\n<\/p>\n
It takes a leap of faith to leave a W2 job<\/strong><\/a> and wander through the hills and valleys of self-employment<\/strong>. With the right skill set, time management<\/a>, and perseverance, you can come out more profitable (and happier) than you were originally at your old job. But, once you succeed, it may be hard to slow down the self-employment train, and your <\/strong>side-gig<\/strong><\/a> could become a full-on business<\/strong>, with the need for employees.<\/p>\n TJ <\/strong>has put herself in a phenomenal position, both financially and income-wise. She left her job to become a full-time consultant <\/strong>but knows she won\u2019t be able to expand without hiring her first employee<\/strong><\/a>. Her business would need an employee to bring in more revenue, BUT she needs more revenue to bring on an employee. What would you do in this situation?<\/p>\n Scott and Mindy have both spent time outsourcing and hiring before. They help TJ develop a roadmap to getting her first hire on board <\/strong>while keeping crucial revenue in the business. This episode also dives into self-employed health insurance<\/strong><\/a>, project management, and hiring a junior position that can grow into a senior in little time.<\/p>\n Mindy: TJ: Mindy: Scott: Mindy: Scott: Mindy: Scott: Mindy: Scott: Mindy: TJ: Mindy: TJ: Mindy: TJ: Mindy: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: Mindy: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: Mindy: Scott: Mindy: TJ: Mindy: TJ: Mindy: TJ: Scott: TJ: Mindy: TJ: Mindy: TJ: Mindy: TJ: Mindy: TJ: Mindy: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Mindy: TJ: Mindy: TJ: Mindy: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Scott: TJ: Mindy: TJ: Mindy: Scott: TJ: Scott: TJ: Scott: TJ: Mindy: TJ: Mindy: Scott: Mindy: TJ: Mindy: Scott: TJ: Scott: Mindy: Scott: TJ: Mindy: TJ: Scott: TJ: Mindy: Scott: Mindy: Scott: Mindy: Scott: Mindy: Scott: Mindy: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes<\/a>\u00a0by leaving us a rating and review! It takes just 30 seconds.\u00a0Thanks! We really appreciate it!<\/p>\n
Welcome to the BiggerPockets Money Podcast, show number 252, Finance Friday edition, where we interview TJ and talk about setting up your business to scale in the future.<\/p>\n
Yeah, I think that\u2019s the main reason I haven\u2019t hired anyone right now, is that I don\u2019t want to hire someone and have them dependent on my income when I don\u2019t personally feel like it\u2019s stable. When it\u2019s just me, I don\u2019t have any dependents that are looking to make use of my money, then it\u2019s not a big deal. If I lean on my emergency fund here and there or I decide to take December off, those are all great. But when I\u2019m looking to hire somebody else, they either have to not also be depending on the income themselves, or I need to have enough coming in the door steadily to be able to give them that assurance.<\/p>\n
Hello, hello, hello. My name is Mindy Jensen. And with me as always is my growth-minded business master co-host, Scott Trench.<\/p>\n
I\u2019m just thrilled to be your CE co-host, Mindy.<\/p>\n
Oh my goodness, that was awful.<\/p>\n
I thought it was great.<\/p>\n
They\u2019re always awful. It was clever though. Clever and awful can be at the same time. Scott and I are here to make financial independence less scary, less just for somebody else, to introduce you to every money story, because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.<\/p>\n
That\u2019s right, whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business, or hire your first employee, we\u2019ll help you reach your financial goals and get money out of the way so you can launch yourself towards those dreams.<\/p>\n
Scott, I\u2019m excited to talk to TJ today. She has a very fun problem. She is in the, \u201cI\u2019m about to grow really big,\u201d portion and of her company, and she just needs, I think a little bit of guidance for where she wants to go. And once she puts her feet running, I\u2019m imagining like the Road Runner where his feet go like this and then they finally hit the ground and they take off. Once her feet hit the ground, she\u2019s going to take off and fly.<\/p>\n
Yeah. She\u2019s in this awesome position where her expenses are low, she\u2019s dual house hacker, she\u2019s got a business with all this kind of stuff. And now, it\u2019s a matter of, do we want a turbocharge And go forward, or we want to take a more methodical approach? She has all the options in the world because the status of her financial foundation is one of inevitably moving forward towards wealth and abundance over the next five to 10 years. So it\u2019s just fantastic to see. It\u2019s a higher income, but not a crazy high income with that. So kudos to her for building such a strong position.<\/p>\n
Yeah. Before we bring in TJ, let\u2019s hear a note from today\u2019s show sponsor.
A great, big thanks to the sponsor of today\u2019s show. And, my attorney now makes me say, the contents of this podcast are informational in nature and are not legal or tax advice. Neither Scott, nor I, nor BiggerPockets is engaged in the provision of legal, tax, or any other advice. You should seek your own advice from professional advisors, including lawyers and accountants regarding the legal, tax, and financial implications of any financial decision you contemplate.
TJ is 30 years old and targeting a work-optional life within the next 10 years. She\u2019s recently purchased a new-built home and has her expenses dialed in. She\u2019s looking to optimize her finances and is actively growing her business, consulting businesses on their business practices. I\u2019m actively growing the use of the word business in the introductions here. TJ, welcome to the BiggerPockets Money Podcast.<\/p>\n
Thank you for having me.<\/p>\n
I\u2019m so excited to talk to you today, because I think you have an interesting set of circumstances, and I think you\u2019re not the only one in this set of circumstances. So let\u2019s jump in and see where your money\u2019s going. What are you bringing in and where are you sending it out?<\/p>\n
Great. Coming in the door, I recently just transitioned from working full-time as an IT project manager to full-time as a consultant. So this year, my finances are a little wonky, but I\u2019m looking at bringing in a little under 150K this year based off of the leads I have right now. And after taxes, that\u2019s about 9K a month.<\/p>\n
Awesome. And is there any additional income?<\/p>\n
Yes. I have a couple, and they\u2019re really just small. I do have one PPM or a syndication, and that\u2019s bringing in about $125 a month. And then I\u2019m actually part of a research study that gives me like $25 a month.<\/p>\n
Well, that\u2019s cool. I like those research studies. Yes. When you\u2019re in college, you can generate a lot of income like that.<\/p>\n
Well, let\u2019s get a picture of net worth. So what are your assets and liabilities, and however you want to present those.<\/p>\n
Sure. So from an asset perspective, I\u2019ve got several retirement accounts and all sorts of fun things. On the traditional retirement side, that\u2019s about 95K on the Roth side that adds up to about 55K. And then I\u2019ve got a 529 plan that just sits there because I thought I would get my MBA at some point at about 16K. And then after tax, investments is at 66K. And then I do own, I just moved from a two bed, two bath condo into this new build home, and I hung onto that one. So right now that is a rental property that is worth about 171. And I do have a HeLOC out on that, which is about 62K. So a little bit of debt there, but that\u2019s really just because I like to have the line of credit to have that flexibility.
And then this property, I\u2019m actually house hacking it, so I have a roommate.<\/p>\n
Awesome. What\u2019s the mortgage? Do you have a mortgage in addition to that HeLOC? And do you have a mortgage on your primary?<\/p>\n
The condo is paid off. I basically just got the HeLOC and took the HeLOC funds and paid off the mortgage, so it reduced my monthly expenses there. And then the mortgage on the single family home I\u2019m in right now is at 235 with a 2.99% interest.<\/p>\n
And what\u2019s the asset value of the house hack?<\/p>\n
The house hack, that is-<\/p>\n
How much is it worth?<\/p>\n
Oh, 171, that\u2019s what it was.<\/p>\n
So, you have a mortgage for 235. So the condo\u2019s worth 171.<\/p>\n
Oh, sorry, yeah.<\/p>\n
And you have the $66,000 HeLOC. And then you have a mortgage of 235. How much is the property worth?<\/p>\n
The single family is 350.<\/p>\n
350. Okay.<\/p>\n
Oh nice.<\/p>\n
And how much does this all boil up to for total net worth?<\/p>\n
About 450K<\/p>\n
Awesome. One more question before we get to where you want to get to, what brought you to this point? How long have you been thinking about fi or personal finance or this kind of stuff? Can you give us a quick overview of your story in the past? A couple years.<\/p>\n
Sure. Yeah. I would say, a lot of it comes from just having strong fundamentals. My parents are immigrants. They came to America to do their masters and then stayed. And they\u2019ve all always been super frugal. It\u2019s just an immigrant mindset where you\u2019re trying to fast track your way to the American dream. My mom\u2019s amazing at finances. So she taught me a lot of things. She actually doing swing trades stocks right now. I look at her portfolio, I\u2019m like, \u201cWhat? How?\u201d I really picked up a lot of that, and just knowing it was possible and having a female role model show me that this is how to do finances.
And then I learned about fi in 2017, and I was already in a good position. I already owned my condo at the time, and I was not enjoying my job. So I went to my boyfriend at the time and went, \u201cI want to do this. Will you support me?\u201d And he gave me that mental space and emotional support to really decide that this was something I wanted to do. And that\u2019s really just the jumping off point. Since then, I\u2019ve soaked up a lot of information, purchased several classes on real estate investing, stock trading, all sorts of other things, just to get myself to this point.<\/p>\n
Awesome. And did you ever have any debt or were you able to just pay off and build this position? Did you have a pretty good launch pad for that journey?<\/p>\n
I had a good launch pad. I did recently tell a salesperson that my family doesn\u2019t take out financing for things, the only debt that we ever had in the house was the mortgage. So it actually was not a part of my world of possibilities that I could take out a loan for college, that just wasn\u2019t a thing. So I got a scholarship that paid for most of it. My parents paid for the difference because they already had a 529 plan, so they wanted to use the money without the penalties. And then I did work internships and part-time jobs during college to pay for anything else I wanted.<\/p>\n
Awesome. Okay. So what\u2019s the best way we can help you from this position?<\/p>\n
Right now, my main focus and passion is in growing my business. So I\u2019m doing, how I describe it is, project and operations management and organizational change management consulting. So I help medium to large businesses optimize the way that their businesses run, and if they need a particular project to just hand off to somebody so that they don\u2019t have to worry about it, that\u2019s where I come in.<\/p>\n
Okay. Awesome. Do you have any representative types of projects you could share with us to give us a little bit more of a picture?<\/p>\n
Yeah. So my background is in IT, so I don\u2019t currently work with an IT client right now, but a lot of spaces where you need any software implementation, upgrades, things like that, that\u2019s where I have my bread and butter. So things like Salesforce, the most recent large one that I completed was in implementing their Field Service Lightning module. It was basically when a store like the container store deploys a contractor to your house to do a job, then that\u2019s the technology they\u2019re using behind that. And actually, right now, I\u2019m helping marketing department optimize their operations. They don\u2019t have any internal project managers, so I\u2019m helping them figure out how to leverage the tools they have at hand, things like Microsoft Office 365, Teams, SharePoint, and really just get the most out of what they already have.<\/p>\n
Okay. Awesome. And how many hours a week is this taking you currently?<\/p>\n
It really depends on the phase of the project. The unfortunate part and the reason why going consulting was a big deal to me is that, some of it depends on how available the client is. So if the client doesn\u2019t have any time to share with me what their current process is, then I actually have a decent amount of downtime. So that\u2019s where I come in as a fractional consultant to help them win. They need the help, and bill them hourly and then I can juggle up to three clients at a time.<\/p>\n
Okay. And what would three clients at a time lead to in terms of total income?<\/p>\n
Three clients at a time? I actually haven\u2019t projected that. With just the one client right now is where the 9K a month is coming in right now, and that\u2019s at 40 hours a week.<\/p>\n
Okay. But you think your maximum capacity would be three clients juggling at a time?<\/p>\n
Yeah. Hypothetically, if I phase them correctly so that I\u2019m not starting all three at the same time, then yes.<\/p>\n
Okay. So if you are able to do three clients at a time, if you\u2019re able to juggle that and schedule that, then your theoretical income would go from 9,000 to 27,000 per month, which would be about a little over 300K a year. Is that how you\u2019re thinking about the income potential for your business?<\/p>\n
Yes, though I would end up hiring some support staff. I would probably get a personal assistant, add a couple of expenses to really optimize that.<\/p>\n
And is that where you want to go? Is that the best thing we could help you with, is thinking through how to make that happen and build the business on that trajectory?<\/p>\n
Yeah. I think that long term, if I were thinking big about the business and it won\u2019t necessarily get to this point, but dreaming big, what I love to do is have a staff of other consultants, not necessarily in my space, but my roommate is an industrial engineer and I\u2019m not as versed in organizational change management as I would like to be. So if I had a specialist in that space, I\u2019d really love to have a suite of offerings to my clients.<\/p>\n
I love it. So to me, I actually think that the game is very, very simple in the immediate and short term future, which is, you just don\u2019t have enough revenue for your business to hire an employee with this. And to get to that level of revenue, you need to bring on two more clients, and that sounds like a brutal amount of work, but I think that is the price to pay to be able to get to a position where you can hire someone in this particular line of work, or at least that\u2019s my immediate observation. That said, I don\u2019t know what I don\u2019t know, but I\u2019m just going to float that out there and see how you react to that. Does that sound generally along the right trajectory?<\/p>\n
Yeah, I think that\u2019s the main reason I haven\u2019t hired anyone right now, is that I don\u2019t want to hire someone and have them dependent on my income when I don\u2019t personally feel like it\u2019s stable. When it\u2019s just me, I don\u2019t have any dependents that are looking to make use of my money, then it\u2019s not a big deal. If I lean on my emergency fund here and there, or I decide to take December off, those are all great. But when I\u2019m looking to hire somebody else, they either have to not also be depending on the income themselves, or I need to have enough coming in the door steadily to be able to give them that assurance.<\/p>\n
I think that that makes perfect sense, and I think that that\u2019s\u2026 That\u2019s where I\u2019m like, okay, it\u2019s almost remarkably simple. It\u2019s not easy, but it\u2019s simple in the sense that like, okay, you\u2019ve got to complete this job in 35 or 40 hours and crush it and then moonlight to get the second job and get that going, and that\u2019s 18,000 per month. That\u2019s good. That\u2019s a good individual income. That\u2019s a higher end individual income, but it\u2019s still not like the ability to comfortably hire somebody at that point, I think, unless you have a backlog of business with it. So it\u2019s getting that second one and then having the third one in the books, and that\u2019s when the hire comes in place. At least that\u2019s one way to think about it.
Mindy, I see you making some faces. Do you agree to disagree?<\/p>\n
I want to throw on a different option, but first I want to make fun of you because you said, \u201cOh, $18,000, that\u2019s a good income. Yeah, I\u2019ll take that.\u201d<\/p>\n
Yeah. It\u2019s a very good income.<\/p>\n
That\u2019s okay. That\u2019s not bad. So I\u2019m just using you about that. But you keep using the word higher, Scott. She\u2019s a consultant. I would encourage her right now in her \u201cdowntime,\u201d and I\u2019m making air quotes, in her \u201cdowntime,\u201d start reaching out to other people. You said something about organizational change management or something that isn\u2019t a strength that you have, start looking for somebody who has that strength, who can supplement your business when you need them, but you\u2019re not hiring them as an employee because that\u2019s not\u2026 It doesn\u2019t sound like you putting in a lot of time to learn that is worth your while. It sounds like that\u2019s the thing you can bring somebody in on.
Is that the sort of thing that your company needs to have somebody on staff, or can it be a hire out when you need to? If you could find a rockstar organizational change management person to come in and consult with you for the beginning of this project\u2026 Clearly I don\u2019t know what that is, I don\u2019t know if I\u2019ve done a good job of hiding that.<\/p>\n
No, it\u2019s good. Typically, best practice would be to keep them on for the duration of the project, but that is definitely something that a possibility to not have to hire them as part of my org. I think it\u2019s more part of the vision that I would love to at some point, but certainly, as a middle ground, getting somebody to come in as like a subcontractor is definitely an option. I think my main challenge is less so in the change management space, but more in project management, which is where my bread and butter is, is that convincing a project manager to jump away from a W2 job is actually really difficult.<\/p>\n
So it sounds like the personal assistant or the project manager would be the first hire that you do?<\/p>\n
Yes.<\/p>\n
And you said that you have several leads on jobs, but you\u2019ve got one client right now. When is the next job supposed to start?<\/p>\n
I actually have a short engagement about two weeks worth of work starting next week when that client comes back from vacation. So I\u2019ll be working two jobs in November, in addition to all the other fun things I get to do in November. So it\u2019s not actually a lack of demand, some of it\u2019s just time timing or having some of that foresight into what my workload is going to be, things like, \u201cHey, do I want to just take December off? Or does it make sense for budgets for people to wait until 2022?\u201d So there\u2019s not really too much of a challenge in getting somebody in my sales pipeline, but it is more about kneeling down the actual timing.<\/p>\n
We had Joel Esparza on a few weeks ago, and Joel is building a video editing business. With that case, the use of a contractor or a set of subcontractors makes a lot of sense because you can boil down each unit of work product into something very tangible, complete it, decide if it\u2019s satisfactory, and then begin scaling up to a large degree. It\u2019s not always that easy, but it\u2019s going to attend more towards that type of work product. What I\u2019m reading into in your business is you need somebody for months on end, maybe in the short side, two weeks, to complete a contract to the satisfaction of the client with that. And that seems like it\u2019s just going to be a lot more expensive or harder to subcontract out.
It doesn\u2019t mean you can\u2019t do it, and I think Mindy\u2019s point is great. It may be a lower risk option in the next year or two to think about that, but you\u2019re going to probably spend much more. It may be the same percentage difference as if Joel was hiring out each video individually, but the dollar amount\u2019s going to be way bigger. If the contract is 40 grand, you\u2019re probably going to have to pay somebody 30 of it or something, something substantial in order to be able to then subcontract it.
It\u2019s still good, you\u2019re arbitraging, I\u2019m making that up 10 grand in that fictional example, but I think your business doesn\u2019t scale, it scales much better with somebody being paid hourly and you arbitraging the $40,000 contract for $20,000 in employee expense. That\u2019s interesting and I think that that\u2019s the challenge. And again, that\u2019s where I come back to, there needs to be a huge gap between that income and expense, and probably for some period of time in order to pull that off, unless you\u2019re willing to give up much more of the contract, which could be an economy of scale, if you can get 10, 20 contracts, that could be a really good business-<\/p>\n
Yeah. And I want to be careful there because there, there\u2019s definitely a space in the industry where it\u2019s really just being a staffing agency, looking for project managers and pairing them up with a client. And that\u2019s not the space I want to go to, because first of all, it\u2019s oversaturated, it\u2019s ridiculous. The number of LinkedIn messages I get looking for a project manager, it\u2019s not something that I want to join the party for. A certain amount of the challenge is expanding my network and finding people who are in a position in their career where they may not feel like they have enough experience to be fully independent, where I can fill in some with my experience, and things like that.
And right now, a lot of my network is either people who are about at my level of experience or higher. So some of that is, I just need to put some more leg work into finding younger professionals.<\/p>\n
Well, where would you find a younger professional? When we\u2019re talking about real estate, because of the BiggerPockets aspect of this, we suggest going to local meetups. Are there local business meetups?<\/p>\n
There\u2019re actually. Project managers have an organization that certifies them, the Project Management Institute. We do have a chapter in my area that I could start attending. I hadn\u2019t attended since I was a student because it\u2019s really just a bunch of people looking for jobs.<\/p>\n
Oh, wow. Is it really just a bunch of people looking for jobs who may not have a ton of experience?<\/p>\n
Sure. Last time I checked, yes. So I guess I need to go back to doing that. It does come at an expense. Every single event costs money, so it\u2019s something where I have to find out which ones are really going to be worth my time and money to be doing that. So that is one avenue. And then I\u2019m still in the town where I went to college, and I do have professors that I\u2019m keeping in touch with. SO if they have somebody who would be willing to take on\u2026 And at this point, I only need like five hours a week for a personal assistant. So if they have the ability to get to my place and they want to learn from a project manager, that\u2019s what I\u2019m looking to do. So I\u2019m expanding my network in that space as well.
What I don\u2019t want to do is convince somebody to do that when I either don\u2019t have the income to pay them or that I don\u2019t have a lot of work to give them either. So it\u2019s a little bit of a balancing act.<\/p>\n
When you\u2019re in this space, it sounds like you\u2019ve got some downtime coming up in the form of taking off all of December. When you\u2019re in a space that has a bit of a lower demand on your time, start looking for things that you can put off on somebody else\u2019s plate. How much time are you spending on the menial tasks? That sounds snotty, but the menial tasks like email and calendaring and all these things that don\u2019t need TJ to do, as opposed to the business processes that does need TJ to do. What can you take off your plate? What can you put on somebody else\u2019s plate? And do you have a system in order to pass that off easily, but it takes time to set up those systems.<\/p>\n
Yeah, definitely. And this is actually something I do a lot for my clients as well. It\u2019s a funny space where I\u2019m like, \u201cI do this for my clients, but now I\u2019m going to offload some of the stuff for my business to somebody else.\u201d So it\u2019s a little bit of letting go of control, a delegate thing as well, but I do think one of them-<\/p>\n
I didn\u2019t say it was easy.<\/p>\n
One of the main things I do want to do, because right now I\u2019m operating in like three different calendar softwares, is to have somebody just sit there and sync them all up because that\u2019s just the way the invites come in. And there is a purpose to having them separated. But in order for me to know where I need to be next, I do need them to sync up a little bit more.<\/p>\n
Well, that sounds like more than five hours worth of work to do.<\/p>\n
What\u2019s like a three year target for the business? What would you\u2019d be like, \u201cI\u2019m super happy with my business,\u201d in three years?<\/p>\n
Three-year target is definitely to have that personal assistant, and then maybe one other consultant at that point. And I\u2019m not picky about in which space their specialty is in, but that would be the ideal space in three years.<\/p>\n
Okay. Your business currently generates, it looks like 110 to $120,000 a year in revenue. Is that right?<\/p>\n
Yeah.<\/p>\n
So I just want to point out, if you\u2019re hiring a\u2026 What would be the salary range of someone that you\u2019d be wanting to hire?<\/p>\n
So for a personal assistant, I\u2019d probably do 20 to $30 an hour just because the demand for talent, especially type of talent that I want to mentor is going to be at that price range. For a project manager, that\u2019s where it gets expensive. My starting salary coming straight out of college was somewhere around 60K. So we\u2019re starting to really eat into the revenue there, unless that person can independently handle a client all by themselves.<\/p>\n
Great. Let\u2019s say it\u2019s 75K for the persons one or two years out of college with that. When I think about employee expense, I fully burden it, I say, \u201cOkay, the bonus, the benefits, all that kind of stuff.\u201d That\u2019s going to be an incremental 50% on top of the base salary. So that would give you 37,500 on that. So that\u2019s 112,500 that you\u2019re going to be paying this person, I think I did that right, in compensation, that\u2019s how much cash is going to leave your business on an annual basis to pay that person\u2019s salary.
Let\u2019s say the personal assistant, say it\u2019s 50K. So same deal. 75K, maybe 80 in that case because you still have to pay the health insurance and all that kind of stuff, is going to come out on that particular one. So that\u2019s 80. So that\u2019s $200,000 in cash costs that are leaving your business in order to pay for just those two employees, not to mention your software and all the other stuff. How much do you want to make?<\/p>\n
That\u2019s a good question. At the bottom of it, what I need to live off of is about 55K a year. What I\u2019d like to make is at least 150 to make all of the rest of this worth it.<\/p>\n
So you need 150 in base plus bonus or plus some wiggle room, or is that the profit the business needs to be at the end of the year?<\/p>\n
Let\u2019s say plus a low wiggle room, because I\u2019ll probably do an S-Corp election and do an owner\u2019s draw.<\/p>\n
Okay, great. And then you\u2019re going to have benefits and all that kind of stuff that you\u2019re going to want from the business, like health insurance and all that kind of stuff. So you say 150. Let\u2019s add another 37,500 to be consistent with your top employee there. So that\u2019s going to put you at 200. So now we\u2019re now we\u2019re fully loaded at 400,000 to $450,000 in cost to get to your future target. So you need to be able to generate business that does, I guess we can pull 150 out of that target, that generates about 450 to $500,000 annually in revenue in order to get to complete that picture. And the point I\u2019m trying to make here is that, I like the systems and all that kind of stuff, but this is a revenue game right now.
You need to bring in more business and build that book of business. At first, I don\u2019t know how much that scales. I think Mindy\u2019s absolutely correct that you should write out all those tasks, the calendar syncing, that\u2019s perfect. You\u2019re certainly in a position to outsource some of that work that\u2019s lower skill that anyone else can do that doesn\u2019t need to do that, the project management, that is your professional thing. But I think, you\u2019re saying three contracts, I can juggle three at once. You need to do six at once in order to justify this or fewer that are bigger or more that are smaller. I don\u2019t know, with that, but that\u2019s the name of the game that I see.
Do you think I\u2019m framing the challenge appropriately with that? And is that sparking any ideas or thoughts on this vision?<\/p>\n
I like the way you laid it out, it definitely helps me quantify what the goal is. At this point, I\u2019d say towards the end of the three years, that might be a bit of a stretch to really get to that point. And I only say that because the whole just trying to hire just a part-time person right now is a little bit slow going, more because of the networking aspect that goes into it. So some of it is like, I know what I need to do, but either I don\u2019t have the network to do it yet. I don\u2019t have everything set up, or I\u2019m just waiting until the appropriate time to make those overtures.<\/p>\n
What I\u2019m hearing you say is, or what I am getting from this conversation is you need to hire a personal assistant. The ideal personal assistant is coming from a professor that you\u2019ve been in touch with, is a junior or senior in college, is hungry and would work for 20 or $30 an hour, part-time your five hours, but they\u2019re studying to be a project manager or that you have aspirations to be a project manager. So as they\u2019re learning with you, learning your company on a part-time while I\u2019m in school basis, they graduate, and now you\u2019ve got a project manager who\u2019s already familiar with all the aspects of your company and can hit the ground running and then you have to go and find another good personal assistant, but you can find a good personal assistant.
It sounds like project management is more of a difficult task. So that\u2019s the first thing that I would do is really focus on reaching out to all of your professors and saying, \u201cHey, I\u2019m at a position where I need somebody five hours a week, but I\u2019m thinking it\u2019ll grow.\u201d And having a conversation with them, \u201cOh, midterms are coming up, great. You can take time off this week. And finals are coming up. Great. I want you to focus on that too.\u201d But having this back and forth with your employee can be really, really beneficial to your business.
Another thing I want you to do is get a new client, it\u2019s called TJ\u2019s business, and look at TJ\u2019s business from 50 miles up and say, \u201cIf TJ\u2019s business was my client, what would I tell them to do?\u201d And it\u2019s very much Cobbler\u2019s children have no shoes kind of thing where you know what you have to do, but it\u2019s so easy to not do it. Let me tell you all the things that I know I have to do and I just keep finding reasons not to. So it\u2019s not TJ\u2019s business, it\u2019s Mindy\u2019s business. Mindy\u2019s business just happens to run exactly the way TJ does. What would you tell Mindy to do in your exact position and start implementing that?
But I really think the assistant who can, like your calendar, that\u2019s really important. If you miss a meeting, that\u2019s going to be horrible. I don\u2019t want to do all that moving calendar thing either. So I would love to have an assistant who could do all that. But that\u2019s a great task that you can easily check on, \u201cOh, they messed this up. Forget it, I don\u2019t want to hire this person.\u201d But starting off on a project basis and then asking them, do you want to come on as a part-time and then as a full-time?<\/p>\n
Yeah, for sure. I think an answer to your, what would I tell you? If I was looking at my business as the consultant, it really is just to get a job description out there and just throw it out there and see what comes back. I\u2019m totally definitely the introvert that doesn\u2019t want to talk to anybody, so it doesn\u2019t happen. I even drafted it and everything, and actually, I didn\u2019t think about just sending it to my professors, I was thinking I\u2019d have to put it on some kind of job board and things like that. But I think the professor route probably is the better way to go.<\/p>\n
I would start with the professors and then start with, are there any project management institute? Do they have any like Facebook groups or LinkedIn? There\u2019s a lot of technology in our fingertips, are there any college groups and clubs that talk about project management? I\u2019m just throwing stuff out here, but maybe something like that could spark what heck is this.<\/p>\n
It\u2019s a little tough coming out of the pandemic that people basically shuttered all their events and stuff. They are coming back, and I did just talk to a student on Friday. Where I do want to be careful though, is that if they have particular career aspirations that don\u2019t line up or just isn\u2019t a good first step for them, I don\u2019t want to convince them that it\u2019s better to work for me than whatever else they have going for them.<\/p>\n
I think that\u2019s fair.<\/p>\n
What would be a good outcome in the next year for you?<\/p>\n
You in the next year would probably be to feel stable in my business operations. Right now, I\u2019m enjoying the whole like eat when you kill thing where you get to do the sales thing and all of that and having those conversations, but especially if I\u2019m thinking about bringing on people that will depend on income from me, I do want to be stable enough where I don\u2019t have to worry about whether or not I\u2019m going to have a tough conversation with them six months down the line.<\/p>\n
Well, what does stable mean?<\/p>\n
Stable would be probably signing a client before I\u2019m done with the current client that\u2019s bringing in whatever the profit, because in the next year, I don\u2019t think I\u2019ll be juggling three at a time, maybe two at a time. So basically knowing when my next engagement is going to start, when I already know that the current one is going to end, and having that visibility into the future of what\u2019s going to happen so that I can plan for it. And clearly as a project manager, I\u2019m a big planner. So that\u2019s what that means to me really, because I\u2019m very flexible in a lot of other spaces, but I don\u2019t want this business endeavor to be something that just falls apart because I stop paying attention to it.<\/p>\n
Okay. I love the focus on the personal assistant because there\u2019s clearly opportunity to go there, but I think we\u2019re missing a huge piece of what being in a future state that actually checks all these boxes means. And the personal assistant is one component of that overall approach with that. So what I\u2019m hearing is you want to sign a client prior to the engagement ending. That means you need a sales and lead management pipeline. So there needs to be, there\u2019s traditional sales funnel, here\u2019s the amount of leads, here\u2019s where they are in the sales cycle, here\u2019s where they\u2019re falling. I have my pricing figured out and I have all of that kind of stuff.
So that\u2019s an easy to-check-the-box component of the business plan that only you can achieve, only you can construct for at least for now at that, and you can hire a consultant or something like that, but that would be really high-value work. Then creating some forecast with that or some schedule that compiles those and has those end dates figured out with that kind of stuff, and that making it into your calendar where you\u2019re like, \u201cOkay, my engagement\u2019s at the end and I worked 40 hours, too bad, I got to do another five hours this week because I need to manage that pipeline and get that next lead into the business with it. Otherwise, I\u2019m going to be increasingly anxious over the next month while this engagement is ending with that kind of stuff.\u201d
And I think the tool for that would be helpful is the business plan. So it\u2019s a bit back to basics college, dig up one of those things, but putting together a very simple two-page, three-page business plan may be very powerful for you because, again, I don\u2019t think the personal assistant is going to solve as many problems as you think. I think it will solve some of them, but you\u2019re attempting to build a business with an employee with all this, you need to have those traditional sales and marketing operations, finance, and forecasting, roles defined and filled.
It doesn\u2019t mean you\u2019ve hire people to do all of that, they just need to get done, probably by you in the short term with this. And so that\u2019s where I think-<\/p>\n
I will rest for something.<\/p>\n
Yeah, go ahead.<\/p>\n
I was going to say actually, because my major was from the business school, it actually isn\u2019t too much of a stretch to ask the personal assistant, if they were to come from my major or an adjacent major to do a practice run of it. They\u2019re definitely parts of marketing that I don\u2019t want to do, things like social media and stuff like that. I\u2019m like, \u201cI\u2019m sure I could figure it out, it\u2019s not like so much of a stretch, but it\u2019s not where I want to spend my time.\u201d So there is definitely opportunity if I could find a student that was interested in those spaces to have them stretch into those spaces as well.<\/p>\n
Absolutely. But I think if you start with what needs to get done in order to move the business forward and then fall back, and then outline that like, \u201cOkay, somebody needs to post to my Instagram with this type of content with it.\u201d Or, \u201cSomebody needs to run a Facebook ad campaign with this kind of stuff. Here\u2019s how much I\u2019m willing to spend.\u201d If you start by mapping out what needs to get done and then putting in place the pieces that move that get that forward, I think you\u2019re going to find that more powerful than just saying, \u201cOkay, well, all of this is a catchall. The personal assistant will take care of all of it.\u201d
It is possible to hire that incredible assistant who can just take on all of these things and do them all well, but you may find on the marketing function, I\u2019m making this up, I don\u2019t know. You may find on the marketing function that outsourcing to a social media firm for 100 bucks a month is going to be much more powerful because they\u2019re going to know what they\u2019re doing than giving that as additional task to the personal assistant with that. You may find that an outsource bookkeeping firm can keep the books much better than the personal assistant can. The inverse of that may be true, I don\u2019t know.
What I\u2019m hearing is the next step is the personal assistant. That\u2019s surely the case, some of the work with that, not doubting that, I just don\u2019t think it\u2019s the only tool in your toolkit to help you get to that stable position in a year from now. And it\u2019s going to create a lot of dependency on this particular individual as well if we go down that route. And that\u2019s why I\u2019m just encouraging you to think about it from a business planning perspective and say, \u201cWhat actually needs to get done? Who is the optimal person to do that? What\u2019s a good short-term solution? What\u2019s a good long-term solution with that? And mapping it out like that. That\u2019s just, I think, a more powerful approach.<\/p>\n
Yeah. I think that makes a lot of sense that I do need to just write out the individual tasks that are easy to say, \u201cYes, this is done.\u201d Or we can move the owner around as necessary because it might be the personal assistant, it might have to go somewhere else, it might have to be me, but there\u2019s no way to determine that until I have a list and we stare at it and go, \u201cWhat are you willing to do? Or what do you feel strong in doing?\u201d And then delegate those out appropriately.<\/p>\n
And just so you\u2019re aware, at BiggerPockets, we do this kind of stuff all the time. Let\u2019s talk about this podcast. Mindy and I both work at BiggerPockets. The podcast is produced by an employee, but it\u2019s edited by a contract firm in the Philippines. Then the video is edited by a firm in Spain. Then we have a contractor who listens to the show and comes up with titles. So there\u2019s certainly somebody who\u2019s managing that flow, but there\u2019s also bits of work product that are best done by certain individuals out there. And it\u2019s much cheaper, more cost effective or better outcome to structure it, we think that way than to do all of that in house with one all-rounder on that front.
And that\u2019s our business that\u2019s completely different, but just a framework to help think through.<\/p>\n
That\u2019s a great point. And I think what I\u2019m learning through this conversation is that because of where I come from as a project manager, what actually happens when you said, \u201cHey, there\u2019s somebody managing the flow,\u201d that\u2019s what I do. And then typically at large enterprises, what they also don\u2019t do is hire the correct people to do all those like, \u201cThis is the best person to do X, Y, Z.\u201d So since enterprises don\u2019t hire those people, it actually falls to the project manager to fill in those gaps.
And that\u2019s been a big part of why I\u2019ve been successful in project management is because I will jump in when we don\u2019t have a body to do a particular piece of work. And that\u2019s something I have to unlearn in order to run my business.<\/p>\n
Yeah. That\u2019s more eloquently phrasing. What I\u2019ve been trying to communicate with this is like, I love it. Your biggest problem is you need to drive revenue growth. You have a large body of work that needs to get done to drive the revenue growth, inclusive of operations, which is taking over most of this. And I think that another, replicating yourself is great, but continues to avoid the scalability, the long term scalability problem of mapping out each process with it.
I think you should definitely have the personal assistant with all this, again, at least on a part-time basis with all that. I just, again, encourage you to use that tool of the business plan, or don\u2019t write a 20-page business plan, it\u2019s a waste of time. But if you just jot your stuff down on a few pages, that may be very powerful for you to refer back to. And there\u2019s a lot of templates out there. If you\u2019re looking for the easiest or simplest one, Traction has a really good one. It\u2019s meant for businesses that are larger than yours with that, but they have a two-page business plan called the Vision\/Traction Organizer, which will force you to collect all of those thoughts on two pages.
It can take you away from an hour to a day to fill that in or months, depending on how long you want to spend on core values and that kind of stuff. But that may be an easy one for you.<\/p>\n
Yeah. I\u2019ll definitely look into that.<\/p>\n
Okay. Well, do you have anything else we want to talk about on this particular subject? Or do you have any other questions about your financial position that would be helpful for us to discuss?<\/p>\n
A couple others maybe. The one that pops out at me, if I\u2019m looking at my notes, is really in the healthcare space, because I\u2019ve jumped off of working W2, and right now I\u2019m on Cobra, but we\u2019re also approaching open enrollment. So that\u2019s top of mind for me right now, is figuring out healthcare as an independent consultant.<\/p>\n
We have in the past suggested if you are relatively healthy, you don\u2019t have any chronic conditions, the high deductible plan is the best option for you, but if you have chronic conditions, it may not be. I said this out loud on a show and somebody reached out to me and said, \u201cI have run the numbers, this is like my thing. I ran all the numbers and there is this very teeny-tiny space where even with the chronic condition, even with great health, poor health, there\u2019s a very tiny space where the HSA isn\u2019t the best plan, the high deductible option, isn\u2019t the best plan.\u201d
So I would say if you were going out on the exchange trying to find this for yourself, the options aren\u2019t great. Mostly they seem like high deductible plans, I would set up an HSA to make sure that you are able to invest the funds if you\u2019re going with the high deductible route. But honestly, I think the exchange is going to be your best option, which isn\u2019t a great option. It\u2019s more of a catastrophic plan. If you have your appendix out, that\u2019s going to be\u2026 I had my appendix out in \u201996, then it was $27,000 back then. So it\u2019s going to be more now because everything goes up.<\/p>\n
Actually, I\u2019ve had my gallbladder removed. That was a tax year that I took advantage of a lot of things. So yeah, I definitely am a big fan of the HSA, and it\u2019s great to know that somebody\u2019s run the numbers and figured out that there\u2019s actually long term more effective to stay in the HSA even if you have health concerns. So that\u2019s definitely something I\u2019m looking at, I think something that will mitigate the whole health concern thing, considering that I\u2019ve already had major operations is probably just picking one that has a lower out of pocket max or a lower deductible.
And I actually looked at the exchange, there\u2019s one that was 1,400 was the deductible, and I was like, \u201cHow does this exist?\u201d But I also don\u2019t recognize the network it\u2019s in, so that some of my concern is more of like, how good is this network?<\/p>\n
And that\u2019s another thing to consider. I knew somebody who did not like a specific provider network because when she went in, she didn\u2019t see the same doctor all the time. My kids don\u2019t know their doctor because they go in once a year and then it\u2019s a whole another year before they go in again. So we don\u2019t have a relationship with our doctor, when we ended up with that insurance, it didn\u2019t bother us because we didn\u2019t have a relationship with our doctor anyway. So what it all boils down to is there\u2019s no easy or cheap all-encompassing answer for healthcare in America.
It is expensive, it is going to be expensive, and it can be a business expense. Scott, her company TJ\u2019s Business Consulting can provide health insurance to you 100% paid, right?<\/p>\n
I think that may be the case, but I want to caveat that where that is definitely going to be the case once you have employees. If you\u2019re acting as an independent contractor, for example, I don\u2019t know the structure of your business and how you\u2019ve set things up.<\/p>\n
Actually, I\u2019ve looked into it. Right now, I\u2019ll probably stay sole proprietor. And just because of what a reasonable compensation is for a project manager, is on the higher end, I\u2019ll be able to deduct off of my personal taxes, the premiums, but I won\u2019t be able to have the business pay for all, I can\u2019t do like a health reimbursement plan or anything like that yet. So until I\u2019ve got other employees and I\u2019m running as an S-Corp, that\u2019s not an option.<\/p>\n
Okay. Thank you. I did not know that. So thank you for educating us on that particular one. That makes sense. It\u2019s 601 half a dozen the other if it\u2019s tax deductible versus a pass due to your business. So for now, that doesn\u2019t seem like a high stakes problem for you.<\/p>\n
Yeah. I get this question a lot, how am I going to pay for health insurance after financial independence? How am I going to pay for health insurance as a small business? And I wish there was a great answer like, \u201cOh, go to Abc.com and they\u2019re totally going to take care of you. Insurance is a dollar.\u201d But there\u2019s not. Insurance in America is expensive. So if that is something that you are going to be responsible for, it just needs to be a line item in your budget.<\/p>\n
I want to put out a little dangerous shout-out here, arm for this. I\u2019ve considered in the past maybe creating a benefit for BiggerPockets Pro members of a healthcare plan or access to a healthcare plan that is reasonably competitive. So if anyone listening knows how to potentially help with that, that\u2019s an exploration phase, probably not something coming in the next year, not in the 2022, but would be something that I would love to provide downstream because a lot of full-time real estate investors or flippers, etc, have this type of problem in the early stages of building a business and I would love to be able to offer a reasonable solution to that.
So if anyone has ideas, please send it my way, [email\u00a0protected]<\/a>, I\u2019d love to explore that, probably something for 2023 or 2024 BiggerPockets roadmap for that.<\/p>\n
Yeah, perfect, perfect.<\/p>\n
Yeah. That\u2019s [email\u00a0protected]<\/a> Email him.<\/p>\n
Nobody else.<\/p>\n
Scott\u2019s no longer inbox zero.<\/p>\n
That\u2019s a tough one. I think the answer is, there\u2019s no good answer right now. So there\u2019s only list of bad options and you\u2019re probably as informed as we are on those list of bad options for you through the research that you\u2019ve already indicated in the portal there at healthcare.gov, I imagine. Is that right?<\/p>\n
Did Warren Buffett connect with Jamie Diamond, and who\u2019s the Amazon, Jeff Bezos and tried to disrupt the system and then decide they couldn\u2019t?<\/p>\n
I think they went into pharmaceutical. That\u2019s where I understand Amazon tried. And I don\u2019t know if they\u2019re still working on it or not.<\/p>\n
Yeah. That\u2019s the thing, I don\u2019t know if they\u2019re still working on it. I wish they would. I wish that somebody would figure this out. Warren\u2019s really smart. Come on, Warren, step it up.<\/p>\n
Well, I\u2019m sorry we don\u2019t have a wonderful, helpful answer for that one on yet, but if anyone does, we\u2019d love to collect notes and maybe we can post about this as well in the BiggerPockets Money Facebook group and just rehash if there\u2019s any new or exciting news in that front about what are some good healthcare options for somebody who is self-employed or sole proprietor or has a small business that is not eligible for employer plans.<\/p>\n
Yeah, for sure. I kind of figured.<\/p>\n
Yeah. Then we\u2019ll send you a link to that.<\/p>\n
Link to episode 94.<\/p>\n
Yeah, show 94. She had a list of like 25 options or something like that that were applicable. There\u2019s a couple of edge cases that you could qualify for. So it\u2019s probably worth to listen because there might be some golden there, but I would say the odds are that it\u2019s probably going to be something along the lines of what you\u2019ve already researched.<\/p>\n
I\u2019ll take a look and see.<\/p>\n
Okay, awesome. TJ, is there anything else that we can talk to you about today?<\/p>\n
I think that\u2019s about it.<\/p>\n
Well, I just want to compliment you on the fact that you\u2019re doing really well with your I position with all this. You\u2019re spending very little, you\u2019re house hacking, you\u2019re building a business, all this kind of stuff. You\u2019re thinking about scale. I love it. You\u2019ve got the two properties now with it. It just seems like you\u2019re off on incredible trajectory with building wealth, with all this kind of stuff. And I\u2019m excited to see how things go with your business.<\/p>\n
Thanks, Scott. It\u2019s great talking to you guys.<\/p>\n
Thank you, TJ. We\u2019ll talk to you soon.
Scott, that was TJ. What did you think of her story?<\/p>\n
I thought there were some interesting financial decisions to contemplate. What\u2019d you think, Mindy?<\/p>\n
I really liked where she\u2019s at. And I think she\u2019s in that almost to the point where she\u2019s\u2026 She\u2019s in that position of business growth, where she could probably hire somebody on a very part-time basis, but I think very soon is going to be a little bit farther than when she should have hired. You know what I mean? You always wait a little bit too long to hire your first employee, I think she\u2019s thinking about it, and I think you in particular gave her some really great things to contemplate, and I\u2019m super excited for her business growth in the next couple of years.<\/p>\n
Yeah. Look, I feel like when a business line or area has that level of revenue one $60,000 employee on $110,000 in revenue is going to eat up 90 grand out of 110 in profits, if you pay anything else, rent or whatever, you\u2019re at break even with that. So the plan has to involve aggressive growth projections, not just to protect your own business interests, but also the interests of continued employment for that employee with that. And so that\u2019s where I think my challenge to her come from, where if you want to hire and get people in full time, that\u2019s great, but you need to have the revenue to back it up, or you need to have aggressive path to getting to that revenue that your future employees can reasonably believe.
And so I think that\u2019ll be your challenge. There\u2019s a lot of ways, there\u2019s a lot of betweens here and there, part-time assistant, hourly contract, all of that kind of stuff that can de-risk that, but that\u2019s I think the big challenge there where last thing you want to do is have to eliminate the position because the revenue projections didn\u2019t pan out.<\/p>\n
You know, Scott, I think that you gave her some really great things to think about and consider that maybe she hadn\u2019t quite gotten to yet herself. So I think this conversation is really helpful for TJ to start thinking about growth patterns. And when you get really busy, it\u2019s really easy to say, \u201cOh, I want to hire somebody,\u201d but hiring them in an intelligent manner is the best way to go. And of course, you have to have the revenue to back it up. That\u2019s always, always the top. Okay, Scott, should we get out of here?<\/p>\n
Let\u2019s do it.<\/p>\n
Ooh, ooh, before we do, I want to make a plea to our listeners. If you would like your finances reviewed, Scott and I would love to look over your financial situation. Please apply at biggerpockets.com\/financereview. We don\u2019t need to use your name, your video, we\u2019re not here to out you, we\u2019re not here to catch you in lies. We\u2019re just here to review your finances and see what we would do if we were in your same situation. So if you would like us to talk, let\u2019s talk, biggerpockets.com\/financereview. Okay, Scott. Now, should we get out of here? And you say, \u201cLet\u2019s do it.\u201d<\/p>\n
Okay. Let\u2019s do it now.<\/p>\n
From episode 252 of the BiggerPockets Money Podcast, he is Scott Trench, and I am Mindy Jensen saying, don\u2019t be a punk skunk.<\/p>\n