Side Hustle Has Me Uncertain About the Future
Throughout college, my dream was to land a role in private equity. Did a short stint at a litigation focused valuation firm then transitioned as an analyst at a LMM PE firm in California. I enjoy my colleagues, a lot of the analysis is interesting to me, and it's fun evaluating deals and helping our portfolio companies. There are a couple of key downsides:
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Firm has closed one deal in two years as an analyst. We have a really good pipeline currently, but seem to have trouble getting under LOI. Typically valuation-driven.
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I've been told I am a great analyst and do all of the right things, yet EOY came and went, and there was no talk of comp adjustment or promotion to Associate. I am entrepreneurial and if I'm not working toward moving up, I get bored.
Where it gets a bit more interesting is my side hustle. I buy, sell, and source vintage luxury goods and make ~$15K in margin per month in my free time while barely trying. I do my inventory sourcing after work and pay a family member to ship orders that I receive during the day.
One part of me wants to stay in PE and maybe even lateral to a bigger shop to pursue my longtime dream of being a great PE investor. The other part of me wants to see how much money I could make if I did my side hustle full time and went from doing it ~10 hours per week to ~50-60 hours per week. Not totally sure how fulfilling this would be.
Not entirely sure what I'm hoping to get out of this post. I guess some different perspectives would be nice.
Based on the most helpful WSO content, it seems you're at a crossroads where you're balancing the stability and career progression of private equity with the entrepreneurial allure and current success of your side hustle. Here are some perspectives to consider:
Career Progression in PE:
Side Hustle Potential:
Lifestyle and Fulfillment:
Risk vs. Reward:
Hybrid Approach:
Remember, there's no one-size-fits-all answer. It's about aligning your career with your personal goals, values, and what you find most rewarding. It might also be helpful to network with others who have made similar decisions or to seek a mentor in the PE space for guidance.
Sources: LMM is underrated, Warning re: LMM PE, Any career regrets after moving from PE to public markets?, Working in PE is hell on earth, Warning re: LMM PE
I would say scale your biz and bring on ppl to help, pay them, and grow the side hustle to a point where you're not involved and then adjust accordingly on professional front at the next proverbial fork in the road.
If I was in your shoes, look for how much more you can grow the biz and maintain sustainability, and then bring on personnel and infrastructure to support where you're spending time doing mainly oversight.
On the career side, transition out as might see fit, where if the firm has closed one deal in two years... personally I'd probably play out until sometime Q3 of this year, see where things go, and figure out the criteria and the bottle necks of the other deals that didn't go thru and try and forecast if your pipeline is gonna be subject to those limiting factors.
In terms of jumping to a new firm, personally instead of moving up in terms of range, I'd move up in terms of volume and deals completed (volume QUALITY deals completed), I'm not in the PE space, so I'm not really sure if that's sound advice on the PE side, but w/side hustle would def get that to a place where it's running it's self (without of course giving away too many of the "tricks of the trade" to the ppl around you bring on).
BrotienShake
Scaling and delegating is a good idea. I already have a family member fulfill orders for me, so the only other “work” is sourcing inventory, taking photos, posting for sale across various platforms, and storing inventory. Sourcing requires the most “skill”, but could probably find someone to take photos, post for me, and negotiate with prospective buyers from my account.
Nice! I was more saying scale to a level of a consistency / sustainability, and then getting as hands off w/biz as possible...
Sounds gd brotha and all the best cheers..
Did you talk to them about comp adjustment or promotion...? These LMM firms are not like BBs where there is a timer and then you automatically become ASO. You should be having development / goal-setting conversations somewhat regularly and promotion timeline/items to achieve that should 100% be on there.
I would keep doing the side hustle at the scale it is at - sounds like you make plenty, and why leave your job for it if you don't have to. You can move to a larger PE firm and still do that on the side. I get the desire to scale, but seems like you found a great niche... the reselling market is very expensive and competitive at scale (look at TRR's margins...)
All are good points. After year end passed, I sat down with my senior and expressed that I would hope to be an ASO this year. He had told me in my 2022 review that this was the plan so I was surprised when we were told there was no news.
To your other point, margins and scalability are definitely reasons why I haven’t jumped into doing this full time. I pretty consistently hit a 15% gross margin, or about $500 in gross profit per unit. I’ve heard that in my specific niche, margins can shrink and hold times can increase as you try to scale. I know people who have scaled very successfully and make $2-3m+ in operating margin and others who have failed. I think it really depends on how talented your sales associates are at buying and selling from and to clients.
Well done, I've always wanted to do something similar. What made you go into this side hustle? Do you have a background in selling luxury goods?
How long have you been running this side hustle? Whether you stay or leave depends on how sustainable it to make $15k/month.
Thank you.
no background in luxury goods, just a long time observer and admirer.
I’ve been doing this for two years, in 2022 I did about half of what I did in 2023. I’d expect to continue growing as I gain capital until I reach my time capacity, which would probably be about 50% more than I’m doing now while also holding a full time job. I’ve made it somewhat formulaic, where I simply hold myself accountable to buying x units per week at x% below comps and have never had trouble hitting my targets regardless of market fluctuation. I believe I could scale it to pull half a mill in annual profit in 2 years if it was a full time gig without breaking a sweat.
How do you even research markets as a reseller? Where do you get the data from to know if a market is trending or falling. And how do you source suppliers?
PM me? Interested in learning about your business and potentially partnering
Sure PM’d you
Can’t send you a PM given your profile.
Mind sending me a PM too? Curious if there’s a way to scale and everyone benefits.
Hey there, would love to learn more here. Would you mind PM’ing me? Really appreciate it!
Lol everyone now wants to copy OP's business
Plenty of space for everyone.
Could you also please PM me if you have the capacity? Not based in US but interested in certain niches. Thanks!
Haha Pm me too if you’d be happy to - u want to know about this biz! Def out of your market here :)
Also — my two cents — sounds like you’ve got a cool opportunity to scale a business. Wonder whether there’s any opportunity to “test” before you make a leap? Not sure what your shop is like. Could you drop to 4 days/week if it’s quiet, take a month off and go hard and assess viability? Recruit for a new gig and negotiate 6 months in between (seen this done). I’m APAC though and things apparently more chill here :D
There's a Chinese saying called 破釜沉舟 (Burn the Food and Sink the Boats). A Chinese general was leading his army to a battle where everyone knew they were facing an enemy that was 10x their number. When he crossed the river to get to the battlefield, he made his army burn all of their food and also sank their boats, this way there was no return home if they lost the battle, and the only way for them to eat is to defeat the enemy and take their provisions. They then went on the win the war.
I was under a similar situation to you OP and I was hesitating. It resulted in me being terrible at both my finance job and my side hustle. I ended up quitting to "sink the boats" and force myself to grow my business full-time. It's now much bigger than what I could have imagined. You are young; if this doesn't work out, you can always hop back into PE. With no family, no obligations, and the business already being so profitable with you barely putting in any effort, imagine what you could do with it if you put your mind to it 60 hours a week.
What area is your business in if you don't mind sharing?
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