If you don’t have $250K in the bank, don’t go all-in with entrepreneurship

Alexei Sorokin
2 min readNov 10, 2021

Unless you’re very young or don’t have family.

I tried going all in and struggled miserably, ultimately failing. My situation is a little extreme — 4 kids — but I recommend the above anyway.

The logic is simple.

If you are starting your business from scratch, you can’t expect to pay yourself initially; your business won’t be making enough money. Any business needs time to ramp up from nothing to something. Whether you are doing a fancy tech start-up and funding with external money or starting brick and mortar mom & pop shop, you can’t rely on your early-stage business to feed you and your family.

“Initially” can easily mean 1–2 years. Time is needed to get sales, reach profitability, or finance working capital. Or all of these things.

Let’s be conservative and say it takes 2 years for your business to be stable and generate enough cash to pay the founder.

Let’s say you have a family with 2 kids. Maybe you’re renting, maybe you have a mortgage. Maybe your partner is working, maybe taking care of the kids. Maybe your kids are young, maybe they are teenagers.

Without going into much detail, I think it’s reasonable to assume a budget of $10k/month to break even and maybe save.

No income from your business for 2 years — you need $240K to fund your family’s existence for 2 years.

Let’s say 1.5–2 years into your entrepreneurial life you find out you’re failing. Maybe you find a job quickly, maybe not. I’d reserve a few months here.

Do you see? Some of these assumptions are simplifying but I don’t think the underlying maths changes much.

If you don’t have that cushion in the bank to burn through, you’re likely to create huge risks for your family; uncertainty can quickly escalate into outright distress. It’s not worth it. I know. I tried. I guess if in the end, you succeed then, in hindsight, the nearly drowning experience can be looked favorably upon. Unfortunately that “if” hasn’t happened for me.

The image is borrowed from this article on the topic of entrepreneurship — it’s a great one.

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Alexei Sorokin

A Russian immigrant in America, father of 4, Cambridge and Harvard Business School alum. I run and write every day. https://runningwritingliving.substack.com/