GMB Ep #79: The Sacramento Startup Climate With Cameron Law

In recent years interest in entrepreneurship has been steadily increasing around Sacramento and around the country, leading younger generations to explore self-employment as a career option.  In today’s episode, we have a distinguished guest who specializes in educating entrepreneurs and guiding them toward success. Cameron Law, Executive Director of the Carlsen Center For Innovation & Entrepreneurship in Sacramento, joins us today to talk about the startup climate in the region. Throughout the episode, we dive into how Cameron’s organization helps entrepreneurs, common mistakes entrepreneurs make, trends in the startup arena, and what entrepreneurs should know about creating successful business ventures. 

 

 

Show Notes

[01:40] Cameron’s Background in Startups – Cameron shares how he got into the business world, his work in the venture capital arena, and his contribution to helping entrepreneurs thrive. 

[06:18] Cameron’s Organization – Cameron dives into the mission of his organization, Carlsen Center for Innovation and Entrepreneurship. 

[10:50] Generating Interest – Cameron’s organization works with students and people who are already in business. He talks about what his organization is doing to generate interest in entrepreneurship and to make its programs more accessible in the region. 

[15:30] Evolution of Entrepreneurship – How the mindset of entrepreneurship has evolved over the years in the region and how recent trends in the markets and technologies have influenced it. 

[28:48] Avoiding Mistakes – Common mistakes Cameron sees entrepreneurs make in their startups and bits of advice Cameron has for entrepreneurs to help them avoid their mistakes. 

[35:39] Taking Risks – Entrepreneurs often have to take risks to make their new products or services successful. Cameron shares his take on what entrepreneurs should keep in mind about creating solutions that successfully solve a problem. 

[38:11] Blockchain – Cameron shares his take on how cryptocurrencies and blockchain technology are being adopted in the region. 

[46:05] Sports – Both Grant and Cameron were baseball players in college. They talk about how sports fit into their lives and how experiences from sports have influenced their professional skills. 

[52:47] Get Involved – Cameron shares how you can get involved in entrepreneurial communities in your region and how you can utilize the resources available at the Carlsen Center for Innovation and Entrepreneurship. 

 

Resources

Connect with the Carlsen Center for Innovation and Entrepreneurship: 

Website: www.csus.edu/center/carlsen
LinkedIn: linkedin.com/company/carlsencenter 

Investing in Yourself as an Entrepreneur

Investing In Yourself as an Entrepreneur

Many of us feel an innate need to make contributions to tax advantaged retirement plans every year.  When it comes to personal finance, much of what we read, hear, and see in the media centers on plowing money into your 401k every single year, no matter what.

In general it’s great advice.  Save early and often, and take advantaged of tax deferred compound income.  And if you’re lucky, your employer might match your contributions or make a profit sharing contribution.  If we’re going to build up enough savings to sustain our lifestyle through retirement, this makes perfect sense.

Every once in a while I’ll speak with an entrepreneur who is really working hard to build their business, but they can’t quite scratch together enough cash to fund their retirement plan for the year.  They’re putting all their effort into their company and things are still just a bit tight financially.  They feel like they should be contributing to the 401k they set up for themselves and their employees, but they can’t quite pull the funds together to do so.

For many business owners I speak with, the fact that they can’t fund their 401k for the year makes them feel inadequate.  Like they’re not good at their job.  Like they’re unsuccessful.

I wanted to write a post on this topic because entrepreneurs who feel this way are missing the forest from the trees.  Regardless of whether you contribute to a retirement plan in a certain year, it’s far more important to sustain & grow your business.  Because if you can find a way to grow your business each year, the increased value in your ownership stake will dwarf what you could ever contribute to 401k!

 

It’s OK to Skip a Few 401(k) Contributions

Aswath Damodaran is a professor at NYU who teaches corporate finance, investing, and business valuation.  He publishes estimates of EBITDA multiple benchmarks for use by his students, and anyone else who’s interested.  EBITDA is an accounting measure that stands for “earnings before interest, taxes, depreciation, or amortization”.  It’s a decent proxy for free cash flow, and is often used in quick and dirty business valuations.

For example, let’s say your business does $350,000 in revenue one year.  If your costs & operating expenses totaled $250,000, you’d be left with EBITDA of $100,000.  Here are Professor Damodaran’s valuation estimates for 2018.  The list of multiples ranges from 5-6x EBITDA on the low end to nearly 20x on the high end.  Meaning, it’s very possible that a business with $100,000 in recurring annual EBITDA is worth at least $500,000 ($100,000 * 5).

Now, when I mean quick and dirty, this example is very quick, and very dirty.  Business valuation is a field of its own, and not something I claim to be half way competent in.  There are a ton of factors that go into what a business is worth, and EBITDA certainly doesn’t paint the whole picture.  Nevertheless, the takeaway is important: if you can build a business with recurring annual revenue, that will persist even if you’re not around to drive sales, there’s a good chance you’re creating far more wealth than what you would maxing out your 401k contributions.

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