last day at Ness.
I enjoyed my stay of over 3.5 years here! I do believe Ness is a pretty good place to work at. Much better than the biggies – Infy’s, Wipro’s, TCS’s, IBM’s of the world.
In a matter of hours, will add to the pool that is confused if they are unemployed or self-employed!
Why do this?
A lengthy answer if you have a bit of time to waste, read about it here.
Where am I headed?
No clue yet! There are a few initial thoughts like I had mentioned in my earlier post.. but too early to discuss them.
Am I scared?
Absolutely yes! I do sometimes feel like being in a circular room trying to figure out a corner! At the same time, if I figure out that there is no corner, I wouldn’t mind dropping the search and returning back to where it all began… another job!
For how long will you look/try before you give up and return?
Haven’t really given that a thought. Perhaps a year. Or 6 months. Or if there is a drop in my net worth. Or if I figure out that there is no corner in the circular room. Actually, no clue!
Have the last 2 months been of any use?
Absolutely! These 2 months have been so worth it that I now believe this could be one of the best decisions of my life even if it is not successful.
That said, not having an offer and having to figure things out is so different from doing the same sitting on a nice job. Like Warren Buffett once said, it’s as different as reading about s** and actually doing it!
**Away until Apr 1**
Finally,… will be away from the blog and social media until at least Apr 1. I have been contributing too much noise to an already cluttered world. You guys are better off without my self-indulgent updates!
So, don’t bother checking for updates for a month or so!
Four more days before I add to the unemployed pool.
The last 3 weeks have been very good.
I’ve been spending time on figuring things out and am pretty pleased with what I’ve figured out. Very importantly, was able to realize that certain things weren’t for me. Also, been able to figure out few things that I certainly would want in life.
I would say, the map is almost 3/4th done. There are missing links, those can be figured out, by trial and error.
A few key updates
In the last one week, I had been discussing with friends and family about an idea I had in mind. The hobbyists hub.
What initially started as an idea of a book library for a niche segment, morphed and mutated into something you see in the image. I was pretty excited because it stitched together many things I loved.. books, photography, travel, cycling, etc.