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Want to Launch a New Financial Firm? Consider These Locations

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And wherever you begin, be ready to do a lot of things outside of your core concentration, says one expert.

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"I think Asia is making a tremendous push for it -- not just as a place to invest, but a place to be based as a company," said Knight. "Those will probably be the two places I would look at. Frankfurt was traditionally a financial center, but obviously their fate depends a lot on the fate of the euro. Switzerland is another one that was traditionally a stronghold of financial business, but here again, they did some stupid decisions from a legal and regulatory standpoint and a lot of investor confidence in Switzerland is shaken now."

Entrepreneurs who are looking for a niche should look no further than San Francisco. But for Knight, it doesn't really matter where his firm is located. "It was never a question of, 'Should we incorporate in Los Angeles?' where I am based, or Nevada because they have cheaper state taxes, or New York because it's the financial capital, because all three still follow the exact same rules," Knight explained. "The United States isn't like Canada. In Canada, each province has its own regulatory structure and different rules, so it really matters if you're in Vancouver versus Toronto. In the US, I don't think it really matters that much. In the age of the Internet, I [can] live in California; I don't have to be in New York. I still get real-time price quotes from New York."

Wherever you begin, Knight said that you should be "prepared to do a lot of things outside of your core concentration."

"Be prepared to wear a lot of hats," he advised. "You're gonna spend a good amount of time on regulation, a good amount of time on customer support. If you're an entrepreneur, you've got to be prepared to be your own lawyer, your own PR firm, everything. It's not just going to be you doing your core competency or what you love all the time. You either have a startup budget to surround yourself with a solid team, or you've got to be prepared to do those tasks yourself, which is not necessarily a bad thing. A lot of it is really fun and interesting. But you gotta realize there's more to running a financial firm than just trading, and you've got to be prepared to take it on."

That said, you don't have to be successful overnight. "Failure is not a bad thing," said Knight. "Failure is a very good educational tool. All the great entrepreneurs that I really admire in the world, whether it's George Soros or Richard Branson or even Mark Zuckerberg. The one thing I keep hearing them saying is, just like in trading, you've got to be able to take on a little bit of risk. Don't wait till everything is perfect and then put your feet in the water. Go for it, take a chance, be prepared to fail, and if you fail, don't give up. Use it as a learning opportunity, pick yourself up, and try again."

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No positions in stocks mentioned.
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