Bootstrapping Success

Welcome to Building Better Developers, the Developer podcast, where we work on getting better step by step professionally and personally. Let's get started. Hello and welcome back. We are just cruising right along in our new season. This is actually season 21 of the podcast and we are getting into sort of like a little bit of a shift gear. If you haven't been around for a couple episodes, we're focusing a little bit more on sort of like that mentor mastermind kind of stuff that we've done in the past, quite a bit on the YouTube side. Now we're going to bring some of this forward into the podcast side and just discuss some of the business problems and such that we've run into as well as technical problems that we hit on any given day or week. Go ahead and that's I guess I should introduce myself in case we haven't met. I'm Rob Broadhead and one of the founders of the developer building better developers. Also a founder of RB consulting and do a lot of consulting from a IT point of view, particularly doing IT assessments and things of that nature. My partner on the other end is Michael Malosh and I'll let you introduce yourself. Thanks Rob. My name is Michael Malosh. I am also a co-founder of developer and I also am a I have my side hustle is Envision QA where we do a lot of focus on the QA assessments, QA audits for your software and also help you build the tools and testing cases you need to actually test your software. So I want to get right into because we talked earlier when we were thinking about things to things we wanted to cover and you brought up bootstrapping in particular like bootstrapping your business. So let's let's sort of focus on that. This one is where did you want to where do you want to go in the bootstrapping discussion? Well we've had a lot of conversations on this over the years. I mean there was one point what about 10 15 years ago where we were spinning up businesses and like to test niches to test ideas in different markets and we bootstrapped things like to the nth degree right. We were doing things for next to nothing open source all the way. But the bootstrapping what I kind of want to talk about today or have our discussion with this is where do we go you know when you're starting out. Yes there's a certain level of bootstrapping you can do you know like how quickly can you get to market with the least amount of money to get up and running for your fixed costs and your startup costs because you know you're going to have some type of set of costs at the beginning to get started but then you're going to have at least some type of residual fixed cost at the beginning that you have to make sure you cover or at least have a way of funding. And then the other thing that in the meeting I had last night we talked about taking it to the next level. You know how when basically when you define your breakeven point when you actually like get into the black when you actually start making money when you actually start having a profit. And it brought up some questions that I never really thought about because we have bootstrapped some things for so long you just don't think about certain things or like if you're running your own business or a side hustle you might not think about health insurance because you might be under your current employer's health insurance or your wife's health insurance or your husband's health insurance. And just there were some things that we had a conversation about last night that's like Well crap you know if you want to quit your day job and do your side hustle all the time there's some things you have to think about going forward that you might just not think about right now. Oh definitely there are had actually recent discussion with another friend of ours about side hustling and in particularly he had a very he would charge us a lower rate than he would normally do from a side hustle because he was like I don't really have to like I don't have to put food on my table you know I don't have the expenses so I don't feel like I need to charge as much. However even with a side hustle you should be you know you should still charge essentially a fair market rate which we've talked about in the past from a from a shifting from side hustle to day job you know real real hustle or day job. There is a lot that need that goes into that and it's a little different now if you go back just a few years if you go pre-COVID there was a huge amount of stuff that people needed to think about because you weren't usually remote. So if you were going to have an office that was going to be your side hustle if you needed to go to an office you need to know what that cost was. A lot of people if you needed to go purchase you know internet connectivity or a laptop or a desktop or things like that there's all this there's a huge amount of stuff that when we work for somebody else in particular when we work in an office we don't think about at all it's just it's just not something because it's just part of the job but then suddenly this is what happened when COVID hit a lot of people were working from home and what they were doing and for those you can't see I was air quoting that they were doing this and they realized suddenly that I can't work they were actually doing work and they're like I can't work eight hours a day on my at my kitchen table let's say I've got too much stuff going on this doesn't work I can't think I'm not comfortable all of those kinds of issues came up or they had like a you know an old 14 inch monitor that they had attached to a desktop that was a I don't know like a 386 or something was from decades back that they had to like hand crank it to start and they're trying to do work with that and it just it was fine maybe if all they were doing was you know browsing the internet briefly but when they suddenly have to go to do work with it they didn't have you know they didn't have what they needed and that's why you saw a big jump in like people buying desks for their home and people upgrading their internet connections and all of that stuff is the kinds of things you need to think of before you step into that you know take that leap of I'm going to go from full-time employee to employing myself yeah exactly and then you run into the other thing is when you go from that or even if you were physically in a brick and mortar still are you run into this situation of well what do I need to start up you know I have a home computer or do I have a home computer or do I have a tablet you know is there something you can repurpose without using work work equipment because you don't want to get yourself in trouble where you're doing your side hustle on your company laptop that's kind of a big no-no stay away from that but like you said though you know people went out and they bought all this but some people don't some people are just starting out there they maybe have been through this and they're like oh okay I want to do something where would you begin so I would start simply by just listing the basics right you know are you writing software okay you know do you need a computer you know can you do everything you need in a notepad you know notepads are cheaper than computers if you do need a computer okay you're going to have to have some basic business things right you get have like we've talked about you know we have to go maybe get a logo figure out your company name you may have to pay for some basic startup costs at the beginning but then that's your startup right so like your domain name your email your website maybe a computer but that's fixed or that's not fixed but that's your startup that's a one-time kind of buy at the beginning and you don't need to renew it it's not what I deem fixed fixed basically means you have to pay it every month regardless of what you're making right startup is just what you have to put in at the beginning so I know we've had some different business models over the years so I've been a C Corp sole proprietor I've been in LLC currently in LLC about to be S Corp so what are some of the things that you've run into when you've gone out of startup mode into fixed mode now from a sole proprietorship I can tell you that you know there's things we can write off with your taxes you can set up a physical space for your home office things like that but that's taxes you know that's right off at the end as far as a business cost things that you have to consider would be like you know do you need to pay rent like you say you know do you need to go into an office but if you can carve out space within your home maybe you can charge yourself rent but then you have to take that deduction off like you can't use that deduction at the end of the year so it just kind of depends on the different business tiers so I'll let you speak to that for a moment oh uh there's a lot there so I think one of the first what I started way back um this was a long time is I this is back long enough that people had phones that you actually plugged into a wall and things like that so what I did when I first started out is I was looking at the idea of eventually working for myself and so what I would do is I go into the office and I'd look around I'd be like all right what do I have in the office that I don't have at home and this is before remote work so I sort of had to like figure it out a little bit it wasn't like I was going to go work from home and go test it out now that that is the nice thing is now what you can do is you can actually you know go work from home if you can if your work allows it at all or if your side hustle allows it at all do a work from home day or a work from a work remote day and honestly if you're if your company doesn't allow it take a you know take a sick day take a day off or something like that and do just your side hustle for a day is just say all right I'm going to go work my side hustle per day and I'm going to test it out I'm going to see how this works out and it may be you don't get far into your day before you realize oh I need A B C and D probably what's going to happen is you're going to realize that you can like you can limp along and then that's where you look at what are my what is it going to take me to upgrade to whatever I need to that's like my baseline that I want and look at those costs and you can either figure out that's where you go through that decision of do I have the money do I want to spend the money to do that or am I going to just like suck it up and suffer for a while and that's going to be part of my goal which I've done that as well where I would adjust my side hustle stuff and basically be you know sort of go into this like hey I'm going to go chase down a project or work for x amount of money and once I get to that point that's going into the business especially from a side hustle you're basically saying okay I'm loading that into the business's coffers and once I get to a certain point now I can go like buy a laptop or buy a desk or whatever it happens to be so it's true bootstrapping where you're going out and you're doing what you can to generate work generate income use that to then sort of like get you set up as a as more of a real business I guess as to oppose a side hustle because it's easy with the side hustles just take that money just like you know just turn it into whatever your favorite little things is it's that it's a little bit like when Tim Ferriss talks about dreamlining and stuff like that where you're just like you go generate the money and now I'm going to go buy a Porsche this is different this is where like I'm generating this money to put it into the business and then I'm going to turn around and use that at some point to have a launching pad so that I can move from side hustle to real hustle and so those are and it you got a brought up a good point is you may not need a desktop or a laptop or a phone there's like depending on what you have already you may have some of the the things you need it may be as simple as maybe you've got like maybe you've got a phone that basically is all you need the problem is you don't want to be typing like that you don't want to have like phone you know texting type stuff you need a keyboard so you can get full-size keyboards for your phone I mean there's things like that you can do so maybe you look at what is the device you need actually you can take that phone and you can also cast its display to a screen so you could use your phone as a laptop essentially if you as a mobile device if you want so I would I'm going to look into that I mean we're like at the very startup portion of it like you said the startup cost is figure out what is it what really do you need to do your business and then figure out what do you what would you like to have to do your business because those things do you know vary what a good example and then I'll toss this back to you was several years ago I'd like I'd had a I'd had laptops that I'd used over the years and I was like all right I'm gonna jump into something new but I really need a more modern laptop and so what I did was just basically said okay I priced out the laptop said this is what I want and then said all right once I can generate x amount of you know that amount of revenue I'm going to turn around and buy that laptop and that's the kind of stuff that yeah you if it's a business if you've got it set up right then you you get to write some of that stuff off or that's a business expense depending on how all of that accounting stuff works disclaimer I'm not an accountant I'm not a tax person talk to your accountant and talk to your tax attorney for whatever you want to deal with but those things are the kinds of things you're going to want to take advantage of as you're shifting gears and it's why you want whether it's a side hustle or a real business you want it to be a standalone its own account everything so the monies don't cross between your personal stuff in your business because it makes it much easier take that pile from your business and say all right I'm going to use that to invest in my business all right back to you talk thoughts on that one since I've otherwise it becomes basically an expensive hobby right because if you don't take the time so that's one thing I want to touch on with what you said and we really haven't hammered that home yet so one of the things with starting up even if you're bootstrapping make sure you keep accounting of everything you buy everything you need everything that you're going to need if you don't this is just a hobby you're basically going to spend money on things as you need it you're not going to be able to write things up and you're not going to really be able to claim yourself as a real business the other thing that was interesting in that because you brought up you know using your phone in that a lot of places that a lot of people don't consider these days because you know with the tech boom of covid with everyone running the best buy all the sales online amazon you know we still have habitat for humanity we still have the salvation army we still have whatever the other one is i just do a blank on it but the goodwill they do have electronics and you can actually find some bluetooth keyboards is stuff like that small stuff that you don't have to spend 50 60 bucks for a high inflated price right now just go to your local store buy a couple broken pieces the other place I found interesting that my neighbor turned me on to a couple months ago was don't forget about pawn shops you never know what the heck's in a pawn shop and they turn around put most of that stuff on ebay so you can also look at ebay I would stay away from some of the other ones that are gimmicky where it's like oh you know pennies on it out read the fine line on that one that one's a little shady you pay like a penny per bid or a dollar per bid for something like that it's very misleading but there are things you can do though cheap also don't forget yard sales I mean if you happen to have the time go check out yard sales the other thing to think about too is what do you need to just get off the ground so like for us being electronic companies we can quickly go spin up a website amazon gives you one for your quote free they've tweaked it a little bit but you can pretty much get a year's worth of web hosting for maybe 15 bucks for the year and then you add a domain name on top of that for about 10 bucks a year so you're still under about 50 under 100 bucks just to get out there then throw an email you know there's things that stack up so as you see I'm building a list of things that come to mind as I'm walking through it don't go out and just start buying things that you think you need take a second take a step back now I know I'm going to segue a little bit but take a second and look at your target market look at your side hustle who are your customers who are you trying to reach where's the work coming from see if you can double down on that with marketing or just you know maybe do social media there's things you can kind of work in for free that take time but you can't discount your time you need to also account for your time and that was something else that was in the conversation yesterday you know with doing these side hustles you know it's like oh cool you know my expenses are like 100 bucks a month so I can just go do a couple jobs a month you know all's good well you can't put your day job for that right because your day job you're getting paid a salary you have to actually break that down into all right what are you really making an hour and then what I found out yesterday is oh if you're going to be your own employer what do you have to pay in Medicare taxes what do you have to pay in payroll taxes what do you have to pay in health insurance costs and it was like oh suddenly my hourly rate just went up a little bit to to kind of supplement that because you're not thinking that way at the end of the day yeah I think and well this is going to definitely be a two-parter so I do want to sort of wrap touch that wrap that piece up and then I want it then we'll you know sort of step into or we'll set the table for the next episode yeah typically you need to add about 20% on top of whatever your salary is and that's what you really it really costs you so if you're making fifty thousand dollars a year because this is easy math it costs the company basically sixty thousand dollars a year for you now that can vary based on benefits and things like that it but and that's not like that's not like a Cadillac health care plan or anything like that's like just basic stuff but having done this several times over the over the now decades there's some things that I think people are very scared about that they don't need to be because there there is there are solutions health care is one of them because yeah you have the taxes it's like death it's there it's except for you see it far more often if you die once you get taxed a billion times but you know you have to do that you have to have Medicare you have social security you're going to have to pay you yes you pay it right now but there's this thing called the employer's share that when you employ yourself you get to pay that part too so you know don't yeah suddenly the the rich guy that's sticking it to you you're the guy and you're realizing that they're not really sticking it to you but with health care is one that a lot of people worry about I don't you know I need health care I have to have vision care I have to have dental I have to have this and that and the other that stuff does exist you can go out there you can find places that whether they're a co-op there are burden sharing type situations and then you can also go get plans that are solo plans it's not that bad there's also ways that you can deal with it especially now because of catastrophic you can have like catastrophic coverage which is basically if you're already pre-existing conditions that kind of stuff there are ways to deal with that and I'm talking like from specifics I've done it with a family of multiple kids I've done it when I've done it I've had it dealt with it multiple times where you've got somebody that is a cancer survivor that is of a you know automatically nixed from a lot of insurance coverage there's all sorts of things like that that you can look into you can look into you can even add like if you want to have a 401k if you want to have a Roth or IRA or all that kind of stuff those things all can exist outside of a company you just have to figure out what you're willing to pay and realize that that you are going to pay it's now something that you don't have to worry about one last one and then we'll well and then I'll toss it to you was just time one thing that and I think I will we'll kick this into the next episode but is the idea of like holidays and vacation days those become very different when you go into working for yourself so I want to let you sort of get the last word on this one so I'm going to go back to your previous one real quick with the insurance the other thing too with you starting out with the side hustle going into business for yourself whatever if you have a spouse that is employed and you can get health insurance through them until you have to actually hire employees or you're make enough that you can basically supplement in your wife or spouse can retire piggyback off of that look at ways where you don't have to add on additional costs see what you can shortcut will be bonuses because we're going to wrap the podcast up but I'm going to talk a little bit more on the video side of this on the YouTube side so a little bonus content there as far as podcast is concerned though we're going to wrap this one up I want to thank you again for listening to us and for as always it's just an email at info at developer.com let us know if you have any questions comments suggestions topics you'd like us to cover questions those kinds of things because that's what we we solve this for each other but we also are more than for you guys for our customers and whoever else is out there that being said we'll let you get back to your day so go out there and have yourself a great day a great week and we will talk to you next time thank you for listening to building better developers to develop a new podcast you can subscribe on apple podcast stitcher amazon anywhere that you can find podcasts we are there and remember just a little bit of effort every day ends up adding into great momentum and great success