Detailed Notes
In this episode of the "Developer Building Better Developers", our hosts explore the journey "From Side Hustle to Success." They delve into the intricacies of turning a passion project into a sustainable business venture. With decades of experience, the seasoned hosts are no strangers to discussing the challenges and nuances of entrepreneurship.
Recognizing the Shift: From Side Hustle to Success
The episode picks up the topic from the previous episode, "Bootstrapping Success," by testing niches on a shoestring budget. They emphasize the importance of recognizing when a side hustle evolves from a costly hobby to a financially viable endeavor. As they embark on this discussion, Michael shares insights from his extensive experience in business development and lessons learned through his journey with his side hustles.
Identifying the Break-Even Point: Crucial Insights for Success
Michael underscores the significance of identifying the break-even point, particularly in service-based businesses where time is crucial. Meticulous accounting and evaluation are essential for accurately valuing one's time and pricing products to cover costs. These practices are imperative for transitioning from a side hustle to a successful full-time business.
Balancing Time and Effort: Keys to Effective Management
Rob adds additional insights by highlighting the necessity of tracking time invested in the side hustle. Stressing the importance of maintaining a work-life balance, Rob shares his personal experience. He meticulously logs hours spent on side projects. This emphasizes the cumulative value of consistent effort over time on his journey.
Strategies for Fair Compensation: Billing and Hourly Rates
The conversation shifts to the complexities of billing and setting hourly rates for services. Both hosts delve into strategies to ensure fair compensation and safeguard against potential losses. Strategies include requesting upfront payments and implementing non-refundable deposits, which are taken to secure clients' commitment.
Establishing Boundaries: Mitigating Risks in Client Engagements
Drawing from their experiences, Rob and Michael emphasize the importance of establishing clear boundaries and expectations in client engagements. They advocate for proactive measures to mitigate risks. These risks are associated with unpaid invoices or abandoned projects. They emphasize the need for transparency and assertiveness in client interactions.
As the episode concludes, Rob and Michael underscore the significance of strategic planning and financial foresight in navigating the transition. Aspiring entrepreneurs can mitigate risks and foster sustainable growth in their ventures by adopting a pragmatic approach to billing, time management, and client engagement.
Additional Resources
A Project Management and Pricing Guide for Success - https://develpreneur.com/a-project-management-and-pricing-guide-for-success/
Work Balance And Trading Money For Happiness - https://develpreneur.com/work-balance-and-trading-money-for-happiness/
Strategies for a Successful Business Launch - https://develpreneur.com/strategies-for-a-successful-business-launch/
Behind the Scenes Podcast Video - https://www.youtube.com/playlist?list=PLxXUHr7mZ-jF8Ip1xF8LUyY97Uzh5QWRq
Transcript Text
[Music] and we're back and we are going we had sort of a cliffhanger last time and we're talking about bootstrapping and also in what we refer to as sort of like double dipping is how do you use your or can you and ways that you can use your job as part of benefiting your side hustle and vice versa and actually if you go look at the develop andur book on building better developers that's actually one of the things we talk about extensively is how to really it's about building you this is about building a better developer this about making yourself better through experience through certain skills and specific problems that you've solved and the nice thing is your side hustle you can use some of that to solve problems or really more laser focus maybe on problems that are going to help you out on your day job and vice versa and sometimes you're going to be in situations and there are a lot of people that I've talked to over the years where their day job they are allowed to they basically invest more in a project or something that a product even that they're building at their company and of course you want to make sure that you talk to everybody so you're legally covered so your company doesn't come after you that you own what you need to own but sometimes people are allowed to basically build something at work that they can go take and sell it's just they have to make sure that it's you know properly licensed to their company and things like that so if you depending on where you're at and what your boss is like things like that you may pitch something and say hey I see where we could really take this thing that we're doing we could spin it into a product but also it doesn't seem to compete with what the company does so hey can I like can I work on the side thing or can I focus on this a little more and it have that discussion but don't be afraid to and don't be afraid to think like outside of the box a little bit and not think like I have to work my side hustle I have to work my uh my day job we are doing the same thing we are double dipping and so we're doing the video stuff and we're doing the podcast and right now we're going to go ahead and double dip because you guys got the bonus stuff but right now we're going to go into the podcast as well so you get to see us step into the side of it someday we're going to stream this it's just right now it just ain't worth it actually just our schedule's not consistent enough that being said hello and welcome back thank you for coming back to the developing or building better developers podcast I'm Rob the other guy that you're going to soon hear is Michael we are talking deep into season 21 hundreds literally hundreds of episodes in Apple only keeps up with the last 300 we're like rapidly approaching three times that amount definitely past two already this season we're focusing on business problems and just sort of talking about a problem of the week some of the things that we would normally see in a mentor or a mastermind kind of group and this episode we're continuing last episode we talked about starting up a business and the costs and things like that little bit of bootstrapping and this episode we're going to tweak that a little bit we're g dive a little bit more and focus on the basically breaking even how do you go from and it's really a two-step process how do you go from I'm running a side hustle and it is just an expensive Hobby and to like I'm breaking even so now I'm doing this thing but it's paying for itself and then the next step obviously at some point you want to get a little bit of money out of that but then the next step is when this generates enough money that it's like time for me to quit my day job and go work on the side hustle so that's what we want to talk about this episode first I'm going to throw it over to Michael and say hi and see what your thoughts are on this as we start into it hey everyone Mike molash Vision QA and co-founder of developer Nur uh yeah so it's kind of funny you know we talk about this all the time you know we talk about bootstrapping businesses we talk about doing side hustles and there's always that point when where do when do I say that my side hustle is no longer a hobby you know I started this to make a couple bucks on the side maybe buy a PlayStation or buy that new fancy phone but now it's like oh it's actually making money um you know at first it's costing me money but now it's like hey I can buy things now I'm making a small profit or breaking even and there's then you want to start looking at that next step you know well can this supplement my day job or should it you know it all depends on your lifestyle choices and what you're comfortable living with mon monetarily wise uh what I'd like us to kind of touch on this time is the break even point so when we talk about breaking even we have to consider those additional cost right where before we're looking at okay well I'm if you're a service based business your time is your cost right so you need to make sure that you justify or have a justifiable cost to get paid for your work you want to make sure that you're charging what you're worth so that you can make a living however if you're selling a product you need to make sure that you're selling the product for enough to supplement the cost of either buying the product making the product shipping the product so you have to figure out what all your hitting costs are there in order for you to break even yeah and this goes back to something you mentioned earlier is the idea of making sure that you've got proper accounting of what you're what you're spending on this I include uh and we sort of touched on this a little bit is hours I have for since I started since I was side hustling and I wasn't even doing any business stuff I was just s hustling and had like my you know I had a day job and all that kind of stuff and I wasn't even generating money out of my side house so I still had a little log it's sell spreadsheet or actually at that point I don't remember it was a some spreadsheet and I would just put out like did I you know i' put an hour here if I put two hours there whatever it is and I I had sort of a goal of spending you know 10 to 15 hours a week on basically it was side hustle and career development stuff worked out great over the years and I would you know track that stuff and it that turns out pretty sizable that's like you start doing that that's easily going to be 500 600 700 hours a year and that stuff starts to add up you do that four years that's a 2000 you know that's ,000 Plus hours that's a full year of something that's a full year experience in that thing that you're doing now a lot of what I did was to to sort of augment and uh accentuate my day job so if there was something I was needing to learn for my day job that was what I was I was going deeper into it in my my side hustle stuff but as you get further into that especially when you say now what is my am I breaking even what am I making versus what am I spending you have to includ include the obvious things I think for most people are the cost is and people forget to do this but what does it cost me to generate this what are my what is the cost of goods sold what's the cost of materials but then the thing that we tend to miss is time put into this and even stress it's like what is it how is this stressing me causing me issues that even though I'm not working on it I'm thinking about it and this comes from someone that was thinking about stuff all the time and so there you know you you have to you don't have to but you probably should if you want to stay sane be able to draw lines between your life and your business or your side hustle kind of stuff and this is where have you really do need to I think keep track and there's a lot of tools out there whether it's you know if you're a bill by the hour in some way at work they probably already have stuff like that like uh Harvest and some of those kinds of time tracking tools or just do it yourself or just like checking a watch and just making sure that you're getting into the habit of doing that I think is very big and so this first part is let's I'll toss it back to you on that thought of time put in and then the nice thing that is figure out what your hourly rate is and just multiply that out it's like you need to generate that amount of money your thoughts yeah so it's interesting you were saying about you know the stress and and the time you know that you put into it and the stress that can come out of it CU if you're doing this full-time then your side hustle your business is your business you're work just working on that but if you have a full-time job uh be it hourly or salary you're working probably 40 to 60 hours a week on a day job and then now if you're trying to tack on a side hustle you're taking another 10 20 hours or more to try and get something else going the problem you run into is it or at least I run into this a lot and I think you have too Rob but um I don't sleep much which is kind of a blessing and a curse where I look for things to fill my time and typically it's looking for side hustles or learning new things in technology because I'm a huge geek when it comes to technology you know I I don't mind picking up my Raspberry Pi and trying to put together some new project with it or figure out how to code the thing is if you are doing something that requires a lot of intellectual thinking or very deep thinking uh at your day job if your side hustle is very similar to your day job you potentially could burn out twice as fast because not only are you working 40 to 60 hours a week for someone else doing this thing now you're doing an additional 10 to 20 hours you are you could essentially be compounding the problem so if you don't make sure you take breaks schedule times or try to do things slightly on a off-kilter schedule you're going to burn out and you may never get your side hustle off the ground you may walk away from it completely so you have to be careful of that the other thing is time I'm bad about this I think we all are at some point we get really good and strict at using tools to help us keep track of what we're doing but then you could very easily sit down and you start watching a TV show on Netflix next thing you know it's eight hours later you've watched the entire B watched the entire season you could do the same thing with work you could sit down get very interested in something you're working on next thing you know you're 8 to 10 hours into this but you only build for 4 hours so you have to be careful and more mindful with your personal work and even your professional work if you're working for a corporation what are you putting time to what is your ta you know what are your tasks costing you TimeWise and then that kind of leads to your billing and your hour hourly rate if you really don't know what you're putting in if you're not keeping good records of that then you could be charging $100 an hour but getting paid $5 an hour it you just have to be very mindful of and keep track of how you're doing that and that's where I think it's it's very helpful if you're doing a side hustle to have like business hours for your side hustle uh for many years that was one of the things I did I said I was able to track my hours so well because I would work from like 9 to midnight or 10 to 2 or something like that I had like sort of certain you know certain days certain nights I had certain schedule that was like this is my side hustle time and we I've talked about that over the years where it would be things like hey I would work from 8 to you know from 8 in the morning till noon on Saturdays and that was just like a nice chunk to be able to do that now that allows you to get into that that habit of tracking the hours and then figure out what does that cost what am I spending as like you know what is what do I need to make technically to be able to pay myself for those hours and you may think of it and it's really difficult because you're like it's just for fun this is a side hustle it's just a hobby well that's all well and good but when that hobby suddenly is your full day job now you've got a couple of things that complicate that one is now what's your hobby gonna be are you g to just blow that out and now you're going to add 40 hours a week to that or are you going to have like is this going to allow you to change to a different Hobby you know the sub the you know bad answer to that is probably you're going to take all of that time up together if you run a business it takes more time than like than being an employee I have literally talked to people and you know discussed amongst family and stuff like that having a job and treating it it's like to me it would be retirement because it goes from or partial retirement because it goes from something that can consume your life completely where you're easily spending 60 70 hours a week on it to something where you're like I'm going to spend 4 I'm going to do my 40 hours of work and whatever my commute time is especially these days with remote work I do 40 hours of work a week and I'm done and you don't think about I think most people don't realize that if you do eight hours of work you really probably only got at best five or six hours of like productive work in there and that's something that when you start billing and doing things like that you're gonna you're probably going to be more sensitive to one other part of that is taking that 15 hours a week let's say that you're doing on your side hustle on your hobby does it actually grow can you grow that to 40 hours a week is that something that because it may be that you can go build exactly what you need 15 to 20 hours a week and it's awesome and you're always busy but if you now suddenly have 40 to 50 hours a week that you're spending on that are you going to just like burn through that really quick is there not that much work out there so there's some things like that that are definitely bigger issues you want to take into account so I kind of want to touch on the first part of that uh when you're talking about you know looking at your rate your what you're charging versus what you're making uh to determine if you can you know sustain yourself one of the biggest problems I would say in in software in technology right is a you're have a boss or you have an idea and you sit down you throw out a proof of concept next thing you know your proof of concept has been sold it's now in production and you have this uh duct tape rubber band concoction that is now going to cost you so much time to maintain or you start out Billing at such a low rate you have a hard time kicking that cost up because you basically have set yourself at a billing rate that's not sustainable that's true as well is you have to you have to that's where you you never want to undervalue you particularly if you're doing services and even your products the same way you don't want to create a product in your side hustle or provide a service that you're doing at A Cut Rate now if you're doing it as a uh a loss leader or something so you're building stuff out that's one thing but you have to at some point be able to turn that nozzle up and say okay now I'm charging my real rate the rate I'm expecting out of that and see if that's sustainable and then see if that's actually extendable because you're really growing your business at that point you're really going from side hustle to a full-time you're essentially growing your business now the nice thing about a side hustle is you can use that side hustle for a while to reduce the risk of jumping out of your you know leaving your your job and you can be generating Revenue that you can put this again goes into like put it in your business coffers so that if you're going to pay yourself a salary and one thing I recommend is go to if you're going to pay yourself a salary is go figure out what that salary cost you can go to like you know quick and uh QuickBooks and stuff like that there's some things you can do that says basically if I pay x amount this is what I'm going to earn you know this is my annual salary this is what it's going to cost uh this is what my take-home pay is going to be this is what I need to hold aside for taxes and all that kind of good stuff so you can figure out what is it that you need to earn and for me that's really what is it comes down to can I what is my target per week per month that I need to bring in in Revenue in order to sustain my you know the life that I'm accustomed to or that I want to be accustomed to what does that what does that require in me you know in customers and billable hours and products sold whatever that happens to be and now it's just a math problem it's basically like can I do that and the nice thing with being the side hustle is if I need to be able to ramp up for a while I can sit there and I can start putting some money into the business so that I can jump and know that I at least have you know a month or three months or six months of a Runway that I have the bills paid so that I'm going to be able to actually do this right and this has been discussed many times over the years you don't want to get in a situation where you're just you're so hungry you'll take anything and they end up soort like you said is you like you undersell yourself you undervalue yourself you're taking this stuff just to pay a quick couple of quick bills and the next thing you know you're basically committed into something that you really can't or don't want to afford Bo to be a part of exactly the other thing with that and we haven't really touched on this too much and this might be another conversation uh we can carry into but with billing or setting hourly rates and selling your services now products are a little bit easier to calculate because you know okay I have a set salary here's how much my products are here's how my products I must sell uh to maintain this income right when it comes to Services we're out there constantly having to hustle to get business we're constantly having to find customers or you find a great big customer and that's great it'll maintain you for a while but as you start getting bigger and you start having larger clients L larger projects um do you start building in buffers where if you take on this 10-week project do you require them to pay you 10% up front uh that is non-refundable if they walk away from the project within the first or set up to where you know you do 10 hours yes okay we're all on the same page but because you start to set budgetary or monetary uh you know fixed not fix but like schedules of money that would be coming in based off of those uh projects and then if they suddenly walk away you're left with nothing so how do you kind of buffer that in or is that something we should kick to the next one um I think we can cover that sort of quickly in this one and that's it really it's an interesting approach and I've I've seen it done a couple different ways I've done it different ways I usually one I usually I have been told many many times I'm way too I don't charge enough I'm way too easy on on billing I'm just way too light on that so I am probably the wrong person to ask my mentor is um he does stuff up front and he usually does and it's not bad thing is it's a and it's going to be a bigger project so you know if it's going to be a three to six month project then what you do and I've this is very common is that you're going to do like four to six weeks that you like if we're going to start it I'm going to send you an invoice for the first four to six weeks you know whatever that hours is like you know for 150 hours I'm going to send you invoice for 150 hours and what I'm going to do is I'm going to start you know every week I'm going to say hey I burn you know 10 hours 20 hours 40 hours on this and we're going to keep that little you know ticker until we go down to a certain point and then I'm going to you know I'm going to get down to whatever my amount is maybe it's like at every when I get down to 20 hours or less I'm going to invoice you for the next 150 hours I have seen it done uh a lot and I've I've even tried in the past to do like half up front and half at the end but what you want to look at in those situations is like what is making sure that your Revenue flow is something that makes sense and that it's it makes sense for your customers if you if you've got a two-year project and you want a half up front and a half at the end that means you're going to take a Year's worth of of that there's you know two invoices and if it's a let's say it's a you know $500,000 project then you're going to ask going to pay you $250,000 before you've done anything and then you're not going to see another dollar until two years from now it's probably not going to work for them for for um for their cash flow nor is it going to work for you for your cash flow so a lot of times I'm going to look at that first I think like yeah it's like it's not bad to say hey I need 5% or 10% off or upfront basically to cover maybe like your first week or two or maybe your first month depending on how you do it particularly you know if you're going to hire somebody or you're going to you're getting other people to commit there's money that you have to put out or something like that then you're going to want a little bit more up front and you just say hey I've got bills to pay I've got people that I've got you know payroll to make I have to have the cash I can't risk a delay from you guys or sometimes you just not get paid I've had a couple of times I've gotten burned and usually that's when I I'm a little harder uh you know moving forward on that where you like you step into something and maybe you get paid for the first you know first invoice but now you get you know an invoice that's missed and another one's late and the next one's late and the next thing you know you're a lot of money into this that they owe you and they may walk away that's I've had stuff where they've come back and they've they know now that they have leverage so it may be that they you know it could be a you know just pick a number it could be a thousand project and they paid you 50 bucks but now they owe you 800 more of work you've done they have leverage there to say hey well we'll pay you this but you know we're thinking we need a little bit of a discount or something like that and you know those are the kinds of things you have to again you have to be more wary of if you're running your own business that you probably aren't going to have as you're not going to see those issues as much as an employee and so you have to understand that there's going to be there's going to be losses there's going to be like a customer is going to back out customer going to want money back you know things like that there's going to be things you're going to have to deal with that if it's your bread and butter if that's how you're paying the bills then it becomes obviously a lot more serious kind of issue for to have those kinds of things hit you well would it be interesting so this is kind of something I've been bouncing around a little bit and this goes back to I think it something in the 4-Hour Work week about dealing with offshore uh I think it was your man in India like kind of Outsourcing your life kind of thing where the first guy yeah at like $5 an hour he ran up a $200 a bill for something that should have taken an hour whereas he went with someone else at like $20 an hour he was build $40 but got it done quickly you know in two hours it's one of those where especially when you take on customers do you I almost want to Tech on like 10% up front like you pay 10% non-refundable front at the start of the project and that covers like the first 10 hours or something small first and foremost to get them to commit actually put money hey I want to do this but that is also non-refundable but it's applied to the bill at 10 hours so okay we will deduct this from your bill if you stick with us but if you drop at that time hour or even before that 10 hours I keep that money like basically that is non-refundable but it's one of those where it's like d you kind of I don't want to say carrot and Cake kind of thing but it's one of those where it's I kind of want to get customer Buy in that they are going to commit to this for at least the initial part and then if they like the services cool if they don't they can walk away or vice versa you know if they walk away right at the beginning it's like well we decided we didn't want to do this well you just wasted my time cuz I'm not going to get paid for that but if you paid up front then I'm not out you know what I mean it it just it's kind of one of those things I'm I'm struggling with and wondering what your thoughts are on that that is really a it is really a challenge when you are uh if you're particular if you're in a service based kind of thing and particularly some sort of consulting or something like that because what you end up with is that you'll and I've had this I've had situations where you you have a customer just keeps coming back and it's like an hour here and an hour there and an hour here and I want to talk about this I want talk about and they're they're doing it as part of their uh maybe their RFP process kind of thing or something like that where they're trying to just like figure out if they want to work with you there's a certain point where where I'll say to them and it's I think it's totally valid to sayy look like it is you know as they say fisher cut bait kind of time it's like look we've spent you know our company myself however it is I've invested x amount of hours into this it is a point where if we're going to go forward I need you to step in as well I need like I need to invoice you for these hours or we need to something and I and it's something you don't want to get into like where you saying because sometimes if I know a customer and I trust them and things like that it's just like those hours will just get you know they get swept into Whatever Gets build sometime down the road it's just like just yeah we'll take care of that we'll like you get you're covered for that time but if it's something that's brand new the last thing you want to do is go deep into you know designing and and doing all this stuff for somebody and then they walk away early early on one of the Lessons Learned is I had a I was like wanted this project it was really cool it was really big and this guy just kept coming back and it was like you know you're you're the short list and your shorter list and can you just do this can you just do that by the time I was done I had a a 50 to 75 page detailed design document that had been built for this guy it was like this is is what we're going to do this is what it's going to take all of that it was a full plan and you know I don't know but I I have a feeling he just had me just for free design his entire solution for him because then he was he got like oh I'm going with the other guys and that was it it was like you you've got to like you have to figure out where that is and some people are going to ask for more than you want to give them honestly in that case like that's where you probably should know upfront what are you willing to give or what are you willing to risk and this goes with like invoicing I have a I have my numbers that I'm willing in my head it's like if I have more than x amount of unpaid invoices then I'm not going to spend much time on them I'm G say hey you need to pay and usually it's a percentage or it's based on what they're doing you know if they're only if if they're just like a really small little thing which is what you run into a side hustle a lot of times if it's not really bothering me I can take more risk so I'm going to have more more money on the table potentially if I'm having to pay bills then suddenly that you know that comes down but you also need to make sure that you're you are pushing that and saying hey we've got a you know there's unpaid invoices there's so don't let it get close to your limit where you're Suddenly at a point like I I have had that before I said look this is this has gone on too long I can't afford to do I literally cannot afford to work with you guys because I'm not getting paid for it the billable stuff the stuff that's sitting out there in my receivables basically is huge if I can get paid that then we're back on track and I ended up you know basically walking away that customer I did finally get paid but it was some of those things that by then it was you know I was like I was like I have to go find something else I cannot keep doing that I was like you was basically loaning the money into me not being able to pay all my bills so that's something you want to watch out for for sure yeah so that's in like you were talking about the RFP process so what I've kind of constructed into the current business model is I'm offering a free 30 minute consultation to uh do like a highlevel introductory QA assessment of what the company has from there I'll spend an additional 30 minutes take that detail and then I will produce a report for them on uh you know kind of where they're at where they need to go um not so much a sales sheet but just kind of like here is a highlevel stamp of your current software QA process and then if they buy into that what I my thought was that okay so I'm going to then Bill you if you want to do the full QA assessment I'll bill you upfront for the first 10 hours uh which if it's a small project you know I think I'm looking about 5,000 for the assessment so you figure you know about 10 hours of that so it's going to be about a grand and if they pay the check for the Grand then okay we're often right you don't pay the check for the grain well then you're not really committed to doing this process it's kind of that uh ask them to buy and then tell them well here buy um because if you ask them will you buy it 90% of people say yes but if you say here's the product buy it you may get only 40% that actually buy it so I'm I'm trying to set the expectation a little differently with this and I might be wrong but it it's after doing like the marketing strategies we've done for a couple different things that kind of mindset seems to work for me and some of the other technical businesses I've been talking to that's what they do they kind of get a little bit in up front to get the customer to commit they cat that check they have that money for first part and he it's applied to the total bill but if they customer walks away within that time frame then no one's you know at a loss yeah and that's the way and I that's exactly why I do the same thing is I is to give the customer enough to understand what is being offered to them and and it's I guess it is a little bit of a lead magnet in the same same way but essentially the same thing is you get you get and this is very common is that you get free Consulting up front you know it's typically a half hour to an hour and it's sort of the same thing it's I'll do a half hour real like high level just talk to them about their problems and their situation so I can give them a couple of you know it's basically like you would you run into somebody the bar they talk about stuff and they're like hey here's what I'm going through you're just like hey I don't mind solving your problems good example is I've got a a lead right now that um came back to me and said hey I'm like just getting started I don't know if I need an IT assessment and I said you know what starting your business is probably the best time I get that you maybe you know maybe can't afford it don't want to put the money into it so just like let's spend that time let's just have that initial call and then see what comes out of it because if nothing else I get to learn about their business I have somebody that I have helped them out and maybe they'll tell somebody else or they'll come back to me later whatever it is but then if I'm going to go beyond that if I'm G to actually start putting serious time into something then yeah I'm going to say hey all right this is the agreement this is this is what you're getting build this is what the rate is what however that work or this is the fixed bid fixed amount whatever it is and then a lot of places I mean like if you go buy a TV you don't get the TV go watch it for six months and get to pay for it I mean unless you're charging it on credit but say it's the same thing it's like hey you know if I'm going to commit into this if I'm G to burn hours on this then I'm going to expect to get paid for it now sometimes I'll work with people and say you know upfront initially and then I'm later going to come back and I'll allow you to you know pay on 15 every 15 days or 30 days or something like that the nice thing this is what's really nice about if you use a lot of these sites from a service point of view if you use upwork or Guru or some of those they have all of their own uh payment like guarantees and stuff like that so as part of them taking their cut one of the things they do is they make sure or you can make that part of the project it's like that customer has to have already put money into their their you know that service provider account so that you Bill it through the system and then when that comes through unless they go in and you know like argue it and say you didn't you didn't deliver or something like that then that money gets released to you but that's where you know all of this is stuff you want to consider as you're stepping into your your own business I think that's I want to run sort of wrap this one up because we have gone you know we've got a pretty solid episode here and we will come back to these These are recurring themes we've talked about pricing we've talked about these kinds of issues before next episode we're going to change gears a little bit but we will be back to this so for those of you out there listening shoot us an email info@ developer.com if you have any questions comments suggestions things like that you can always check out the developer.com site you can sign up there you can get the newsletter and keep up with sort of what the latest stuff is going on you can see insane amounts of content it's like we go back all the the time and we I use I use our site all the time to just like how do we do that and sure enough we did it at some point and we have a Blog article or something about it so great place to go send your friends if they're trying to solve some technical problem it's not uncommon for us to find stuff that we've already covered because that's what we're doing every day that being said we'll uh we're going to continue here and we will see next time around we are just choose like cruising right through this season we're going to continue going for a while so don't uh you know don't like pause your subscription or anything because we're going to be right back next episode that being said go out there and have yourself a great day a great week and we will talk to you next time the rest of you we're still talking to you and I just wanted to wrap this one up with that whole sort of circling back to the break even point is really look at if you want to jump from working for somebody to hustle realize that it is not it's not just a money game it's not just a straight numbers game there are so many things involved with moving to running your own business that people if you've never done it you will have you will be shocked and like I've I've actually gone back and forth a couple times and every time I go back I forget things it's like oh yeah that's something I have to worry about so think it through uh the more you can set set yourself up so that you can reduce stresses things like what happens if I go if I leave my job and my side hustle doesn't generate any money for six months those kinds of things just like any other startup don't think that just because it's a side hustle that it's like magically gonna you work uh sometimes it does sometimes it doesn't the other thing is the the whole Break Even part um you know it's it's very difficult to get into that if if you're lucky the last time I like really I guess one of the last times I I really had to like move into where I chose to jump off versus I really like worked it like the last time I went just short story last time I left I basically just had my current company at the time was paying me to consult and it was up to I think it was like 20 to 30 hours a week and I already had customers side hustle stuff that was 20 to 30 hours a week so cover I had three or four customers I was going to I had easily 60 to 70 hours a week that's that's like a no-brainer the time before that I was basically I was having to take days off from my company I was like spending all of my lunch breaks I was doing work before work I was doing work after work I was doing work all weekends and I was legitimately up to about 30 hours a week of side hustle stuff I was doing that was pure billable not admin or anything like that and so and it was at a higher rate than what I was getting for my salary enough higher rate even after you figure out all your expenses and so it became basically something where I realized I was losing money going to my day job and so that usually makes it a you know a nice math to figure out but um this is one of those feel free to shoot us an email at info developer.com if you have questions I said I've done this back and forth I've done the split version I've done all different com like combinations and permutations of this over the years and I'm more than happy to talk to you about it and just like offer some suggestions and warnings and things like that because it's it also matters are you are you single do you have are you married do you have a kid do you have 16 kids do you have a farm do you have whatever it is you have animals you have other things that are part of your life that need to continue and would impact your ability to start a new business and trust me that's those are things that you really don't want to get into a new business and suddenly realize that you you don't you know that's not supported that your your life does not support the job that you decided to take so you just try to avoid that I will flip it over to you Michael because I've talked a lot here sort of get your your parting thoughts before we wrap up this episode so I want to touch on that last point a little bit but I don't want to go too far off on a tangent but one of the biggest things when starting your own business or taking that jump and flipping the switch on your side hustle if you're personal finances are not in a good place you probably are not at a point where you should flip that switch um well you don't necessarily have to be financially sound to start a business you need to be at least be able to cover your own bills if you start out and it takes you six months to get going so kind of rule thumb again we're not financial advisors or even budgetary but just kind of lessons learned even like through Dave Ramsey things like that always try to get to the point where you have six months of your bills covered and one thing to think about is if you know how much it's going to cost you for expenses to live that's probably going to need to be work in you to break even point in your business even though those are not business expenses that can kind of help you figure out your salary because you need to make that much money to pay your bills uh but then you also have to takech on all the additional things like things you want so kind of start out with what you need uh what you must have figure out your budget there figure out six months it's kind of a good starting point uh I'm actually pushing mine out now nine months because my wife's retired so it's single income uh so things like that you have to consider and that needs to tie back into that break even point and what you actually need if you're going to start your business and just make that be your only thing I would add to that before unfortunately I just going to give you the last word and now I'm taking it back uh I would add to that when you're budgeting your hours I I mentioned the idea of having like a you have a target for your week or your month that you have to generate for your company to pay its bills to cover what you need on the the plus side of that the overreach side of that this is something else that goes back to your time if you need to generate pick a number you know if you have to generate ,000 a week and you've gone this week and you have now generated $1,100 a week but you have more work you can do this week maybe just don't do it this week and it maybe you'll lose it and so sometimes you do run into that where you're going to have feast or famine kind of stuff where you're going to have to have a $2,000 week because you're going to have a zero week the next week or something like that but use that as a like a sanity check because if you're hitting if you're seeding what you need then you need to look at maybe hiring somebody else because maybe they can pick some of those hours off which is what I've done I always like I always go over I go to a certain point where now I'm overloaded and I pick somebody else up and then once that person's overloaded as well and I'm overloaded okay now we have buffer we can go hire somebody else but use that so you don't get the idea that um depending because depends on what your mindset is it's easy for you to say I'm going to work that extra hour because I'm going to get paid for that extra hour and so you now you you have this stuff where it's like I really want to earn that extra I really want a little more safety I want a little more security but you're giving up so much sanity for it and it's easy to burn out so we've gone a little long on this one but we will wrap this one up we'll come back next time trust me the conversation never ends uh as always let us know developer.com info developer.com if you have any questions comments suggestions leave comments out in the in there out in the show notes or underneath this video all that kind of good stuff like us follow us send us smoke signals all the fun stuff subscribe all those things that people talk about all the time go ahead and do those and come back and see us next time till then have yourself a great day we will talk to you next [Music] time
Transcript Segments
[Music]
and we're back and we are going we had
sort of a cliffhanger last time and
we're talking
about bootstrapping and also in what we
refer to as sort of like double dipping
is how do you use your or can you and
ways that you can use your job as part
of benefiting your side hustle and vice
versa and actually if you go look at the
develop andur book on building better
developers that's actually one of the
things we talk about extensively is how
to really it's about building you this
is about building a better developer
this about making yourself better
through experience through certain
skills and specific problems that you've
solved and the nice thing is your side
hustle you can use some of that to solve
problems or really more laser focus
maybe on problems that are going to help
you out on your day job and vice versa
and sometimes you're going to be in
situations and there are a lot of people
that I've talked to over the years where
their day job they are allowed to they
basically invest more in a project or
something that a product even that
they're building at their company and of
course you want to make sure that you
talk to everybody so you're legally
covered so your company doesn't come
after you that you own what you need to
own but sometimes people are allowed to
basically build something at work that
they can go take and sell it's just they
have to make sure that it's you know
properly licensed to their company and
things like that so if you depending on
where you're at and what your boss is
like things like that you may pitch
something and say hey I see where we
could really take this thing that we're
doing we could spin it into a product
but also it doesn't seem to compete with
what the company does so hey can I like
can I work on the side thing or can I
focus on this a little more and it have
that
discussion but don't be afraid to and
don't be afraid to think like outside of
the box a little bit and not think like
I have to work my side hustle I have to
work my uh my day
job we are doing the same thing we are
double dipping and so we're doing the
video stuff and we're doing the podcast
and right now we're going to go ahead
and double dip because you guys got the
bonus stuff but right now we're going to
go into the podcast as well so you get
to see us step into the side of it
someday we're going to stream this it's
just right now it just ain't worth it
actually just our schedule's not
consistent enough that being said hello
and welcome back thank you for coming
back to the developing or building
better developers podcast I'm Rob the
other guy that you're going to soon hear
is Michael we are talking deep into
season 21 hundreds literally hundreds of
episodes in Apple only keeps up with the
last 300 we're like rapidly approaching
three times that amount definitely past
two already this season we're focusing
on business problems and just sort of
talking about a problem of the week some
of the things that we would normally see
in a mentor or a mastermind kind of
group and this episode we're continuing
last episode we talked about starting up
a business and the costs and things like
that little bit of
bootstrapping and this episode we're
going to tweak that a little bit we're g
dive a little bit more and focus on the
basically breaking even how do you go
from and it's really a two-step process
how do you go from I'm running a side
hustle and it is just an expensive Hobby
and to like I'm breaking even so now I'm
doing this thing but it's paying for
itself and then the next step obviously
at some point you want to get a little
bit of money out of that but then the
next step is when this generates enough
money that it's like time for me to quit
my day job and go work on the side
hustle so that's what we want to talk
about this episode first I'm going to
throw it over to Michael and say hi and
see what your thoughts are on this as we
start into it hey everyone Mike molash
Vision QA and co-founder of developer
Nur uh yeah so it's kind of funny you
know we talk about this all the time you
know we talk about bootstrapping
businesses we talk about doing side
hustles and there's always that point
when where do when do I say that my side
hustle is no longer a hobby you know I
started this to make a couple bucks on
the side maybe buy a PlayStation or buy
that new fancy phone but now it's like
oh it's actually making money um you
know at first it's costing me money but
now it's like hey I can buy things now
I'm making a small profit or breaking
even and there's then you want to start
looking at that next step you know well
can this supplement my day job or should
it you know it all depends on your
lifestyle choices and what you're
comfortable living with mon monetarily
wise uh what I'd like us to kind of
touch on this time is the break even
point so when we talk about breaking
even we have to consider those
additional cost right where before we're
looking at okay well I'm if you're a
service based business your time is your
cost right so you need to make sure that
you justify or have a justifiable cost
to get paid for your work you want to
make sure that you're charging what
you're worth so that you can make a
living however if you're selling a
product you need to make sure that
you're selling the product for enough to
supplement the cost of either buying the
product making the product shipping the
product so you have to figure out what
all your hitting costs are there in
order for you to break even yeah and
this goes back to something you
mentioned earlier is the idea of making
sure that you've got proper accounting
of what you're what you're spending on
this I include uh and we sort of touched
on this a little bit is hours I have
for since I started since I was side
hustling and I wasn't even doing any
business stuff I was just s hustling and
had like my you know I had a day job and
all that kind of stuff and I wasn't even
generating money out of my side house so
I still had a little log it's sell
spreadsheet or actually at that point I
don't remember it was a some spreadsheet
and I would just put out like did I you
know i' put an hour here if I put two
hours there whatever it is and I I had
sort of a goal of spending you know 10
to 15 hours a week on basically it was
side hustle and career development stuff
worked out great over the years and I
would you know track that stuff and it
that turns out pretty sizable that's
like you start doing that that's easily
going to be 500 600 700 hours a year and
that stuff starts to add up you do that
four years that's a 2000 you know that's
,000 Plus hours that's a full year of
something that's a full year experience
in that thing that you're doing now a
lot of what I did was to to sort of
augment and uh accentuate my day job so
if there was something I was needing to
learn for my day job that was what I was
I was going deeper into it in my my side
hustle stuff but as you get further into
that especially when you say now what is
my am I breaking even what am I making
versus what am I spending you have to
includ include the obvious things I
think for most people are the cost is
and people forget to do this but what
does it cost me to generate this what
are my what is the cost of goods sold
what's the cost of materials but then
the thing that we tend to miss is time
put into this and even stress it's like
what is it how is this stressing me
causing me issues that even though I'm
not working on it I'm thinking about it
and this comes from someone that was
thinking about stuff all the time and so
there you know you you have to you don't
have to but you probably should if you
want to stay sane be able to draw lines
between your life and your business or
your side hustle kind of stuff and this
is where have you really do need to I
think keep track and there's a lot of
tools out there whether it's you know if
you're a bill by the hour in some way at
work they probably already have stuff
like that like uh Harvest and some of
those kinds of time tracking tools or
just do it yourself or just like
checking a watch and just making sure
that you're getting into the habit of
doing that I think is very big and so
this first part is let's I'll toss it
back to you on that thought of time put
in and then the nice thing that is
figure out what your hourly rate is and
just multiply that out it's like you
need to generate that amount of money
your
thoughts yeah so it's interesting you
were saying about you know the stress
and and the time you know that you put
into it and the stress that can come out
of it CU if you're doing this full-time
then your side hustle your business is
your business you're work just working
on that but if you have a full-time job
uh be it hourly or salary you're working
probably 40 to 60 hours a week on a day
job and then now if you're trying to
tack on a side hustle you're taking
another 10 20 hours or more to try and
get something else going the problem you
run into is it or at least I run into
this a lot and I think you have too Rob
but um I don't sleep much which is kind
of a blessing and a curse where I look
for things to fill my time and typically
it's looking for side hustles or
learning new things in technology
because I'm a huge geek when it comes to
technology you know I I don't mind
picking up my Raspberry Pi and trying to
put together some new project with it or
figure out how to code the thing is if
you are doing something that requires a
lot of intellectual thinking or very
deep thinking uh at your day job if your
side hustle is very similar to your day
job you potentially could burn out twice
as fast because not only are you working
40 to 60 hours a week for someone else
doing this thing now you're doing an
additional 10 to 20 hours you are you
could essentially be compounding the
problem so if you don't make sure you
take breaks schedule times or try to do
things slightly on a off-kilter schedule
you're going to burn out and you may
never get your side hustle off the
ground you may walk away from it
completely so you have to be careful of
that the other thing is
time I'm bad about this I think we all
are at some point we get really good and
strict at using tools to help us keep
track of what we're doing but then you
could very easily sit down and you start
watching a TV show on Netflix next thing
you know it's eight hours later you've
watched the entire B watched the entire
season you could do the same thing with
work you could sit down get very
interested in something you're working
on next thing you know you're 8 to 10
hours into this but you only build for 4
hours so you have to be careful and more
mindful with your personal work and even
your professional work if you're working
for a corporation what are you putting
time to what is your ta you know what
are your tasks costing you TimeWise and
then that kind of leads to your billing
and your hour hourly rate if you really
don't know what you're putting in if
you're not keeping good records of that
then you could be charging $100 an hour
but getting paid $5 an
hour it you just have to be very mindful
of and keep track of how you're doing
that and that's where I think it's it's
very helpful if you're doing a side
hustle to have like business hours for
your side hustle uh for many years that
was one of the things I did I said I was
able to track my hours so well because I
would work from like 9 to midnight or 10
to 2 or something like that I had like
sort of certain you know certain days
certain nights I had certain schedule
that was like this is my side hustle
time and we I've talked about that over
the years where it would be things like
hey I would work from 8 to you know from
8 in the morning till noon on Saturdays
and that was just like a nice chunk to
be able to do that now that allows you
to get into that that habit of tracking
the hours and then figure out what does
that cost what am I spending as like you
know what is what do I need to make
technically to be able to pay myself for
those hours and you may think of it and
it's really difficult because you're
like it's just for fun this is a side
hustle it's just a hobby well that's all
well and good but when that hobby
suddenly is your full day job now you've
got a couple of things that complicate
that one is now what's your hobby gonna
be are you g to just blow that out and
now you're going to add 40 hours a week
to that or are you going to have like is
this going to allow you to change to a
different Hobby you know the sub the you
know bad answer to that is probably
you're going to take all of that time up
together if you run a business it takes
more time than like than being an
employee I have literally talked to
people and you know discussed amongst
family and stuff like that having a job
and treating it it's like to me it would
be retirement because it goes from or
partial retirement because it goes from
something that can consume your life
completely where you're easily spending
60 70 hours a week on it to something
where you're like I'm going to spend 4
I'm going to do my 40 hours of work and
whatever my commute time is especially
these days with remote work I do 40
hours of work a week and I'm done and
you don't think about I think most
people don't realize that if you do
eight hours of work you really probably
only got at best five or six hours of
like productive work in there and that's
something that when you start billing
and doing things like that you're gonna
you're probably going to be more
sensitive to one other part of that is
taking that 15 hours a week let's say
that you're doing on your side hustle on
your hobby does it actually grow can you
grow that to 40 hours a week is that
something that because it may be that
you can go build exactly what you need
15 to 20 hours a week and it's awesome
and you're always busy but if you now
suddenly have 40 to 50 hours a week that
you're spending on that are you going to
just like burn through that really quick
is there not that much work out there so
there's some things like that that are
definitely bigger issues you want to
take into account
so I kind of want to touch on the first
part of that uh when you're talking
about you know looking at your rate your
what you're charging versus what you're
making uh to determine if you can you
know sustain yourself one of the
biggest problems I would say in in
software in technology right is a you're
have a boss or you have an idea and you
sit down you throw out a proof of
concept next thing you know your proof
of concept has been sold it's now in
production and you have this uh duct
tape rubber band concoction that is now
going to cost you so much time to
maintain or you start out Billing at
such a low rate you have a hard time
kicking that cost up because you
basically have set yourself at a billing
rate that's not
sustainable that's true as well is you
have
to you have to that's where you you
never want to undervalue you
particularly if you're doing services
and even your products the same way you
don't want to create a product in your
side hustle or provide a service that
you're doing at A Cut Rate now if you're
doing it as a uh a loss leader or
something so you're building stuff out
that's one thing but you have to at some
point be able to turn that nozzle up and
say okay now I'm charging my real rate
the rate I'm expecting out of that and
see if that's sustainable and then see
if that's actually extendable because
you're really growing your business at
that point you're really going from side
hustle to a full-time you're essentially
growing your business now the nice thing
about a side hustle is you can use that
side hustle for a while to reduce the
risk of jumping out of your you know
leaving your your job and you can be
generating Revenue that you can put this
again goes into like put it in your
business coffers so that if you're going
to pay yourself a
salary and one thing I recommend is go
to if you're going to pay yourself a
salary is go figure out what that salary
cost you can go to like you know quick
and uh QuickBooks and stuff like that
there's some things you can do that says
basically if I pay x amount this is what
I'm going to earn you know this is my
annual salary this is what it's going to
cost uh this is what my take-home pay is
going to be this is what I need to hold
aside for taxes and all that kind of
good stuff so you can figure out what is
it that you need to earn and for me
that's really what is it comes down to
can I what is my target per week per
month that I need to bring in in Revenue
in order to sustain my you know the life
that I'm accustomed to or that I want to
be accustomed to what does that what
does that require in me you know in
customers and billable hours and
products sold whatever that happens to
be and now it's just a math problem it's
basically like can I do that and the
nice thing with being the side hustle is
if I need to be able to ramp up for a
while I can sit there and I can start
putting some money into the business so
that I can jump and know that I at least
have you know a month or three months or
six months of a Runway that I have the
bills paid so that I'm going to be able
to actually do this right and this has
been discussed many times over the years
you don't want to get in a situation
where you're just you're so hungry
you'll take anything and they end up
soort like you said is you like you
undersell yourself you undervalue
yourself you're taking this stuff just
to pay a quick couple of quick bills and
the next thing you know you're basically
committed into something that you really
can't or don't want to afford Bo to be a
part
of exactly the other thing with that and
we haven't really touched on this too
much and this might be another
conversation uh we can carry into but
with billing or setting hourly rates and
selling your services now products are a
little bit easier to calculate because
you know okay I have a set salary here's
how much my products are here's how my
products I must sell uh to maintain this
income right when it comes to Services
we're out there constantly having to
hustle to get business we're constantly
having to find customers or you find a
great big customer and that's great
it'll maintain you for a while but as
you start getting bigger and you start
having larger clients L larger
projects um do you start building in
buffers where if you take on this
10-week project do you require them to
pay you 10% up front uh that is
non-refundable if they walk away from
the project within the first or set up
to where you know you do 10 hours yes
okay we're all on the same page but
because you start to set budgetary or
monetary uh you know fixed not fix but
like schedules of money that would be
coming in based off of those uh projects
and then if they suddenly walk away
you're left with nothing so how do you
kind of buffer that in or is that
something we should kick to the next
one um I think we can cover that sort of
quickly in this one and that's it really
it's an
interesting approach and I've I've seen
it done a couple different ways I've
done it different ways I usually
one I usually I have been told many many
times I'm way too I don't charge enough
I'm way too easy on on billing I'm just
way too light on that so I am probably
the wrong person to ask my mentor is um
he does stuff up front and he usually
does and it's not bad thing is it's a
and it's going to be a bigger project so
you know if it's going to be a three to
six month project then what you do and
I've this is very common is that you're
going to do like four to six weeks that
you like if we're going to start it I'm
going to send you an invoice for the
first four to six weeks you know
whatever that hours is like you know for
150 hours I'm going to send you invoice
for 150 hours and what I'm going to do
is I'm going to start you know every
week I'm going to say hey I burn you
know 10 hours 20 hours 40 hours on this
and we're going to keep that little you
know ticker until we go down to a
certain point and then I'm going to you
know I'm going to get down to whatever
my amount is maybe it's like at every
when I get down to 20 hours or less I'm
going to invoice you for the next 150
hours I have seen it done uh a lot and
I've I've even tried in the past to do
like half up front and half at the end
but what you want to look at in those
situations is like
what is making sure that your Revenue
flow is something that makes sense and
that it's it makes sense for your
customers if you if you've got a
two-year project and you want a half up
front and a half at the end that means
you're going to take a Year's worth of
of that there's you know two invoices
and if it's a let's say it's a you know
$500,000 project then you're going to
ask going to pay you $250,000 before
you've done anything and then you're not
going to see another dollar until two
years from now it's probably not going
to work for them for for um for their
cash flow nor is it going to work for
you for your cash flow so a lot of times
I'm going to look at that first I think
like yeah it's like it's not bad to say
hey I need 5% or 10% off or upfront
basically to cover maybe like your first
week or two or maybe your first month
depending on how you do it particularly
you know if you're going to hire
somebody or you're going to you're
getting other people to commit there's
money that you have to put out or
something like that then you're going to
want a little bit more up front and you
just say hey I've got bills to pay I've
got people that I've got you know
payroll to make I have to have the cash
I can't
risk a delay from you guys or sometimes
you just not get paid I've had a couple
of times I've gotten burned and usually
that's when I I'm a little harder uh you
know moving forward on that where you
like you step into something and maybe
you get paid for the first you know
first invoice but now you get you know
an invoice that's missed and another
one's late and the next one's late and
the next thing you know you're a lot of
money into this that they owe you and
they may walk away that's I've had stuff
where they've come back and they've they
know now that they have leverage so it
may be that they you know it could be a
you know just pick a number it could be
a thousand project and they paid you 50
bucks but now they owe you 800 more of
work you've done they have leverage
there to say hey well we'll pay you this
but you know we're thinking we need a
little bit of a discount or something
like that and you know those are the
kinds of things you have to again you
have to be more wary of if you're
running your own business that you
probably aren't going to have as you're
not going to see those issues as much as
an employee and so you have to
understand that there's going to be
there's going to be losses there's going
to be like a customer is going to back
out customer going to want money back
you know things like that there's going
to be things you're going to have to
deal with that if it's your bread and
butter if that's how you're paying the
bills then it becomes obviously a lot
more serious kind of issue for to have
those kinds of things hit you well would
it be interesting so this is kind of
something I've been bouncing around a
little bit and this goes back to I think
it something in the 4-Hour Work week
about dealing with
offshore uh I think it was your man in
India like kind of Outsourcing your life
kind of thing where the first guy yeah
at like $5 an hour he ran up a $200 a
bill for something that should have
taken an hour whereas he went with
someone else at like $20 an hour he was
build $40 but got it done quickly you
know in two hours it's one of those
where especially when you take on
customers do you I almost want to Tech
on like 10% up front like you pay 10%
non-refundable
front at the start of the project and
that covers like the first 10 hours or
something small first and foremost to
get them to commit actually put money
hey I want to do this but that is also
non-refundable but it's applied to the
bill at 10 hours so okay we will deduct
this from your bill if you stick with us
but if you drop at that time hour or
even before that 10 hours I keep that
money like basically that is
non-refundable but it's one of those
where it's like d you kind of I don't
want to say carrot and Cake kind of
thing but it's one of those where it's I
kind of want to get customer Buy in that
they are going to commit to this for at
least the initial part and then if they
like the services cool if they don't
they can walk away or vice versa you
know if they walk away right at the
beginning it's like well we decided we
didn't want to do this well you just
wasted my time cuz I'm not going to get
paid for that but if you paid up front
then I'm not out you know what I mean it
it just it's kind of one of those things
I'm I'm struggling with and wondering
what your thoughts are on that that is
really a it is really a challenge when
you are uh if you're particular if
you're in a service based kind of thing
and particularly some sort of consulting
or something like that because what you
end up with is that you'll and I've had
this I've had situations where you you
have a customer just keeps coming back
and it's like an hour here and an hour
there and an hour here and I want to
talk about this I want talk about and
they're they're doing it as part of
their uh maybe their RFP process kind of
thing or something like that where
they're trying to just like figure out
if they want to work with you there's a
certain point where where I'll say to
them and it's I think it's totally valid
to sayy look like it is you know as they
say fisher cut bait kind of time it's
like look we've spent you know our
company myself however it is I've
invested x amount of hours into
this it is a point where if we're going
to go forward I need you to step in as
well I need like I need to invoice you
for these hours or we need to something
and I and it's something you don't want
to get into like where you saying
because sometimes if I know a customer
and I trust them and things like that
it's just like those hours will just get
you know they get swept into Whatever
Gets build sometime down the road it's
just like just yeah we'll take care of
that we'll like you get you're covered
for that time but if it's something
that's brand
new the last thing you want to do is go
deep into
you know designing and and doing all
this stuff for somebody and then they
walk away early early on one of the
Lessons Learned is I had a I was like
wanted this project it was really cool
it was really big and this guy just kept
coming back and it was like you know
you're you're the short list and your
shorter list and can you just do this
can you just do that by the time I was
done I had
a a 50 to 75 page detailed design
document that had been built for this
guy it was like this is is what we're
going to do this is what it's going to
take all of that it was a full plan and
you know I don't know but I I have a
feeling he just had me just for free
design his entire solution for him
because then he was he got like oh I'm
going with the other guys and that was
it it was like you you've got to like
you have to figure out where that is and
some people are going to ask for more
than you want to give them honestly in
that case like that's where you probably
should know upfront what are you willing
to give or what are you willing to risk
and this goes with like invoicing I have
a I have my numbers that I'm willing in
my head it's like if I have more than x
amount of unpaid invoices then I'm not
going to spend much time on them I'm G
say hey you need to pay and usually it's
a percentage or it's based on what
they're doing you know if they're only
if if they're just like a really small
little thing which is what you run into
a side hustle a lot of times if it's not
really bothering me I can take more risk
so I'm going to have more more money on
the table potentially if I'm having to
pay bills then suddenly that you know
that comes down but you also need to
make sure that
you're you are pushing that and saying
hey we've got a you know there's unpaid
invoices there's so don't let it get
close to your limit where you're
Suddenly at a point like I I have had
that before I said look this is this has
gone on too long I can't afford to do I
literally cannot afford to work with you
guys because I'm not getting paid for it
the billable stuff the stuff that's
sitting out there in my receivables
basically
is huge if I can get paid that then
we're back on track and I ended up you
know basically walking away that
customer I did finally get paid but it
was some of those things that by then it
was you know I was like I was like I
have to go find something else I cannot
keep doing that I was like you was
basically loaning the money into me not
being able to pay all my bills so that's
something you want to watch out for for
sure yeah so that's in like you were
talking about the RFP process so what
I've kind of constructed into the
current business model is I'm offering a
free 30 minute consultation to uh do
like a highlevel introductory QA
assessment of what the company has from
there I'll spend an additional 30
minutes take that detail and then I will
produce a report for them on uh you know
kind of where they're at where they need
to go
um not so much a sales sheet but just
kind of like here is a highlevel stamp
of your current software QA process and
then if they buy into that what I my
thought was that okay so I'm going to
then Bill you if you want to do the full
QA assessment I'll bill you upfront for
the first 10
hours uh which if it's a small project
you know I think I'm looking about 5,000
for the assessment so you figure you
know about 10 hours of that so it's
going to be about a grand and if they
pay the check for the Grand then okay
we're often right you don't pay the
check for the grain well then you're not
really committed to doing this process
it's kind of
that uh ask them to buy and then tell
them well here buy um because if you ask
them will you buy it 90% of people say
yes but if you say here's the product
buy it you may get only 40% that
actually buy it so I'm I'm trying to set
the expectation a little differently
with this and I might be wrong but it
it's after doing like the marketing
strategies we've done for a couple
different things that kind of mindset
seems to work for me and some of the
other technical businesses I've been
talking to that's what they do they kind
of get a little bit in up front to get
the customer to commit they cat that
check they have that money for first
part and he it's applied to the total
bill but if they customer walks
away within that time frame then no
one's you know at a loss yeah and that's
the way and I that's exactly why I do
the same thing is I is to give the
customer enough to understand what is
being offered to them and and it's I
guess it is a little bit of a lead
magnet in the same same way but
essentially the same thing is you get
you get and this is very common is that
you get free Consulting up front you
know it's typically a half hour to an
hour and it's sort of the same thing
it's I'll do a half hour real like high
level just talk to them about their
problems and their situation so I can
give them a couple of you know it's
basically like you would you run into
somebody the bar they talk about stuff
and they're like hey here's what I'm
going through you're just like hey I
don't mind solving your problems good
example is I've got a a lead right now
that um came back to me and said hey I'm
like just getting started I don't know
if I need an IT assessment and I said
you know what starting your business is
probably the best time I get that you
maybe you know maybe can't afford it
don't want to put the money into it so
just like let's spend that time let's
just have that initial call and then see
what comes out of it because if nothing
else I get to learn about their business
I have somebody that I have helped them
out and maybe they'll tell somebody else
or they'll come back to me later
whatever it is but then if I'm going to
go beyond that if I'm G to actually
start putting serious time into
something then yeah I'm going to say hey
all right this is the agreement this is
this is what you're getting build this
is what the rate is what however that
work or this is the fixed bid fixed
amount whatever it is and then a lot of
places I mean like if you go buy a TV
you don't get the TV go watch it for six
months and get to pay for it I mean
unless you're charging it on credit but
say it's the same thing it's like hey
you know if I'm going to commit into
this if I'm G to burn hours on this then
I'm going to expect to get paid for it
now sometimes I'll work with people and
say you know upfront initially and then
I'm later going to come
back and I'll allow you to you know pay
on 15 every 15 days or 30 days or
something like that the nice thing this
is what's really nice about if you use a
lot of these sites from a service point
of view if you use upwork or Guru or
some of those they have all of their own
uh payment like guarantees and stuff
like that so as part of them taking
their cut one of the things they do is
they make sure or you can make that part
of the project it's like that customer
has to have already put money into their
their you know that service provider
account so that you Bill it through the
system and then when that comes through
unless they go in and you know like
argue it and say you didn't you didn't
deliver or something like that then that
money gets released to you but that's
where you know all of this is stuff you
want to consider as you're stepping into
your your own business I think that's I
want to run sort of wrap this one up
because we have gone you know we've got
a pretty solid episode here and we will
come back to these These are recurring
themes we've talked about pricing we've
talked about these kinds of issues
before next episode we're going to
change gears a little bit but we will be
back to this so for those of you out
there listening shoot us an email info@
developer.com if you have any questions
comments suggestions things like that
you can always check out the
developer.com site you can sign up there
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going on you can see insane amounts of
content it's like we go back all the the
time and we I use I use our site all the
time to just like how do we do that and
sure enough we did it at some point and
we have a Blog article or something
about it so great place to go send your
friends if they're trying to solve some
technical problem it's not uncommon for
us to find stuff that we've already
covered because that's what we're doing
every
day that being said we'll uh we're going
to continue here and we will see next
time around we are just choose like
cruising right through this season we're
going to continue going for a while so
don't uh you know don't like pause your
subscription or anything because we're
going to be right back next episode that
being said go out there and have
yourself a great day a great week and we
will talk to you next time the rest of
you we're still talking to you and I
just wanted to wrap this one
up with that whole sort of circling back
to the break even point
is really look at if you want to jump
from working for somebody to hustle
realize that it is not it's not just a
money game it's not just a straight
numbers game there are so many things
involved with moving to running your own
business that people if you've never
done it you will have you will be
shocked and like I've I've actually gone
back and forth a couple times and every
time I go back I forget things it's like
oh yeah that's something I have to worry
about
so think it through uh the more you
can set set yourself up so that you can
reduce stresses things like what happens
if I go if I leave my job and my side
hustle doesn't generate any money for
six months those kinds of things just
like any other startup don't think that
just because it's a side hustle that
it's like magically gonna you work uh
sometimes it does sometimes it doesn't
the other thing is the the whole Break
Even part um you know it's it's very
difficult to get into that if if you're
lucky the last time I like really I
guess one of the last times I I really
had to like move into where I chose to
jump off versus I really like worked it
like the last time I went just short
story last time I
left I basically just had my current
company at the time was paying me to
consult and it was up to I think it was
like 20 to 30 hours a week and I already
had customers side hustle stuff that was
20 to 30 hours a week so cover I had
three or four customers I was going to I
had easily 60 to 70 hours a
week that's that's like a no-brainer the
time before that I was basically I was
having to take days off from my company
I was like spending all of my lunch
breaks I was doing work before work I
was doing work after work I was doing
work all weekends and I was legitimately
up to about 30 hours a week of side
hustle stuff I was doing that was pure
billable not admin or anything like that
and so and it was at a higher rate than
what I was getting for my salary enough
higher rate even after you figure out
all your expenses and so it became
basically something where I realized I
was losing money going to my day job and
so that usually makes it a you know a
nice math to figure out
but um this is one of those feel free to
shoot us an email at info developer.com
if you have questions I said I've done
this back and forth I've done the split
version I've done all different com like
combinations and permutations of this
over the years and I'm more than happy
to talk to you about it and just like
offer some suggestions and warnings and
things like that because it's it also
matters are you are you single do you
have are you married do you have a kid
do you have 16 kids do you have a farm
do you have whatever it is you have
animals you have other things that are
part of your life that need to
continue and would impact your ability
to start a new business and trust me
that's those are things that you really
don't want to get into a new business
and suddenly realize that you you don't
you know that's not supported that your
your life does not support the job that
you decided to take so you just try to
avoid that I will flip it over to you
Michael because I've talked a lot here
sort of get your your parting thoughts
before we wrap up this episode so I want
to touch on that last point a little bit
but I don't want to go too far off on a
tangent but one of the biggest things
when starting your own business or
taking that jump and flipping the switch
on your side
hustle if you're personal finances are
not in a good place you probably are not
at a point where you should flip that
switch
um well you don't necessarily have to be
financially sound to start a business
you need to be at least be able to cover
your own bills if you start out and it
takes you six months to get going so
kind of rule thumb
again we're not financial advisors or
even budgetary but just kind of lessons
learned even like through Dave Ramsey
things like that always try to get to
the point where you have six months of
your bills covered and one thing to
think about is if you know how much it's
going to cost you for expenses to live
that's probably going to need to be work
in you to break even point in your
business even though those are not
business expenses that can kind of help
you figure out your salary because you
need to make that much money to pay your
bills uh but then you also have to
takech on all the additional things like
things you want so kind of start out
with what you need uh what you must have
figure out your budget there figure out
six months it's kind of a good starting
point uh I'm actually pushing mine out
now nine months because my wife's
retired so it's single income uh so
things like that you have to consider
and that needs to tie back into that
break even point and what you actually
need if you're going to start your
business and just make that be your only
thing I would add to that before
unfortunately I just going to give you
the last word and now I'm taking it back
uh I would add to that when you're
budgeting your hours I I mentioned the
idea of having like a you have a target
for your week or your month that you
have to generate for your company to pay
its bills to cover what you need on the
the plus side of that the overreach side
of that this is something else that goes
back to your time if you need to
generate pick a number you know if you
have to generate ,000 a week and you've
gone this week and you have now
generated $1,100 a week but you have
more work you can do this
week maybe just don't do it this week
and it maybe you'll lose it and so
sometimes you do run into that where
you're going to have feast or famine
kind of stuff where you're going to have
to have a $2,000 week because you're
going to have a zero week the next week
or something like that but use that as a
like a sanity check because if you're
hitting if you're seeding what you
need then you need to look at maybe
hiring somebody else because maybe they
can pick some of those hours off which
is what I've done I always like I always
go over I go to a certain point where
now I'm overloaded and I pick somebody
else up and then once that person's
overloaded as well and I'm overloaded
okay now we have buffer we can go hire
somebody else but use that so you don't
get the idea that um depending because
depends on what your mindset is it's
easy for you to say I'm going to work
that extra hour because I'm going to get
paid for that extra hour and so you now
you you have this stuff where it's like
I really want to earn that extra I
really want a little more safety I want
a little more security but you're giving
up so much sanity for it and it's easy
to burn out so we've gone a little long
on this one but we will wrap this one up
we'll come back next time trust me the
conversation never ends uh as always let
us know developer.com info developer.com
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