Great Salt Lake (Photo credit: Wikipedia)
I’m now in my fifth month of entrepreneurship, and things are going well so far. I’m really happy with some areas, and not too happy with some other areas. Well, life is a learning experience, right?
First, a summary of what I’m happy with, and where I need to improve things:
The good stuff
- I’m happy with the freemium strategy I have pursued with app development.
- I’m starting to interact more with the team at Google, as well as connect with more like-minded souls both online and in the real world, and it’s all been really helpful to date. There are a lot of entrepreneurial souls out there with a lot of passion for what they do. I never used to think of myself as entrepreneurial, but I now firmly believe that everyone is entrepreneurial. We all make entrepreneurial decisions in many aspects of our lives, we just never realize it. I really believe in the maxim of surrounding yourself with souls better than yourself, and recycling and distancing yourself from negative and destructive connections. Promote positive energy, not negative energy!
- I’m also happy with how I’ve managed to evolve the product and manage changes. I’m not the brightest or fastest coder in the room, but I believe that simply doing things with some care and love results in a product 10x better than if you don’t care, regardless of ability. This has really helped me out with managing bugs and features, and keeping quality at a high standard, in spite of the huge fragmented ecosystem that is Android.
The bad stuff
- I’ve made slower progress with the book than I expected, and it’s been a lot tougher than I expected. I’m still glad I started this project, but I need to improve my own abilities as an author — scheduling time, writing, overcoming writer’s block, etc…. The team I’ve been working with is great, and the back and forth dialogue between us has really helped me out a lot.
- I still have an issue with time management. I’m getting better at this, too, and I find taking notes and setting tasks for the day really helps out. I still think I can improve a lot more, especially with keeping a consistent schedule — I’ve been really horrible with this since coming back from Hawaii, as I haven’t recovered from the jet lag and I’ve had an awful schedule. I’ve also dropped the ball on a couple of side projects, and need to look at what I can do there.
- I really wanted to have at least two apps in beta and on the market by now. I spent a significant amount of time working on an app for somebody else, with potential ad revenue as the only compensation. That person has been M.I.A. and it now looks like I may have to throw that effort away. Lesson learned: when it comes to business, unless it only takes a couple of hours, there’s no “being nice” or selling oneself short. Time is precious, and promises sometimes just don’t mean all that much.
Now that you have my summary, let’s take a look at the first three months — February, March, and April. I’ll report on May, June, and July once we’re in early September.
MY OWN REVENUE — FIRST THREE MONTHS
What does the chart mean?
First, you can see my gross revenue, relative to my monthly nut. The red line is my monthly nut averaged out over a year, which includes but is not limited to housing, transportation, and food. My monthly nut does not include the effect of taxes. First, I don’t know for sure what the net impact of taxes will be since it depends on my actual level of income, and because the taxation situation is different between working for another company and working for oneself. Also, if I were to only make my monthly nut, I’m not so sure that I would pay any net tax. In order to compare apples to apples, I want to take a look at things at the gross level, before taxes are applied.
The first three months have been tough
The first couple of months were not that easy. Here are the main trends that I encountered during the first three months of operation:
- Website revenue took a big hit, as you can see in the decline from February to April.
- App revenue started to rise in April, arresting the decline. If not for that, I would have likely touched close to zero.
- I fell below my monthly nut in March and April, resulting in a draw-down on my reserves. This is one reason why it’s important to have reserves stored up before you make this type of a jump.
It looks pretty bad, and if I believed it would continue this way, it would probably have been time to start looking. 🙂 On the other hand, I just started. Which business is an instant success right off the bat? Isn’t that asking for a little bit much?
KEEPING MY HEAD ABOVE WATER
Golden-mantled Ground Squirrel (Spermophilus lateralis). Bryce Canyon, Utah (USA). Image taken by Eborutta. (Photo credit: Wikipedia)
Storing up more nuts
I believe that if anyone working on their own makes at least the monthly nut or more, they can sustain themselves for quite a period of time. Sure, you wouldn’t be building any savings, and unexpected and additional expenses would still result in a draw-down of capital. To be safer, it’s better to make at least double the monthly nut. Then there’s extra room to save as well as cover those unexpected expenses.
Tax punishes less at lower incomes
Taxes are significantly higher in Canada than they are in the US, salaries are lower, and I live in what is probably the highest-taxed Canadian province. Even with all of these taxes, however, I wouldn’t be paying too much if I only made double the monthly nut. My old gross salary was a typical middle-class Canadian salary, meaning in the mid five figures and not close to the six figure range, where taxes can really start to get punitive. Half of this income would be a pretty small income by national standards, meaning my tax burden would not be too bad and I could almost be comfortable at that level.
If you work twice as hard to gain 50% more net revenue, at some point you have to question whether the extra revenue is worth the increased effort.
Is survival enough?
However, is that really my long-term goal? To simply survive and perhaps be a bit comfortable? Not really. I believe there are three milestones on the path to financial success as an independent worker:
- First, I want to at least match my monthly nut, so I’m not at risk of depleting my saved capital.
- Then, I want to match my old gross income at my day job. This is an important milestone to reach, because it validates my choice, and because I think it would be so awesome to reach that point through doing what I love.
- After that, the sky is the limit. If I can go further without sacrificing other important areas in my life, then why not?
I believe that anyone branching out into working on their own should treat it as an integral part of their career, just like any job. That way, they would have the following options:
- If things don’t work out, you still have a great experience to take with you to your next interview.
- If things do work out, you can apply for the positions you really want, from a position of strength.
- If things really work out, then enjoy it!
I want to reach or surpass the second milestone by the end of January next year. Otherwise, time to go back into the workforce.
How do you define your milestones?
Are you an independent worker? If so, what are your most important milestones and goals? Would you be satisfied making half of your old day job income? Three-quarters? If so, why, and if not, why not? I guess it depends on each person. If you were making $50,000 before leaving your job, that money isn’t exactly a big enticement to staying in an office under fluorescent lighting, working on crap you don’t care about. Since the amount is lower, it’s also easier to make it up with your own side projects.
If you were making $250,000 before leaving your job, maybe making 1/4 of you day job income is enough. On the other hand, that’s a pretty big opportunity cost to give up — you could keep working for a few more years and have even more financial freedom down the road.
I’d love to hear your thoughts. 🙂
Congrats on making it through 3 months so far. I also think the coming months will get better, especially since you are diversifying your income. Personally, this last 3 months for us have made us remember what is important to us…that’s the only way I keep from shuddering at my most current numbers compared to the months before.
Hi Crystal,
That’s the downside I guess, it’s variable compared to a job where you know what to expect (at least if you don’t get laid off!). Even now I bet things still look much better than when you had to be under those fluorescent lights eh? 😉
Writing and time management are my biggest struggles as well. I love to write, I just have a hard time focusing enough in big chunks of time without getting distracted with other things I need to do. I think you’ve done a fantastic job in the last 5 months. How exciting that you’re 100% entrepreneur now! I’m hoping to go full time entrepreneur in about 3 more years. Exciting!
Agreed! I still need to work on that.
I think it’s fantastic you have your own dreams and goals lined up, too. What would you like to be doing once you make the jump?
I would like to continue blogging when I’m ready to quit my day job and do a lot more travel. If I don’t have kids I would love to start a blog fully dedicated to traveling the world and develop some products off of that. Or I might teach music and try to earn some income from my photography. The possibilites are endless and that’s exciting!
I think you’ll do an excellent job no matter what you decide to follow, as you’ll be following your passions and dreams. You also have skills, which helps out! 🙂
Great job Kevin! Love the red line NUT number and the charts. Makes things very easy to understand.
Give yourself at least a year before changing course. If you can cover your monthly nut after 12 months I think that is quite an accomplishment!
How long would you be happy just covering and not surpassing though I wonder? There could be a lull for a while as things start building up. Does it scare you not to be saving as much as the past? These are things I wonder about.
thx
Hey Sam,
It does scare me, and I wouldn’t be too happy just covering the nut. Covering the nut is much better than losing money, but I’ll be much happier if I can consistently cover the nut, and I’ll be more at peace if I can match my day job income. That level should give me enough to save 40%+ of my net income, which is an important goal to me for financial freedom.
Kevin, it seems like you are doing a really good job so far! I like your pragmatic approach to the process, as you are evaluating your progress while simulataneously not being too tough on yourself.
Thanks Ray! You guys help to keep me accountable. 🙂
Congrats! It’s not easy to get started and it takes time as Sam mentions.
I think it’s the fear of making the jump in the first place that’s the toughest thing to do. Telling my boss “I quit” was not easy, especially since I liked the guy.
Congratulations! It looks like you’re on track.
Keep me accountable! 🙂
You are doing good man. Keep at it and I’m sure you’ll match your old salary. It takes time to get the momentum going.
My goal is to hit the monthly nut. I haven’t thought much about the next goal after that. Maybe add $1,000 to the retirement fund/month?
Are you getting ready to take the jump, Joe? 🙂
very soon. 🙂
I’m on leave right now and I probably will hand in my 2 weeks notice when I get back.
Sweeeeeeeeeeeeeet!
It always takes a while to shift focus in our lives. It’s more like turning around a tanker ship than changing directions in a 2-man sail boat.
I think all things considered you have gotten off to an amazing start and one that will only continue to grow. You are careful and thoughtful with your moves and that will play to your growth very well.
I tend to be a little reckless at times!
Thanks, Forest! You know you’ve been one of my role models leading up to the jump and beyond. 🙂 I think you’re right about the shifts, too. Most of the first month I was basically thinking “holy #(*&, am I really working from home” and “I’d better make some money!” 😉
Keep it up! As soon as you get your book and apps out there, things should look much better. I was always curious if time management would be a killer for people on their own. Now after reading your story, I know it would be quite a struggle!
It’s one of the more difficult aspects for me at least!
Congratulations on sticking with it, and reaching your three-month mile marker. Did you know that a large number of people quit within three months of online entrepreneurship? In the beginning, they go in with so much fervor, because they think that it’s going to be easy. Then, reality sets in, and they decide that it’s just not worth the stress. So, they quit. No matter what happens, stick around. You’re doing good. The fact that you’re taking notes and setting tasks for the day shows that you are serious, and are planning to succeed. Keep it up.
It’s not that easy, but that move was worth it! Three months would be far too early! I don’t know what the future will bring, but to me, the action is what makes it worth it. Too many people are afraid because they think it’s a permanent decision — meh, the choice of school and partner can be a lot more important, but people aren’t quite as paranoid about those choices. 😉
Thanks for the comment and for the encouragement, I appreciate it. 🙂
I’ve taken three year sabbatical before, and it was fun running businesses. I’m back to doing my IT gig again as salary is good, but now I know that taking a plunge is not as scary as it may seems initially. Congrats!
I think that’s the best attitude to have! It’s not black & white but rather what makes the best sense for you at that current point in your life. 🙂
Congrats on taking this risk! You’re braver than me. I’ve still kept my part-time job. Have you perhaps considered finding a weekend job to help with savings?
If I couldn’t match my monthly nut, I would consider that, but I think long run I would just want to re-enter the workforce as a professional. There’s a lot of overhead as a weekend worker and not much benefit to it. I would try instead to take on additional contracts for 3rd parties.
Great post; very interesting! On that voice app, I was wondering, will there eventually be (or is there) a voice to text app that bloggers can use to “write” while driving or whatever? Now, that’s something I could use!
Hi Darwin,
I agree! Android phones are not quite powerful enough for this yet, but I don’t think the day’s too far away. Google already has the technology so honestly I’m just waiting for them to make an API for it; otherwise I’ll have to do it the hard way and build everything myself. There’s open source libraries out there, but the phones are not quite there yet to do this on their own.
Thanks for sharing your insight. Love how you are honest with yourself and your problem areas. I try to promote positive energy whenever I can. Not trying to rain on the parade, but when you made the leap, did you give yourself a time limit in case things don’t go the way you want? For example, if I’m not earning my nut after 3 years, I will go to Plan B? Just curious. Kudos for making the leap and keep your head up!
I think 1 year’s a good time span for me since I’m still young. If I had enough savings to go 3 years just earning the nut, that probably means my kids are grown up, out of the house, and I don’t have quite the same savings pressure as I do today.
P.S. Thx for the kudos! You’ll also help to keep me accountable. 😉
Keep up the great work!
I’ve read from your blog it’s been hard at times…but you seem to have a diversified plan and I won’t be surprised if you exceed your expectations in another year or so.
I look forward to what you have in store for us in the future.
Cheers,
Mark
It’s a lot of fun, and I look forward to the next update, too. 🙂
I love what you are doing. You bring up a good point about the salary that you are looking to replace factoring into your decision to stay at a job. Wealth is another factor. Good luck, and thanks for sharing your progress.
Thanks Roshawn! I’ll try to get these out every three months or so. 🙂