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

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.