Before people start a business they usually have a decision to make: am I going to quit my job and work full time on this, or am I going to work on this on the side?
Both have pros and cons, both are frustrating for different reasons.
This is a topic to be careful about. Some experts and gurus out there would have you believe you need to just put it all out there, believe in yourself and take a big leap of faith. That’s the model that worked for them so they tell you to do it.
But maybe there are more practical ways we can be intelligent about this decision. In this episode we break down common variables you may not already be thinking about like:
- How much savings do you need?
- What does ‘runway’ mean?
- What’s a ‘burn rate’?
- What are the different decision points here that would allow me to make a smart decision?
It’s a practical and exceptionally helpful episode. Enjoy!
It’s better to listen on the go! Subscribe on iTunes
Corbett:We got this particular question about leaving my job with three months of savings. We’ve got other questions about, “I’ve got a six month runway.” We wanted to like just dive into this a little bit, and ask some questions, like how much savings do you need? What does runway mean? What’s a burn rate? What are these different terms, and how do I look at it? How do I extend my runway? What are the different decision points here, that would allow me to figure out how much runway’s appropriate?
Chase: All of it kind of revolving around this question. How much money do I need to have saved up before I quit my job? How do I be smart about like, “I want to do a thing.” Let’s go back to the beginning, right? There’s some people who are like, “I believe in my self. I’m just going to take a leap of faith, and just put it out there and see what happens.” Some people are just ballsy like that, and it’s pretty killer. Some people think they have to be ballsy like that in order to survive, or in order to be successful, right? Some of these people who thrive on that, like, “I just need to jump off and see what happens,” because they wrote books, or speak on stage. Right? They’re a different kind of person.
Then, someone who’s in the audience going, “I want that kind of success, but it means I have to do this thing that’s incredibly painful to me.” That ends up putting some people in a really bad place. You got to realize, I don’t know if it’s easy to realize what kind of person you are in this, right? You don’t know until you’ve done a lot of it.
Corbett:Right, and hopefully we can ask some questions that will help some people come to some conclusions, there. Just up front, to define what we’re talking about here. You know, before people start a business, usually have a decision to make. Am I going to jump in this and work full time on it? Am I going to try to work my job and then work on the business on the side? Both have pros and cons, and both are frustrating for different reasons. At the point where you start thinking about, “I want to quit my job.” You have to consider, “How much money do I have in the bank?” And “How much am I spending every month?” How much am I spending every month, in the start up world they call that the burn rate.
Chase: The burn rate. How much are you burning up every month?
Corbett:In the Fizzle world, we call that the minimum viable income, which is basically, “How much do I need to earn every month to cover my monthly costs?”
Chase: You’re looking at, Steph wrote this great post on minimum viable income, what we call MVI, or ramen profitable. What’s the number that like you’re just scraping by? If you can make this much money every month, you’re just scraping by. That’s your minimum viable income. Your ramen profitable. You can eat, but it’s only sort of ramen, beans, and things like that. That’s a exercise that we run you through in Steph’s minimum viable income post. That’ll be in the show notes of this episode. That kind of helps you look at your budget, and look at the fixed versus the variable costs, and all sorts of these sorts of things, so that you can, and if you’re married, this is the most powerful thing to do with your spouse. This is some Dave Ramsey stuff, right here.
Corbett:Totally, and think about how you can lower your burn rate. Anyway, if you take the total amount that you have in savings, that you’re willing to spend on supporting yourself while you’re trying to build your business, and divide that by your month burn rate, or your minimum viable income, whatever you want to call it, then you can figure out the number of months that you have to survive until you need to start earning some income. Just for example, if you had a hundred thousand dollars in savings, and you were spending ten thousand dollars a month, then you would have about ten months to survive. Any amount of income that you get coming in extends your runway.
In reality, it’s not as if you’re going to work for ten months, and then all of a sudden the income switch is going to turn on, and you’re going to start covering your entire burn rate. Instead, what usually happens is it phases in gradually. You have to figure, the calculation’s a little bit more difficult than that. It’s not a hundred thousand divided by ten thousand, you eat the ten months. It’s probably more like, you start out with a hundred thousand. The first month you spend ten thousand. The second month you spend ten thousand, but eventually, you start earning a little bit, and so you kind of got to figure that out.
Anyway, that sort of calculation is how you figure out what your runway is. A lot of people ask this question by saying, “I have three months worth of savings.” They’ve already sort of done the back [inaudible 00:14:30] calculation. “I have three months worth of savings,” or, “I have six months worth of savings. Should I leave my job to work on my business full time?” That’s the big question, because a lot of people feel like either A, it’s just impossible to really work on their business when they’re juggling a full time job, or B, they hate their job so much, or their job is so painful or annoying, that it really puts a damper on how much they’re able to work on their business. There are a whole lot of factors that go into this, so you start to feel like if you’re not making progress on your business, maybe it’s because you just don’t have enough time to dedicate to it. It becomes really attractive, this idea of going full force into your business.
Chase: Pause there for a second, because that’s a big deal. A lot of us, a lot of us coming up, so many people listening to this show right now, who want to do, or have an idea, or want to have the idea, or are a little bit further on than others in their idea, or whatever, got that feeling. The only reason why this thing isn’t getting bigger is because I don’t have more time to work on it. If I had more time to work on it, then I could get it producing revenue. Right? Immediately, you’re like, this is red flag zone. That’s red flag zone, wouldn’t you say?
Corbett:Yeah, it’s like when you start convincing yourself why you need to buy a new car.
Chase: Yeah, it’s like I have this camera, I was just talking to a guy at Fizzle, “I have this camera, it actually does a good job at video, but I want to make my videos look just like yours.” I was like, “I use this camera and I use this lens.” He was like, “Okay, it’s a pretty spendy camera, but I think I can do it.” I was like, “Whoa. You don’t buy a camera. Your camera is fine. You maybe can try- Okay, I will allow you to spend like three hundred dollars to get a wider angle lens, because a lot of the look that I’m doing, but you’re looking at ten years of me fiddling with lights in a dark room. That’s what you’re looking at. That’s where you need to be. You need to fiddle with some lights for a little while. You need to go spend three hours on Youtube, just looking at lighting videos, then you try to recreate some of your favorite looks. That’s it. You don’t need new cameras. You don’t need anything.”
That’s the kind of thing that I want, when people are going like, “I’m not making revenue now, but if I quit my job I can work harder on my side business, and then it will start making revenue.” No. Personally, I almost want to make a rule, even though everybody’s different. Everybody has these different capabilities and deal with pressure differently. Some people would be fired up by that. Still, I’m like, nope. You’ve got to earn some revenue from your business, first. At least once, before you jump off and just quit stuff.
Corbett:Right. I think this is where it really depends on the person’s situation and psychology. There’s a lot of factors that play in.
Chase: If you do have forty thousand dollars in the bank, then you’re like, “I’ve got six months, or twelve months to kill,” whatever it is. Right? If you’re like, “Screw it. I just want to do this. Worse case scenario, I’ll go back to flipping burgers at Burger King, or I can get a job with my dad, or I’ll do whatever.” Okay, fine. See what you can do. That’s interesting.
Corbett:Yeah, but there are some factors at play that make leaving your job to work on your business full time not necessarily as ideal as it might seem in your head right now. I know sometimes it’s just like, “Man, I just got to get rid of this job so I can focus on my business.” The problem is, when you do quit your job and start working on your business, there’s a bunch of things that happen that you weren’t prepared for.
Chase: God, man. I feel like I’m talking to myself right now. I’m feeling so much for myself back in the day, when I would just get so anxious to quit the job, and just go full time on the web design, or full time on making sales videos, or full time on whatever thing I wanted to do. I had no clue. I had no clue, and I was so anxious. I felt like my whole body was itching, like I knew it was right. “I know it’s right to do this right now.” You know what I mean?
Chase: A lot of that was pure. A lot of that was good, and that impulsiveness, there was goodness in it, but man. There was a lot more than goodness in it. There was way more than just goodness in it.
Corbett:Yeah, and I don’t fault people for wanting to do that. I don’t fault people for doing it, but you just have to understand that there are repercussions to this decision. If you have X thousands of dollars in savings right now, and it’s taken you the better part of the past decade or something to save, then you just have to wonder if it’s the smartest move to quit that job, to start burning your savings in hopes of building this business, because if it doesn’t work out and you’ve spent all your savings, then what are you going to do next? What’s your next option? As we always talk about, there’s no guarantees in building a business.
Really, what you’re doing is trying out a hypothesis, because you believe that you can make something people want, and are willing to pay for. Then, at the end of this runway, or the end of this trial, you might find out that your hypothesis was wrong. It doesn’t mean that you’re not cut out to be an entrepreneur, but this version didn’t work out. The question is, do you have enough in you for another battle later? That should always be the goal, I think. You always want to have room for a few tries at this thing. You don’t want to go full into it. Like you said, there are motivational speakers and others out there who will tell you that you’ve got to, “Screw it. Let’s do it.”
Chase: That was their story, and it worked for them, and it worked for countless other people that have listened to that advice, but it might be the wrong advice for you. You’ve got to realize, for every one of those, there’s another one saying something a lot more gentle, a lot more interesting and different, that is way more suited for you, potentially.
Corbett:It really depends on the strength of your idea, and your foundation, and it also depends on your psychology. What happens to a lot of people when they quit their job, and they start working on their business, is they realize they don’t have as much self control as they thought they have, and they end up spending five hours of the day playing Xbox.
Chase: It’s not even that. It doesn’t start that bad. It starts like, “How did I … Oh, my God. It’s 2:00 and I’ve been on Facebook since this morning? My coffee’s cold, but I’m still drinking it.” You know what I mean? Then, eventually, you know you’re in bad if you went all the way over to Xbox and was like, “I’ll just play a little game,” and it’s 4PM, and you’re still playing the game, and your wife’s going to be home in a little while, and you’re like, “I’m bad at this.” It takes months of that before you actually have that recognition of, “I’m bad at this.” Which is why some of our most popular content is about time management, productivity.
Corbett:Right. You can definitely get into that situation, and then that can become it’s own shame spiral, which is not good. You can also get in the situation where, you know, it’s kind of like … Just thing about right now, if you have a job and you get to work at home once in a while. What happens when you work at home, and like how easy is it to get distracted, and how much stuff you realize there is to do around the house. When you’re at home, how many expectations are there from the rest of your family about, “He’s home. He could be doing this or that.”
Chase: Those are gnarly. Those are really hard to combat. That’s why for me, for years, it was like you’re out of the house, I’m at a coffee shop. I’m out of the house in a coffee shop. It’s the only place I’m going to get work done.
Corbett:Now you have somebody who comes over to watch-
Chase: Watch my son, but even then, still, it’s like, that’s tough. I work at home, and it would be easier if I had my own place. It’s also kind of nice to just roll out of bed and straight into the office.
Corbett:Totally. There’s these expectations from your family. Maybe you, it takes you time to get into your work day. Then, the next thing you know it’s time to go pick the kids up from school or something. You don’t end up with as much time, just because you’re not working a job, as you think you should.
The next thing is, there’s this anxiety that happens along the way, where, first month feels okay, and then maybe you start to worry like, “Maybe this idea wasn’t as thought out as it should have been. Maybe I wasn’t as far along as I thought before I left.” Then, you start watching your savings dwindle. Then, as this timeline gets shorter and shorter, you get more anxious about it, and you get less and less able to do the work that it actually takes. That’s a very real scenario that happens to a lot of people.
You need to think like, “If I’m going to quit my job, how much self control do I have? How much is this anxiety factor going to play in?” Ask yourself if you’re really the kind of person that operates well under pressure. I think that’s the ideal scenario is, you have a good idea, you have a good foundation, you’ve already prove a little bit about your business idea before you have the plunge, and next you are able to harness all of that to give you the energy that you need. The burn the bridges approach is actually what works for you. It’s a special kind of person.
Chase: You know, for me, I think it was really important to me to try twice, to go off on my own twice, to quit my job twice when I had a decent idea. I was like, “Okay, I’m going to make websites for people.” First, before that I was going to make sales videos for people, and I did a few of those, barely. I quit my job both times to do that, right? The first time was … became really brutal. That was like, “Holy crap.” I actually didn’t even think about my customer acquisition process, my sales funnel, how I was going to get people in the door, trusting me, willing to cut checks to my name. You know? I spent months thinking about what I was going to call the company. Months thinking about the website that I was going to put up for myself. Right? Looking back, it was important to me to try it and fail.
I never fully failed, because I just decided to do something else before it got that bad. You’re failing when you’re moving on, in some ways, but you’ve got to see that as like notches on the belt, as things that you tried, stuff you tried and it didn’t necessarily work out, but it’s growing me. It’s led to a lot of decisions. A lot of the way that I’m able to add value at Fizzle now, just like I was there, and I was doing the thing, and since then, I’ve learned so much and the challenge is figuring out what exactly did I need to know then? What could someone have taught me then, that I didn’t-
Corbett:What at the time were you even capable of hearing?
Chase: That’s what drives me more than anything else, you should know. I want to make stuff that like, even when you’re not even ready to hear it, it’s so good it gets through. It somehow resonates, where you like, “Maybe I am being a little cocky about how this is going to go.” I think that’s the most powerful thing anybody could ever do, is someone, before they even have ears to hear it, you’re able to make something that’s so sweet a juice, it draws them in and then they actually get it. They actually get it. I also think it might be impossible.
Corbett:It’s pretty hard, because there’s just, you know, we all feel like we know better. We all feel like we’re smarter, you know?
Chase: Yeah, it’s a huge part of our identity.
Corbett:Especially when we’re young. Some of us have to fail.
Chase: It’s totally, yeah. You kind of have to fail to feel human, in some ways.
Corbett:Here’s the thing that, even if we can’t convince someone otherwise, they’re still going to try and they’re going to fail, but they need to do that. If we could get something through to them right now, I would love to get through to them this idea that you need to leave enough gas in the tank to try this again. The first try, as an entrepreneur, is probably not going to work.
Chase: That is actually interesting advice. Don’t hit so far at the bottom that you never give yourself another go. What would that look like? That would look like me trying to do my sales, trying to do making videos for people’s websites, and failing so miserably, and sticking to the idea so long, that basically looks like sticking to the idea so long, when all the results about that idea are not pointing in a good way. In every American story, there’s these moments where the hero is sticking to it when everyone around him is going like, “You should really give up going on the football team.” Right?
Corbett:Yeah like, “Quit it. Quit it. You don’t need to do this.”
Chase: In every one of those stories, it was his unwillingness to quit that made him amazing in the end, right?
Chase: We’ve got this fetish about that. Nobody’s making the movie that’s like, there was this character who really wanted to do this business, believed in it so much, and it didn’t work out that time. Then, he went and got a job, and he learned some more skills, and added more tools to his toolkit, and then he tried a different business. It was a little bit the same, but it was different, because he knew more this time. Then, he won. We’re like, “Yeah, I guess if you do it that way, he’ll win. That makes sense.”
Corbett:It’s not so dramatic. The story arc isn’t there.
Chase: That’s what my story looks like. Is that what your story looks like?
Corbett:Absolutely. That’s what everybody’s looks like that succeeds, except for a handful of people. God bless it if you’re Elon Musk, and you decide to bet every last dollar you have on that last rocket launch and it works out.
Chase: That last rocket. That’s one of the best stories of our entire universe.
Corbett:Yes, but let’s not glorify it, because it’s not reality for most people. What that would look like is, if you’re feeling like, “I just got to quit my job.” You’ve got that itch. Instead of quitting your job, burning all the bridges, spending every last dollar you have, maybe keep a part time job, so that you don’t burn money as fast. Maybe give yourself three months, and then at the end of that, if you haven’t made X progress, then you go get a job again and you let it percolate, because in some cases, it’s not about the total number of hours that you put into your business. It’s about the elapsed time that it takes for you to grow, and mature, and experience things. Not just work on your business, but experience and learn things. To get enough of a foundation to be a successful entrepreneur. Even if you can compress your timeline down, you need three years no matter what.
Chase: This stuff takes time. It really does. It sounds, to some people listening, they’re going like, “I don’t believe you. That’s so stupid,” because I said the same thing. I really loudly and confidently said the same thing. Really believed like, “No, I’ve got this already. I have got this already.” Ten years later, you’re looking at me and I’m like … It’s like the cliché about getting older. The older you get, the more you realize you don’t know, and the more humble. I find myself getting more and more humble, even though I know way more than I used to, and I will take anybody to court when I feel like they need to be taken to court. It doesn’t make me feel like I don’t know stuff, but it just makes me way more in wonder and awe of the world that does exist, and going like, “I don’t know enough to [inaudible 00:28:55].”
Corbett:Yeah, right, so time goes by and you realize how much you didn’t know at the time. Then, you wonder, “How much do I not know right now?”
Chase: It becomes very expectable, you know what I mean? You’re sort of like, “Yeah, I know.” It becomes a source of wonder in the world. I feel like the biggest trick, or a good skill, I wish someone had taught me this skill early on, the ability to go like, “I don’t know what that is. What is it?” Someone says like, “You know about the so and so, right?” I’m like, “No, I didn’t hear. What’s the story?” You’re supposed to know about this, right? You know what I mean? I’ve gotten really comfortable going like, “No, I didn’t know about that.” I don’t really care about knowing things as much as I used to, in some ways. Then, I’ll learn, and I can take it in, and I’m better for it. Instead of like posturing and going like, “Yeah, totally. I love that band. It’s so good.” You know what I mean?
Chase: Where do you want to go next?
Corbett:We should talk a little bit about extending your runway. I think a lot of times you feel like, “I’ve got this much money. I’ve got this much time, and that’s it.”
Chase: Which to me, by the way, my personality type, because I know my personality type so well, that is a nightmare. That is a nightmare for people like me. For other people, they’re like rubbing their hands together going like, “I can’t wait to get started. I got three months. I got ten thousand dollars and I got three months. Let’s get this baby going.” For me, as a creative who wants to bring things in to the world that are beautiful and sensational in their own regard, that’s just not a recipe for success. The way that security, and honesty, and yadda yadda yadda are. Those make me do my best work, in some ways. There’s probably fourteen creatives nodding along going like, “Okay, that feels good. I like that, too, but I also don’t get to just sit around and wait for everything to be secure before I get started. It has been a challenge.”
Corbett:The other big aspect here is, a lot of people aren’t very good with money. They don’t understand money that well.
Chase: I’m notoriously terrible at money, and through you and my wife, both of you are extremely good at money, because, for some reason, you were taught how to do that, or you learned it.
Corbett:Because we both were raised with zero.
Chase: You were raised with zero, and I’m just like silver spoon kid over here going like, “None of it matters, clearly, so let’s just buy the couch.”
Corbett:Yeah, but regardless if you’re silver spoon or not, I think just some people don’t operate that way. You tend to see there’s a correlation with the creative aspect of people and then not being so into math, and money, and stuff. Hopefully I’m not offending anybody out there, but you know. On the analytical side, you find people who are better with that sort of thing. Depending on what end of the spectrum you fall there, you just need to be honest with yourself. If you’re not very good with money and you’ve never stood very well, and you have a tendency to spend money on stuff you shouldn’t.
Chase: How long in my life did go, “No, I’m good with money,” because it wasn’t okay if I wasn’t good with money. Now I’m like, “No, it’s okay that I’m not good with money, because I’m not doing this on my own,” and I’m actually getting better at money.
Corbett:You have enough self-awareness to say, “Either I want to get someone else involved who can look this over for me,” or to be more cautious. To err on the side of caution.
Chase: There’s two things, right? There’s a self-awareness to say, “I’m actually not that great at money,” and then there’s the acceptance of, “That’s okay. I don’t need to be. That’s interesting. I’m not that great at money.” Instead of like, “Oh, no. This can’t be. They’ll judge me. Dad’ll hit me,” or something. It’s just accepting that. For me, and people like me, I think that’s a hard thing to accept sometimes. Then, when you do, it’s insanely liberating. You go like, “Okay, so you realize you want to do this business, but you’re actually naturally pretty bad at money,” so you need a partner, or an accountant that you pay quite well to be involved in some serious way. You just go like, “Okay, cool. That’s just a part of the cost of doing business for me.”
Corbett:You need to err on the side of caution, to make sure that you have more cushion, and more runway than you might need.
Chase: I feel like that’s a really big point, because this is one of those, that question, I remember that being in a Seth Godin article about understanding your target market. There’s a bunch of questions, and one of them was, “What’s the relationship with money?” I just think that that’s a fascinating question, because it’s something we don’t like talking about societally. We’re all a little bit embarrassed of, probably. More of us are probably embarrassed, I’d say that more are embarrassed than are not. I’d say that there are more people who are bad with money than there are that are good.
Corbett:Yeah, and you know what? We should take a step back, because there are probably a lot of people, in fact, probably more than half, two thirds, three quarters of people listening to this-
Chase: Eleven twelves.
Chase: I did a number.
Corbett:There are a lot of people listening to this that don’t have any savings at all. There are people listening to this that are in debt, and still have a dream of building a business, and so they don’t have a runway. This isn’t even a question for them. For those folks, it’s hard. It’s more difficult, because you’re going to have to continue earning income while you try to build your business. That’s just a constraint that you have to work with. Realize that constraints aren’t bad. Great things sometimes come out of-
Chase: Always, always. No great thing has ever come about without a constraint.
Corbett:Right. It’s like looking at lottery winners, and how their life goes down the fucking drain, right?
Chase: Totally, totally. I think it’s true that no great thing … That’s a common line in design that a good design comes from constraints. Good creative work comes from restraints, right? The first thing I do when I’m hearing a buddy talk about, I got hired to do this thing,” which I look at and I’m immediately into, “What are the constraints?” “The constraints are, this is the title of the campaign. This is the [inaudible 00:34:33].” I’m like, “Great. That’s all we get to use. That’s all we need.” We start drawing doodles and seeing what comes from those constraints, because you have to, you need a place to start, and your constraints offer that. If your constrain is, “I’m in debt.” That’s a place to start. Now, you don’t get to start way over there, where other people might get to start. You have to start right here. The sooner you can accept that, and the more wisdom you can bring to that, the better. That’s the game you’re playing.
Corbett:It’s very important as an entrepreneur to try to improve your overall financial situation, because stuff happens. It’s not as if we have consistent income month to month as entrepreneurs. Things always take longer than you think, so starting from the strongest potential or possible financial position you can should be your goal. That means if you’re in debt, you have to try your darnedest to get out of debt, and make that your primary focus. You can work on a business while you’re doing that, but you need to make sure that the business activities don’t make your financial situation worse while you’re in debt.
Chase: It keeps coming up is this idea of like, I think money’s really hard, because in money it feels like there is a right way and a wrong way. I think, what I’ve learned is that there really is a right way for you, and a wrong way for you. Like most every other thing in life. I think there are ways. I can see someone doing getting out of debt, the way that they get out of debt being like, and they get through it, and it’s effective, and yadda yadda yadda. They make their life really painful for two years, or something like that, but they do it goldarn it. I can see someone doing that, when I’m debt and I’m like, “God, I’m just not as good as those people.” When really it’s it’s like, “No, you’re just nothing like them. You’re nothing like them.” Yeah, it might take you six years instead of two. The sooner you can find your way, it doesn’t mean that you’re weak. It doesn’t mean that you’re anything. It just means, “This is my way through this.”
Corbett:Yeah, and now you have self-awareness that you didn’t have before, about why this is important. If you’re in debt, building a business, starting a freelancing gig, whatever it is, the debt should drive you. Any extra dollar that you have coming in gets to go straight to that debt, and it helps you pay it off faster than you could if you were just working a job. It’s a super power. It’s like a power up, you know? I was earning X dollars at my job.
Chase: It’s a way of thinking bigger, right? We were talking before about thinking bigger. How do you think bigger? Well, some people just have to, I think of one popular blogger, who had to think bigger from such an early age, because stuff was just so gnarly at home, and just had to like, “Well, I’ve got to provide for mom, and I’m sixteen.” That’s a way that’s going to change how you look at money, forces you into thinking bigger. I think trauma, and gnarly things like that can make us think bigger in some ways.
Corbett:Yeah, or a history of bad decisions that put you in a bad financial position.
Chase: Exactly, but those history of bad decisions build up from the same sort of modality of thinking, and then it takes some sort of miracle to get you to look back and go, “Wait a minute. This has all been my fault.” That’s the moment where you kind of like, “This changes everything. I see it.”
Corbett:”And now I’m going to take responsibility.” Taking responsibility is that fuel that drives you to spend those three extra hours at night working on a business idea. The question then is, if you are … Let’s switch bad to, let’s say you have a little bit of savings, cushion. You want to leave, but you don’t quite have enough to really make a decently long runway. The question is how do you extend that runway? How do you make it longer? There are a few different options here. One is, it’s not so bad to continue in your job, and maybe ask if you can just scale back the hours a little bit. Then, instead of having to live off of savings entirely, you still have some income coming in. That’s not a bad option.
Freelancing is also another good option. Freelancing is great for two reasons. We talk about this often, I think. Freelancing is great, because it gets money in the door quickly, so that extends your runway. It lowers the anxiety, because you’ve got some dollars coming in. The second thing is freelancing is often a really great way to get super close to customers, to learn what the problems are.
Chase: Love that. That changes everything. When you start up, so you want to do a blog. You want to do a course making business. You want to do something that where your time is independent of your revenue, and you can sell at all times, whether it’s a blog, or a podcast, or a course, or a digital product of some kind. You want to do that, right? Spend one year working very closely with clients, individuals around that thing, and I guarantee you, you’ll probably get to better revenue more consistently, faster when you start selling digital things. When you make your digital course now, you’ve worked with forty five customers. You know exactly what the process is. You have stories to tell and testimonials.
You know exactly what the- It gets you through all that BS. If you start your digital, if you’re one of these kids, like I was, and you start your digital course selling thing first, it’s going to take you five years to learn the stuff that you would have learned in one working directly with customers. Even then, it’s like six months. Work with twenty five clients. Work with ten. You don’t need to do it for forever, but you’ll find that it’s quite easy to sell them once you understand what the game is. What it is that you’re actually selling them. That’s the thing. It’s hard to figure out what you’re actually selling people. Then twiddling with, and fiddling with your process to get it actually succeeding for these people.
Corbett:We talk about the importance of customer conversations a lot. I think those are a great starting place for anybody, but then, take it a step further and work with those customers. Solve their problems in a manual way for a while, and then that gives you the ability to earn some money long before you would ever be able to create a product. Your product’s going to be much better.
Chase: You’re talking about freelancing?
Chase: Okay, you’re talking about if you need to get to some early revenue, or if you need to get your access to like we’ve got some monthly revenue coming in. Freelancing is always a great way to go if you have a skill, if you have a process, if you have something you can help people with. There’s a lot of freelancers out there that are looking real hard for more clients, and not finding them because they don’t know how to sell. They don’t know what they’re doing. They don’t have a process of sales, or any sort of strategy. I would even go one step earlier than that. I would say, “Hey. If you have never done a business before, but you want to do one, and no matter what age you are, what you want is not to start a business. What you want is a life you enjoy, working on things that you’re inspired and kind of excited about. That you care about. That are important. That’s what you want.”
Corbett:Right, and to earn enough money so you can afford the things that you want to buy.
Chase: To earn enough money. Okay, so write those things down, where it used to say, “Make a business,” on your mood board, or your dream board, or whatever, write, “Work doing something that I care about. That I feel is important. Make enough money to support myself comfortably.” What was the first one that I said? Now I’m so deep in this pale ale I can’t even see my way out of it.
Corbett:I think you said you wanted unicorns and rainbows.
Chase: Yeah, something about that. Instead of, “I want to start a business,” it’s, “I want to make enough money, and I want to enjoy my work. I want to enjoy my work. I want to enjoy my lifestyle and my work.” Those are the two things that you want. I think a hack for that second one is doing stuff that you care about. Something that you think is important in the world. Regardless of your damn passion, what do you care about? What do you think is important in the world? Then, you draw those two circles, where can you make enough money and work on something that you care about? Go get a job. Go get a job with some company that’s doing something good in the world. Go help them out. Go bug them.
Go like, “I just looked around and found, and looked for all the companies that I could possibly feel like I could give my life to this company for a few years, and you’re basically the only one that I found. What do you need? I got skills in computers. I got skills in mustaches, both trimming and wearing. I got skills in, what, I can make coffee. I don’t know if I need to relocate or whatever,” but I wish more people looked at their career stuff that way. You spend two years, or a year, or three years, or nine years, whatever, working there, you’re going to be so ready to launch your stuff after that, because you’ve probably been in a space similar to where you would want to start your blog, your business in the first place.
Corbett:You’re basically saying look at getting a job in the field that you want your business to be in as step zero in the entrepreneurial journey.
Chase: Yeah, and look at the problems that you see in the world and go as big as you can. Right now, you’re like, “This is the biggest problem I can,” or, “This feels like a big important problem to me right now.” In five years, you’re probably going to know about problems that feel, if you admit it, bigger than that to you. The world gets bigger, and you see the more systemic issues. If you do want to change the world, if you do want to do good stuff. The truth is there’s a lot of problems that are really important, we really need solutions to, and I think we can find business solutions to a lot of these, private sector solutions to these things, but it’s hard to say some are more essential than others. Even when you feel like some are more important, eventually.
The point is, you want to be ballsy? You want to be crazy? Think about the problems that you think are the most important in the world. Go watch some documentaries, and figure out what you think is the most important problems in the world, and find some companies who are working there. They don’t have to be all NGOs and nonprofits. You can find real companies working for, whether it’s for artists, or for wealth redistribution, or for who knows what? Right? Whatever the things that you geek out on, go do some research, because I bet you, most of you listening to this, and this is really just my, take it with a grain of salt, because this is just me looking at it going like, this is how I see things, but man I bet so many of you would feel so fired up if you got a job in a place, it was a mission you actually cared about. It’s also kind of hard to find companies who didn’t just do the corporate thing, and they live for shareholders, and all that stuff, which is what kills us.
Corbett:Right, but even if your end goal isn’t just to find a job that you love, you do legitimately want to build a business of your own, you’re going to learn so much if you get to work in an industry. If you want to be a designer, let’s say, a web designer, go get a job working for-
Chase: You know how many designers I have met, who immediately after school went off on their own and they had successful careers, and these were designers that I admired. Almost all of them say, “You know, I wish I worked at an agency for longer. I never did.” They wanted to see how an agency did it. My few experiences of working in creative agencies completely changed how I looked at working with clients, absolutely fundamentally. I only needed three months to be in half of those.
Corbett:The last one in this list of ways to extend your runway, to make it longer. We talked about either keeping your job and trying to go flexible on it, so you can work a little more on your business, or freelancing, or maybe leaving your job and taking a part time job. That’s another way you can do it, so that you still have income coming in. The point is, how do I keep income coming in?
The last one would be, maybe you have a spouse or a partner that has a really good job. Maybe they just got a promotion. Maybe instead of when they get a promotion, you decide to go buy a new car or whatever, instead maybe you say, “Hey, look. I would love to get a business off the ground, because it’s going to buy us all kinds of freedom and flexibility down the road.” Maybe that’s a conversation you can have, family planning kind of thing. Where I’m going to take this next year to work on this business, and you come up with some kind of agreement. That can be a good way to do it, as well. If you have someone who can support you.
Part of this question at the beginning, and we haven’t covered it yet, but I’d love to before we wrap things up is, “How much savings do I really need?”
Chase: By the way, can you imagine what the bullet points would be on this, if we tried to wrap this up in a three to five bullet point list? It’s all good. This is all the real deal stuff, because life doesn’t come at you in the form of a bullet point, or in form of three buckets to try to fill up with a point. It comes at you with a bunch of emotions and gnarly, grinding teeth. Gnashing was the word I was going for.
Corbett:Grinding works, too.
Chase: I used to grind my teeth a lot when I slept. Apparently my mom could hear me from the other room. Sounds dangerous.
Corbett:I doubt that’s true.
Chase: Yeah, sounds dangerous. How much money do you need to quit your job? You’re going to build your business. You’re ready to go. How much money do I need to have in savings before I quit my job? To me, as I’m listening to this conversation, what I’m hearing is your numbers, and your things are going to be different than other people’s. Remember that. Though you might find some people that think similarly to you, that very clearly, I have people come up to me on the show, or in real life and go, “What’s interesting is I’m much more of a Corbett than a Chase. I like to hear the way that he thinks about things, because he’s been doing this for a lot longer than I have.” You know what I mean? I feel that same way with some of the people that I really admire in podcasting and stuff like that, because that person thinks like me, but they’re fifteen years ahead of me.
I think, in some ways, your numbers and what’s going to be right for you is different than other people, and so realize that there’s not one size fits all for this. There are some best practices, and what I’m hearing is, I loved all this stuff that we got into about, “You might not be great at money.” Chances are, you aren’t. Just dealing with money and thinking it through. Just how you think about money.
Corbett:You’ll get worse at dealing with money when there are all these emotions on the line.
Chase: Tons of emotions, tons of pressure. Be aware of that. Number two, you might be less self-motivated than you think you are. Both those things, money and motivation, or self-motivation, or drive, or something, these are kills that you learn. I was always very self-motivated, and I was really bad, actually. When I look back before, even though people were like, “How do you get so much done? How are you this, that, and the other?” Compared to where I am now, I was a mess. I did not know how to do the things I was doing.
So much of building a business is product management. It’s like here’s what we’re doing to do, and then it’s managing the process of doing that thing. You’re probably not going to be great at money starting out. You’re probably not going to be great at product management, and actually pushing the ball down the field, and time management, from the start. I feel like knowing those, if you can actually take that bitter pill in and go like ugh, that should adjust your numbers for you. Not to tell you exactly what it should be, but it should make you more conservative.
Corbett:Yeah and also realize that things always take longer than you think. Usually what’s the project management rule? Double it or triple it?
Chase: Double it or triple it, yeah.
Corbett:There are a lot of things that you don’t know right now. Instead of saying, “How much time do I need to get my business off the ground? How much money do I need to get my business off the ground?” I would instead ask, “How much money am I willing to spend on this attempt at getting a business off the ground so that it leaves me a chance to fight another day?” So that you don’t end up in a situation, six months from now you’ve spent all your savings, and now you have no choices, no options for several years again, while you build things up. How much could you spend so that you could get a good shot at it, see how it goes, and have a hard decision at the end of that period to say, “I’m not willing to spend any more unless I’ve accomplished X, Y, and Z.”
Chase: You know what I want? I want the person who’s confident and also going, “This is probably not going to work.” There’s a mix, right? There’s way too much modesty, where you’re just like, “This is never going to work. Whatever. Do you like it, or whatever? It’s probably stupid.” There’s that, and then there’s cockiness on the other side. I’m not talking about being in the middle. I’m talking about being all the way on both sides in some ways. You know what I mean? Honestly convinced this probably isn’t going to work, and super convinced that you can make it happen at the same time.
Corbett:Yeah, I would say, “This probably isn’t going to work, and what I’m doing is I’m investing in growing as a person and as an entrepreneur, and learning some things.” Literally think of it as, let’s say I’m going to give myself the next three months to work on this business and see where it gets, and I have to spend twenty thousand dollars to do that. Just look at it as that’s a twenty thousand dollar investment you’re spending on yourself and is that a smart investment strategy? If you were an investor, would you give yourself that twenty k? Realistically? Do you think that you’re going to make enough progress?
Chase: For people who know the investment world, that’s a very interesting question, right? You know what kinds of things you need to do to get an investor convinced. You mentioned something just earlier, where there’s a lot that you don’t know right now. I think that is a huge invitation, that question. What don’t you know right now? What do you not know right now about your business, right? When I think about any business, we’re really good at sort of taking apart business right now, because we’ve seen and interacted with so many of them. So many small businesses. I know, it’s kind of like when we were talking about this the other day. It’s kind of like when you take apart a car, a old dude has been around engines his whole life. You can show him a big part list of here’s all of the parts from the engine, and he can look at that and within about three minutes go, “Where’s the corroborator? The corroborator’s missing.” He can realize when something’s missing.
I’m like that in some ways about business ideas, right now. Whether or not they’re going to work, based on when I’m talking to the entrepreneur. If they’ve thought about this, if they’ve thought about that. All the things that they don’t know yet. What are things they still not yet know? That gives me a sense of how far along in the journey they are. If they’re three years into it, and they still don’t have that corroborator, they still don’t know that thing, then honestly, you haven’t been doing your work.
Corbett:Even if it’s something that could be known by another entrepreneur with more experience, there are things that no entrepreneur could know no matter what experience you have, because there are things you don’t know unless you try.
Chase: I’m saying obviously that, and there are also things that could change even if they’re industry best practices forever, and then they change all of a sudden. That question of what are the things that you don’t know right now, that are important. You can start chipping away at that before you quit your job, for sure. I literally don’t know of a better resource for that than the roadmap, actually. Just going through topic, like what’s the topic of your business? That’s answering the question of, “Are you personally going to be interested in this still when it gets hard?” Getting into audience, which is a question of, “Do you know where these people are actually online?” Because you will need to find them and bring their eyeballs to their thing. Do you know that?
Then, getting into problem or conversations with the customers. Do you know what they actually struggle with? The only business that survives is not one that teaches people to need a thing, but something that actually solves a problem. Unless you’re Apple and Samsung and you’re spending five billions dollars a year on advertising. Then, you can create need all you want, but we don’t have that luxury. That’s what it means to be a small business. Even in just those three, you’ve answered so many things that you didn’t even know are huge questions, and unknowns about your business.
It’s like going through and plugging up those holes in your boat before you actually put it in the water. I just think is so powerful. I wish I could convince more people to do that. That’s what’s a bummer. We get a lot of people who are either really early on, and they’re not really ready to take the boat out on the water at all, but they’re getting a pretty good boat set up if they ever want to in the future, or we get people who are just like, “We need this yesterday,” and they’re not willing to do the work. They just read a bullet point, ASAP blog post, and they’re like, “This is what I’m going to do. This is what I got to try to do.” They’re running around with their freaking hair on fire. They’re not working smart at all.
I feel like I see a lot of that, and very few of the people who are being patient, and honest, but working really hard to actually find out those things that they don’t know. What are the questions? What are the things that I don’t know that are actually important? That’s where you look on a mentor. You look at a course. You look at someone and go, “What are the things I don’t yet know, that are actually important?” That’s my dream for Fizzle, and that’s why we do start a blog that matters, we were talking about earlier. I think that does that so well. The things you did not know are going to be insanely important. We’re setting you up for success on those before you even put your boat on the water. I love that.
Corbett:There we go talking about boats again.
Chase: I think this conversation about boats and bullet points has been a really fruitful one. I think we should settle up there, so we don’t get any more negative reviews. Please do leave us some negative reviews, or positive if you’re into it. Please do actually leave us positives instead of negatives. I prefer positives.
Corbett:Just leave us an honest one.
Chase: Leave us an honest review. If it’s a three star, I’m still going to respect you. If it’s a two or one, you’re just being rude. You don’t see that we clearly have our asses on the line here. I have been Chase [Warbin inaudible 00:55:52] Reeves.
Corbett:I have been Corbett Barr.
Chase: We’ll see you there, or we’ll see you at another time. It gets different every time.
We appologize for any innacuracies in this transcript. We are still looking for a transcript vendor that can, let us say capture our unique way of doing things :)
“How Much Money Should I Have Saved Up Before I Quit My Job?”
The Top 10 Mistakes in Online Business
Every week we talk with entrepreneurs. We talk about what’s working and what isn’t. We talk about successes and failures. We spend time with complete newbies, seasoned veterans, and everything in between.
One topic that comes up over and over again with both groups is mistakes made in starting businesses. Newbies love to learn about mistakes so they can avoid them. Veterans love to talk about what they wish they had known when starting out.
These conversations have been fascinating, so we compiled a list of the 10 mistakes we hear most often into a nifty lil' guide. Get the 10 Most Common Mistakes in Starting an Online Business here »