BiggerPockets Money Podcast - 220: Finance Friday: How Do I Scale My Business But Reduce My Hours?

Episode Date: August 6, 2021

Entrepreneurs work long, stressful hours, and as a result, they get paid the big bucks. This is the position that Stephanie, a freelance Salesforce consultant is in. She makes a respectable income, bringing in $14,000 after tax! But, that income comes at a cost. While Stephanie is currently contracting out work to a few part-time employees, she spends at least 50 hours per week on the business. She’d like to get to a point where she can step back and work 20 (or so) hours per week and have a systematized and growing business. She’s financially in a great place, with more than three years of expenses saved in cash, so she can take more risks with her business. If you’re growing your own business, rental portfolio, or side-income stream, you may be in Stephanie's position in the future. Stick around to hear exactly what Scott (an active CEO) would do if he was in her shoes. In This Episode We Cover Time freedom or financial freedom, which is more important? Taking your hands off the reins and letting your business grow  Subcontracting out work so you can focus on leading a business  Firing clients who aren’t the best fit for your business  Creating systems and procedures so your business can become scalable and saleable  And So Much More! Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast, show number 220, Finance Friday edition, where we talk to Stephanie about work-life balance and building a self-sustaining business. I think part of it is just the mental load of I feel so scattered across so many different things. I don't feel like I'm working effectively in any way. And I'm certainly not doing the work that I would enjoy the most. So, yeah, a lot of my time, it's just like scattered between all these different clients and calls. Yeah, communication management. Hello, hello, hello.

My name is Mindy Jensen, and with me as always is my Obi-Wan Kenobi-esque co-host, Scott Trench. Thank you for the force of that introduction, Mindy. 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're starting. That's right, whether you want to retire early and travel the world, go on to make big-time investments in assets like real estate start or automate or systematize your own business will help you reach your financial goals and get money out of the way so you can

launch yourself towards those dreams. Scott, I am super excited to talk to Stephanie today because she has a bit of a different problem that she needs a little bit of guidance with. We normally talk to people about their personal financial money situation and we start off this episode talking about that, but we quickly pivot to her ridiculously successful business and her conflicting view. She's very excited about it, but not every aspect about it. She'd like to grow it, but she'd also like to work less hours. And I think we're in the frame of work-life balance and how do I get rid of the parts of the business that I don't want and keep the parts of the business that I do.

Yeah, you could tell immediately that Stephanie is a very high achiever, very kind of, I would say type A, knows what's going on, earns a really high income, has complete command of her expenses, has a perfectly clean balance sheet with no debt. We'll get into all those things as the show gets going there. And you're like, what the heck is the problem here, right? But it is a problem, right? Because she's got this incredible amount of income and very low. expenses because she's doing everything by the book when it comes to managing a financial position. And now I think it's time to make a decision about whether she is going to take on the world or get that balance. And what a good problem to have, but what a real problem, right, that's going to impact your life and is a big decision. And hopefully many of you, many of the folks listening, are you either having a similar problem or will have this problem. one day. And so I think that this is a good position to be in. And I think a real strategic choice you're going to make, it's going to impact your day-to-day life, your

optionality downstream, and a lot of things. So anyways, should we get into it, Mindy? We should. Before we bring in Stephanie, I need to say that the contents of this podcast are informational in nature and are not legal or tax advice. And neither Scott nor I nor Bigger Pockets 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. Okay, let's bring in Stephanie. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most

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Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audio book completions on Audible alone, and I still regularly re-listen to the highest impact. impact titles. Lately, I've been listening to Bigger Leeners Stronger for Fitness, the anxious generation for parenting perspective, and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful is its breadth. Beyond audiobooks, you also get Audible Originals, podcasts, and a massive back catalog across business, health, parenting,

and more. All accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BP money. Stephanie is a consultant working for herself after turning a side hustle into her sole source of income. Hooray! But she's starting to feel burned out by the pace. She's on track for early retirement in a few more years, but she's wondering about her

options. She's recently purchased her first house after making and losing multiple offers. Stephanie, welcome to the Bigger Puckets Money podcast. I cannot wait to this. dive into your numbers. Great. Thank you. Hi, Mindy. Hi, Scott. Hello. So let's work on a, what are we calling this? Scott? I always messed this up. We call it a profit and loss and then a balance sheet. So income minus expenses is your profit and loss and then your investments minus your debts is your balance sheet or net worth. So let's look at what's coming in and where is it

going. Yeah. So like Mindy said, kind of work for myself and so therefore it varies month to month, what's coming in, but, like, what I've calculated so far, you know, kind of, like, let's say 2020, the average was probably a little under $16,000 per month, like take home after tax. And then in 2021, so far, it looks like it'll be an average of $14,000 per month. And so that's both after business expenses and after my estimated taxes. So I won't know until the end of the year what exactly it works out to. You make $14,000 a month. That's your income.

Awesome. Thank you. Awesome. Okay. Where's that going? Yeah. So my expenses are, you know, decently low.

So I target around $2,500 per month, which would be $30,000 per year. And I don't, so I certainly use MET for tracking my expenses. So I generally have a good read throughout the month where I'm at. But I don't necessarily do serious budgeting and don't really want to do that.

But I, you know, I can say that, you know, some of my general expenses. So, you know, like I, you know, anyways, I am currently renting by kind of moving, you know, I've already closed on a house. Like, we'll have that mortgage payment starting in August. So the P&I is 1,100. You know, escrow right now is about 250. So that's kind of like a baseline of 1,500, but it'll probably go up a bit. when the property is reassessed for property taxes.

And then I'm expecting utilities will be 200 to 300 a month. You know, still kind of have to get into the place to like figure it out exactly for myself. So that's going to increase my kind of 200 or 500 target. I don't know if that'll be as possible anymore starting in August. But, you know, beyond that, I have kind of an old, you know, 2008 Honda Fitt, you know, bought it cash. Car insurance is about 55 per month on that. I spend maybe $15 in gas a month on it.

You know, my electricity bill. Right now it's like a first year promo. It'll probably go up a little bit to 50 starting in August, 50 per month. Groceries, I probably spend about 500 per month. You know, cell phone, $55 per month. And then maybe one thing. So, you know, I do buy my own health insurance, but I think. think of that as a business expense. So that's $269 per month. It's a high deductible plan.

It has an HSA with it. So those are some of kind of the big baseline expenses, but, you know, certainly other, you know, hair cups that happen, you know, maybe two to three times a year. Other kind of general personal care expenses like that that go along as well as books that I might buy and different things like that. India, I think you and I should start taking notes from Stephanie here instead of the other way around. You seem to have it very dialed in here. You seem to make an extraordinary amount of income. And it sounds like you're conservatively estimating that income, even as you stated there.

You know, that 14,000 a month or 16,000 a month is going to be 250 to 300,000 pre-tax in revenue for your business from a consulting basis. That's amazing income. You spend 30,000 a year. That's amazing on the expense front. What's your balance sheet look like? What are your investments and liabilities? Yeah. So my total network is probably like 420 right now, but 40K of that is home equity.

So kind of have 270 invested, kind of 100 and a solo 401K. I have like a rollover traditional IRA that has 33, So, you know, that was 100,000 in the 401k, 33,000 in the traditional IRA, like 8.5,000 in the HSA. And then kind of also some, like, taxable accounts that have about 120,000 in them. And then do you have kind of a small amount in cryptocurrencies to both stable coins. I mean, that's the bulk of it. And then, like, a little bit in Bitcoin and either. So that in total for those crypto currencies, this 8,000.

So I think it's a pretty small amount, just trying it out. And then, yeah, I do have like 100K in cash or like 110 right now. All right. I have two questions here. Sorry that they're, I think, necessary for this. How old are you and how long has this situation continued? Yep. So I'm 30 years old.

And I, you know, kind of this current situation is only, I've only really properly been just working for myself since the start of this year, but I've been doing freelancing for a long time, going back to 2014. So typically, I was doing that while also having a full-time job, or maybe I was doing it between jobs. I did do a master's program that I graduated from in 2020. So while I was doing that master's program, I was also doing this. And so it kind of just basically like was doing small amounts for a long time. And then once I was in my master's, both through me, like, trying a little bit more with it, but then like things just like organically happening, you know, just like good opportunities that happen, it started

become more of a full-time job. And what kind of freelancing or consulting is this? So, Salesforce consulting. Salesforce consulting. Okay. So here's what I'm seeing here. You make an incredible amount of income. You've dialed it on the expenses.

You don't live in an expensive part of the country. You make, and again, you make a tremendous amount of money. It just appears to me that now. time needs to pass is the biggest problem here because you're earning so much money. You have all of this cash flow coming in and your net worth is not there, I think, simply because this situation with debt-free and bringing in 12,000 a month after your expenses to invest, just hasn't continued for a very long period of time. Is that, I mean, is that, and that's not really helpful advice, but that's my diagnosis.

Right. That I could keep doing what I'm doing for, you know, maybe three more years and I would probably be, you know, whatever my fly number would be. But I think I do work a lot. Like, it's very consuming. And so thinking about how do I maybe start scaling back now in a way, even before I've really properly reached that number? I guess that's the tension.

It's like in a way I can make a lot of money. and that's great and like I love seeing it come in. But it's still like I said, it's like demanding too, right? And kind of a lot of responsibility on myself as well. Yeah, I mean, I completely get that. There's no, I would be very, I'm very surprised to hear the person who's 30, or in their 30s who makes the income you make that does not have a stressful time in making that.

That's part of the deal, I think, of that with that. But I think that's great. So it sounds like the goal is, is okay, I've got this phenomenal financial position. You clearly seem to know what you're doing with a lot of this. You have a conservative thing. You have no debt. You dial in all your expenses.

You have an investing framework. We can help with some of those ideas if you'd like. But it sounds like what you want is to begin scaling back. Is that right in the next, like immediately? Yeah. I mean, maybe thinking about, I guess I have a business asset that I've developed in a way, but I haven't necessarily developed it very intentionally. I do have subcontractors who work with me,

so that's part of how that income is so high. But I guess I still have difficulty delegating and letting go in a way and kind of not being the main conduit through which most things come to me. So, yeah, maybe thinking about what the future can look like. Maybe it's not about just hitting a fine. number, but I recognize that even today, I could scale back in a way that my expenses are covered and then some. But I guess in a way, I just keep having all this work that comes to me as well.

So is your goal to quit working altogether? Let's say you have your fine number already here. It's already, you're already at that number. Would you quit completely or would you want to scale back? Do you enjoy your job? I really enjoy my job. I really enjoy my number. my job. And, you know, but I have more money than time. And I think that you are at that same position. You have more money than time. And I think that your estimates of how much time you're working are probably a little bit low. We talked before we hit record about how you're probably working about 50 hours a week. I would guess that it's at least that. And it's just, you know, an hour here or an hour there. Oh, let me just check my email really quickly. And all of

sudden you think you're working, you know, 40 hours a week and it's really closer to 65. So I would, I would say, first of all, let's see how much you're actually working and how much do you want to work? Like, do you want to work four hours a week like Tim Ferriss? Or do you want to work, you know, are you okay working a couple of full days a week? Yeah. So I think when I think about it in my head of maybe at least like a transverse. ideal life would be 20 hours a week. So that is like what I'm targeting. Like maybe it would be

five hours, you know, Monday through Thursday and Friday's off. I think that would be great. Like, do I want to do what I'm doing for the rest of my life? No, I don't think so. Like I do think at some point I want to transition to something else. I certainly think about everything I'm doing right now is really time for money, even though I can subcontract and that's great. But I still have to do a lot of management of other people to do that. So, you know, I've certainly thought about is there a product that could be developed that would make sense to do? Or, you know, maybe I just want to get to a point where I have this as, you know, like if I really need it in the future, I have this skill set, but I'm going to really like scale back. Maybe I only have one client. Maybe

it's a very, you know, small amount of work. So I think about doing that. I guess it's like right now, I feel like to feel secure, I still do want to grow my net worth more than it is. And so maybe thinking about the next couple of years while I'm doing that, how can I do that, but, you know, still have like a healthier life and what I'm doing right now. One way to approach the problem is to think about this in terms of your time value of money. You have a good problem. And I think Mindy and I share your problem at a high level where our time is very valuable with the, you know, it just is. It's a high dollar per hour value. Your time is probably worth $150 an hour at least on an average across the annualized basis. So one way to think about what you're trying to do here is great. If you generate $100,000 in income, you'll reach FI in after tax. You'll reach five. After tax. You'll reach five. in, I don't know, five, ten years maybe, right? So you've got a great, a great situation with that. How can you eliminate portions of the work you're doing and increase the time, the dollar per hour,

the average hourly rate that you're earning by making some changes? For example, if you were to automate or higher portions of your jobs out or say no to certain types of work that were, I don't know, lower paying on a relative basis, you might only bring in $200 or $150,000, but you might be able to accomplish it in half the time. And that would be, you know, I think a relatively, I mean, it wouldn't be easy, but it would be a relatively simple exercise from a philosophical standpoint. You just make a list of all the things that you do and determine what's the highest dollar per hour at your best guess and then begin eliminating at the very bottom of the list on up until you feel comfortable. But would that, would that be a helpful start?

point perhaps. Yeah, I think it is helpful. I think I get into, like, you know, ultimately I'm trying to be very, like, responsive and available to my clients, that that's a double-edged score, too, because it means, like, you know, get last-minute requests and things like that all the time. Like, I think it's things like that that I'd like to get out of my life. Like, I don't necessarily mind doing the work, even. It's more so all the random things that come in throughout the day. So maybe it's like, yeah, figuring, like, yeah, figuring. out how to build up more of a barrier, whether it's through myself hiring someone else or requiring my clients to have that person, like on the other side, kind of in more of a project

manager role so that I don't have to do all of that myself. How do you staff your business? Probably not as well as I should. So I have two developers based in India who will do anything related to kind of code and kind of more advanced stuff. I have kind of one guy working with me based in D.C. I can delegate, you know, maybe like simpler things to do, right? That, like, it could do myself, but, like, it's great to have someone else do it. I think what I'm lacking right now is another meat in a way.

And, you know, it feels really difficult to find that person who can kind of, like, I know my clients and their systems really well. I guess, yeah, I've had a hard time kind of figuring out, like, again, how all the maybe delegation of the work, the review of the work. A lot of that goes through me. So I think that's what I'm missing. So basically, I have several subcontractors to work with me. I don't think that I want employees or necessarily to go that route, but I think that having people for maybe not my same skill set, but at least like that more can do more of the management, maybe kind of client management as well, that would be helpful.

It sounds like you need like an operations manager or something like that to handle a lot of this. Probably. A lot of this someone, whatever operations means in consulting, person who can actually do significant portions of the work, you're obviously going to have to close the big deals and handle your best, your biggest clients directly. But would that be something that would be helpful to you. Yeah. I think it can. I think this is where maybe I could hit a challenge with the subcontract model of finding that person who doesn't have. like the same rate that I do, basically.

And maybe that could be okay. They're just, again, allowing me to do the work, but still, I'm still having to do less. Maybe that's my challenge of. There are a lot of really smart people graduating from college and looking for jobs and all that kind of stuff. And I think we're coming close potentially to one possible answer to your situation. You make a tremendous amount of money and it's completely overwhelmed.

And it's probably crippling your ability to earn more business because you can't take on more clients at this point. So it sounds like, there we go. We've got a business. This is a great problem. Let's, you got, you got to start reading up about entrepreneurship and building a business. And I think you can, I would suspect, and you tell me if I'm wrong here, but I would suspect that you spend a good amount of time scheduling calls and reacting to client requests and that kind of stuff, things that are. not you doing consulting work that is demanding the high hourly rates. Is that correct? Yeah. I do use howling so that helps us scheduling, but certainly a lot of email communication.

Again, a lot of last minute, like, can you do this? And I think I've just, you know, gotten into this kind of bad habit with clients where at least historically I did things very quickly. And so now it's kind of like every reply is like an immediate request. So It's hard to like, I don't know, set expectations around that. So what I'm hearing is that in your job, there are tech things that you do and non-tech things that you do. I'm guessing that the tech things that you do are going to be more high dollar value than the non-tech things that you do.

I think that there's a lot of opportunity for you to hire somebody to oversee those non-tech things. I can schedule you and. your subcontractors to do the work when I know that it takes six hours. Oh, okay, Bob has four hours available today and two hours tomorrow. So I can respond to this request, hey, I can have that done for you by the end of the week and give Bob a little bit of flex time in case there's an issue. Give Bob time to do the work. Give Stephanie time to review the work and turn it back in. I think part of it is just the mental load of I feel so scattered across so many different things. I don't

feel like I'm working effectively in any way. And I'm certainly not doing the work that I would enjoy the most. So yeah, a lot of my time, it's just like scattered between all these different clients and calls and yeah, communication management. Yeah. Okay. You said the word enjoy, the work that I enjoy the most. Scott said listed out from highest dollar value to lowest dollar value. And that's a valid way to do it. Do that too, but also list out in the order of things I like to do, things that give me migraines. I don't want to do this stuff, but I have to because it's my company. How much of the have to do correlates with bottom of the dollar value? I think there's a lot, there's going to be a lot of correlation with what you have to do and what

doesn't make very much money. And that's the part where you create the job for you don't need somebody who's an expert in Salesforce technology. And clearly I am not. You don't need somebody who can do that. You need somebody who can manage all the stuff that takes up all the space in your head and doesn't pay you what you are worth at $150, $200 an hour. Yeah. So I think that's the, that's the big one right here. That will free up a lot of your time, I think, when you make those two lists. and you review them and you then it'll also help you craft the job listing. And right now people are really wanting work life balance. So if you can give them this amazing job that pays well, that also provides them with

work life balance, you'll have an employee who will stick with you forever. Yeah, I think that's right. I think it comes down to you have a business here and the business is consuming you because it's been become so successful. It's all based around you as a person, as an individual, and you got to break that. And if you can do that over the next three years, you're going to be in, you're going to get what you want and have an exploding income base. To get there, you're going to have to sacrifice your income in the short run because you're going to have to, I think you're going to have to in some capacity, somehow, some way, either sacrifice clients and revenue or pay an employee to begin doing some of this work, which is going to change your income. but I would think about it as a little differently there,

and how can you in three years have three separate functions in your business, somebody who's in charge of sales and marketing, somebody who's in charge of the operations component of that, including managing any of the contractors in India, or those types of things that are going to actually do implementations there. And maybe you can begin, I'm making this up, but maybe you can begin driving more clients and having even more business, while spending less time on your business with those types of things if you put in place

those systems. But that's what's kind of becoming apparent to me here is you've got a business. This is your wealth profile. Your net worth is significantly greater than what you've got here because a lot of these clients seem like the recurring repeated regular business with this. And if you can kind of begin scaling that up, you're going to be in good shape. And think about this in two or three years. Right now, I bet you all of your clients are expecting you to help them personally based on your contracts. Is that right? In a lot of ways, I'm the person being hired.

I don't yet have someone who clearly works alongside me as, I mean, saying like as an equal sounds bad, but like, yeah, someone else who I could just say, hey, this person is going to, like, work with you on this project. I want to get to that point, but I guess sometimes it feels overwhelming or I'm, like, very concerned about quality, you know. So I think, like, I don't even allow people to, like, step in and do it because I feel this need to kind of, again, no one does things exactly the way I would do it. And that's, you know, I need to, like, get okay with, you know, that reality and, um, the benefits that come to me from, like, letting someone else do it as well.

Well, yeah, okay. I think, I think in that, you have two options then if that's, if that's an important factor in your business, is that that high level of quality and, and, well, I guess you have three options because it sounds like that may not be a requirement. But if it is a requirement and it has to be done exactly the way you want it, then that says you have two choices. One, you can bring in a partner who's as skilled as you and begin splitting some of that income, especially if you know some people that have a similar skill set to a certain degree. And that might help double the business or at least, you know, you can go on vacation now or those types of things because someone else is there to take it on.

Or you can, second, you can go with someone in the middle, right, to someone who's got maybe earning $80 to $100,000 a year, who's got some of that skill set but still needs to train and maybe it's hungry and ambitious. And you can document it and work alongside them for a year or two. And your new clients, in two years from now, if you can get a couple of new clients, they will only know this person's work and this person.

And so you can be in position as things move in two years where your new clients in particular are folks that are getting used to that And you can slowly move your current clients there. And third, if it really has to be done your specific way, that's where you can potentially hire someone who's more entry level and then have them, hey, this is not a work-life balance job. You're going to come to my house and you're going to work with me every single day while I train you side by side on exactly how I want this done like this right here

in, I think you're Michigan, right? And work there. And we're going to train you exactly step by step on how to do every part of the business the way I want. and eventually, if you hire the right person, they'll be able to go and run with it. So this is what happened when I started with bigger pockets in my personal thing, right? Josh, Dorkin, our founder was in your position, just completely overwhelmed with all the mechanics of operating the business every which way. And he opted to hire some junior person who was one year out of college, which is me, and trained me up exactly on how he liked to do a lot of things.

And eventually I started, I grabbed, I got grasped it and went and got going with that. And that's a great opportunity for somebody that you could be offering them if you think you've got to scale. business here. Bigger Pockets was about the same size as your business when I joined. Yeah, and that's helpful. I guess how did he do that with you? Like, were you like a part of every email, every meeting? I worked alongside him side by side in a cramped office, you know, and I did everything from every part of the business that needed something that's what you, that's what you, that's what the operations title, to me at least, means at a startup or a two person company is you should be expecting to hey you are the CEO Stephanie so when you need coffee

guess what it's a hundred and fifty dollars an hour for you to make coffee and it's less for your operations manager to go and make the coffee or grab lunch because you've been working six hours in a row right if they need if you need to book an entry or collect a check or deposit in the bank because it's above your your mobile deposit threshold that is not work that the CEO should be doing it's work the operations manager should be doing if if you need to book a calendar appointment because, you know, it's a big client and it's not appropriate to send them the calendar link to go and search it for themselves. That's not something that you, that you should be doing. Right. And so, and so that's kind of how I would, I would think about it if you're going to go

that route. You know, ideally, you get somebody who just raises their hand and says, yes, I will take on every single thing that I can from you because I'd like to earn a bigger and bigger bonus or get a part of that profit share at the end of the year, whatever it is. You're going to have to motivate them. but that would be one framework to think about with this. Yeah, no, I really appreciate the way you laid it out. I think, yeah, part of my challenge has been, like you said, feeling so, like, overwhelmed and consumed by things that it's really difficult. Like, I recognize that it'll be compounds return.

So, like, take a step back and think about these things and figure it out. But, like, again, it's so easy just to, like, focus on the day-to-day of everything instead of doing that. Yeah. Now, another thing that you, I'm observing here is you say you work 50 hours a week, Mindy Suspects a little bit more with that. But I think, I think you have created a complex full-time or full-time plus work environment that, where you can get pinged at all hours of the day at night. And to untangle this, I think you're going to need to spend three to six months or more potentially. saying no, instilling processes into your business, hire, maybe making a hire and that kind of stuff.

And that is going to require even more time investments into that. And so you get to the other side to get to get out of that. And this happens from time to time at bigger pockets, right? We see, you know, employees who own certain areas. We don't tell them specifically how to go about doing things. And so they run and they go and build, build, build, build. And then there's a nightmare of a system that needs to be maintained at the end of that. And it's a full-time job plus to maintain that system.

And then it's even more on top of that to unwind the system. And this happens, I think, to a lot of people at different points in their careers and different types in their businesses. But that's how I would think about it is, like, okay, is that what's happening to me? And in order to unwind this appropriately, I'm either going to have to say no to revenue, or I'm going to have to put in that extra effort to put in place. the things that will go and tackle that. So that's not going to be a fun endeavor for you, but it will pay off, I think, if you can get the other side of that. And I think I have tried to get a couple more clients just to have, again, not to be so dependent on one client slash I think

it's necessary to more properly bring additional people in to make sure that there's enough work to be done. But yeah, so start kind of figuring out either having them work side by side or again, And just, you know, again, letting go a bit and giving them more ownership over a specific part of the project work or specific part of the business. That, yes, that would help me a lot to do that. Have you, do you read or listen to a lot of books in entrepreneurship? Or where do your kind of interests lie in terms of self-education? So, like, I would say what I've read has been more about kind of removing yourself from the business. So, you know, Mindy mentioned the four-hour work week.

I certainly read that a long time ago and that I think initially gave me the idea for hiring subcontractors, but then I reread it recently to kind of think again about saying no, for instance, or right, like kind of thinking about who are your best clients and removing the ones that aren't great. I've kind of read some books around like work, again, about like putting in like protocols, right? kind of again, as an owner, being able to, like, put in place process so that you can step away from it. So that's really what I focus on. I think beyond that, like, no, have not focused too much on other things. Okay. Yeah, I think I would continue that. Maybe I would suggest a couple of very simple books, like traction, which is an EOS book. You might be too small for traction to apply,

but I think it will still help you to kind of see what could be around the corner. And then the E-Mith, the E-Myth revisited, I think would be another good one for you. just because those will get you to pop out and look at working on the business rather than in the business. I think four-hour work week is probably great, but I don't think that's a real option for you in the short-term to medium term, given that it's a services-based business, still based on your personal name for the most part, at least not in the next three years. But you could get to a 20-hour work week where you're just doing the critical consulting work that involves strategy and how you're going to go about solving the client's problem.

your operations team could begin implementing that strategy for you rather than having you do it. So there's probably something to that. I think that you can begin framing. And that could significantly increase, again, your dollar per hour income or your overall income over the course of the next couple of years if you're, I think if you think about those types of things. Yeah, yeah, I agree. Tax season is one of the only times all year when most people actually look at their

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You just said, I think it's important to continue to find new clients because then you can remove clients you don't love. And I'm just going to suggest that you make lots and lots of lists. But who are the clients that you love and what is the work that you love to do? Because, you know, client A could ask you for a bunch of stuff you hate, which you can just simply say no or, you know, find somebody who can handle that part so Stephanie doesn't have to do it. and continue to do the work that you love. I don't know that you have to necessarily remove the client,

although it is 100% okay to fire a client. And I think, you know, there's a strategic way to go about that. Oh, I'm sorry, I'm too busy. I'm not able to properly handle this for you as opposed to I hate talking to you every minute of whenever your phone number pops up on my screen. I'm like, you know, there's ways to diplomatically handle that. But you can also, you know, It's not just yes or no.

There's also, oh, not right now. I'm not able to handle this project for you. I have booked up significantly. I can do it in a week or I can do it in a month and maybe they'll wait for you or maybe they will go and find somebody else on their own and they will fire you in a way that you still look really good. I know you have a second point there. But on that first point, Mindy, I think that that's critically important to go there because

your two highest level options. Look, if you just continue the status quo, you're going to work 50 hours a week and be retired at no time, right, and doing super well. So it's not like the worst situation in the world for what to continue the current state. But if you want to improve the situation, you have fundamentally two choices, right? Reduce revenue to reduce your time commitment or grow the business. And I just want to harp that the reducing revenue option is probably not a terrible option for you in this. And going the route that I suggested earlier of hiring somebody involves management and if you're going to hire somebody you have to at least be willing in the

case that it doesn't work out to fire them and and to manage according to that you i mean it's different with a contractor and an employee in a lot of ways with those types of things but that is not necessarily a a better future state it's just a different future state and it has different different consequences with that and so i really like that whole it is it is okay to fire a client with that And it is a big strategic option that will have consequences downstream in your life. All that said, puts and takes with that kind of thing. I like the idea. Well, I like running a business.

I think it's fun. I think you can maximize your impact and help a lot more people and do something really cool. But it is a different kind of stress when you have 50 employees. who are looking for their own career advancements and opportunities and want different things and all that kind of stuff. Yeah. And I also think that the type of person that you are successful entrepreneur is not going to be happy sitting around doing nothing long term.

So let's say you crank it out like you've been doing for the next three years. You reach your financial independence goal, the high end of your financial independence goal. And then you're like, okay, now I'm going to be done. I don't think you're going to be comfortable with that. I think you're going to be bored. I think you're going to be looking for something to do, looking for some way to contribute to society and better the world and all of that. And why go out and try to find something new when you've got this thing that will continue to generate income for you at the level that you need to maintain your lifestyle without giving you a lot of,

day-to-day responsibilities that you don't want to do. I think that, you know, this isn't going to be an instant change. Scott said three to six months. I think that's a good time frame. But that's also the end of this year. I mean, we're at the beginning of July. This is, by the end of this year, you could be working 20 hours a week or 10 hours a week. If you sit down and think about, you know, what do I love, what do I not love, what pays me well, what do I think I can, give away to somebody else that I will be okay with. And, you know, I love Scott's idea of bringing on somebody else who can do the work for the new clients. You can be Stephanie the salesperson when you're finding the new clients and then pass them off to Bob the new Stephanie, who does all the work for

them and the clients are excited. And there's a lot of people out there that don't want to go out and find the business. They just want to do the work. So if you really enjoy finding the business, that could be a high dollar activity for you. Stephanie, if you'd like, we can connect in the next couple of weeks. Well, depending on what you decide, if you decide to go and post a job description and begin hiring, I would be willing to help you with the job description. And we can post it in the Bigger Pockets Money Facebook group, among other places, if that'd be something that you'd be interested in.

So you can noodle on it. But I would love to hear how you're feeling and then see if that's, if that's, a route that you are interested in pursuing. Yeah. So, I mean, I think, you know, I like the way it was laid out of there are kind of two options of like, right, scaling back in a way, reducing revenue versus really going all in and building something. And I see different aspects of myself in each of them.

I think I do want to create something that's bigger than myself. I think going to what Mindy said of, yeah, I don't think. when I retire, I probably would not just, you know, anyways, I've done like past traveling. I think I know like that's not really the life that I want to have. I would always want to have something that I'm working on. It's maybe like, how do I take this business, which I do like, and I do like my clients. I don't think that I have bad clients. I think, though, the problem is that I don't have clear boundaries with them. And that's what's lacking right now and kind of like set like expectations for SLAs, let's say, or things like that.

So I would like to create something where I help other people do what I've done in a way, because I do like, this like business and work allowed me to work for myself, which I was never happy being an employee. So I really like that of like kind of the independence and control over my life. And so I do like the idea of trying to help other people to do that and kind of, you know, it could be salesports to start with and might become other things in the future. But, you know, this is where I am right now and, like, maybe how to make this better, but also to think about that bigger picture of as other people are brought in,

you know, how to grow it and not necessarily have it become a management headache for me either. I think that's my biggest concern with growing something, is that, like, I'm still in this position of feeling a need to be, like, involved in everything or, you know, having to pull tea, letting other people do things. Yeah, I mean, I think, I think that makes sense. I think, I think at the end of the day, you have a big decision, which you can always pivot across at a future date. But I think you're lean and what I'm sensing, and what I think is correct, in my opinion,

is to go in and build this business. You got, you got something interesting here that is getting going. I think you've got a chance to build a reasonably large business over the next five to 10 years if you can generate this kind of income with yourself and you have the chance to develop a skill set that will serve you in numerous other things later in life regardless whether they're business ventures or social ventures or whatever with that why not take the time or take the opportunity to learn how to manage and lead and those types of things over the next little bit while also giving yourself at the shot at creating more income and an asset that is sellable

You could not sell your business right now for anything more than the contract value of your current clients with that, right? So if you can make it so it's not about you, it's about the services that your firm provides, now all of a sudden you can sell it, let's say your business is doing $500,000 or a million dollars in revenue in two or three years, you could sell that business for two to three or four times revenue instead of just the contract value that you've currently got with your clients with that, right? And so that's a real asset. At the same time, you can be, with your expenses so low, you can just pile up the investing that you're already doing and have, take a shot on an employee right now, which is an investment, is probably going to have a much higher ROI than dumping money into index funds if you're this close to the business with that. So I think, I think you've got a lot of good options, but I think that that one becomes my favorite by far here is. going down this direction of figuring out, like, what do I need done in my business? How do I convert that into a job description and a performance management protocol? And then how do I hire and execute against that? And does my life begin to change following the completion of that?

Do you think, like, growing a business, but like, let's say a year from now working 20 hours a week, are those compatible? Like, do you, I know that there are people who do it, but like, maybe in your experience or other people's experience, do you think that's actually realistic? I do not think that's realistic. I think that if you want to work 20 hours a week next year, you should shrink your business, not grow it, most likely. Now, I can hear some people screaming into their mics, no, no, it's possible.

I've done it. Yeah, I think you can get there over three to five years, you know, potentially with that. and you can certainly automate it, but I think starting, you don't have a CEO's skill set, I don't think right now, right? That would be something you'd have to develop with that. And so I don't think that you can grow the business substantially and work less next year. I think you can do one or the other, but I think if you zoom out to a three to five year timeline, you can have a large, reasonably automated business if you work with that end in mind. And you want to get to that point.

If your business is not automated in two years of the earliest, three years to five years, then you can't sell your business, which you never need to sell your business, but you always want to have the option to sell your business. So you have to automate it to do right by yourself financially in the end state with that. So I think that you've got a, that would be how I would think about it. If you want to stop working right now and spend 20 hours a week, shrink your business, cut out the contracts. If you want to be in that position three to five years from now, I think you should grow it and go through the pain that every entrepreneur experiences in growing a business

with those types of things. So you can come out the other side in a good spot. That's my honest opinion. Yeah, no, I mean, that's what I was looking for. I'm glad you explain that, Scott, because when she said, do you think I can cut my hours? I'm like, yeah, sure you can. I guess in one year. You can cut your hours, but you're not going to grow your business. Yeah. If you cut your hours. In one year, I think, is the key in that question. I think growing the company so that you can delegate more and growing the company by, you know, I mean, hiring people to delegate more of what's on your plate.

You might be able to superficially grow your business. It might seem like you get a little bit more revenue in the short run, but you're not going to build a lot. lasting asset that is growing next year and cut your hours at the same time without I don't think that's a realistic endeavor with that you might be able to attract more clients for example if you put operations in place and that kind of stuff but I think you'll be building a fizzling business without investing a tremendous amount of mind share you have there's so many mental models to learn once it comes to like performance management and building out an organization that has a scalable infrastructure and that kind of stuff you know I think I think

maybe that's what I'm lacking is the perspective of what that future work can look like, because it's not necessarily, you know, work 20 hours a week. I think it's just not like continue working 50 hours a week on what I'm currently working on. But I guess like, I guess that's what I have a harder time visualize is like what does that future look like as someone thinking about like models and, um, you know, frameworks to use for like how this business organization could run. Yeah. Man, this is this is what by.

So I have a boss. His name is Mike Zawalski. And he's phenomenal. He's been a CEO for like 30 years across 15 different organizations. And so he tells me to develop what he calls the CEO toolkit. Right. And the CEO toolkit is got a whole bunch of things in it. Right.

What's my strategic plan? What's the strategic planning process? What's the performance? management process, right? Here's when we're hiring somebody, what's the process there? I put together the job description. I put together. And like here's what, so this is one tool, right, in terms of hiring and performance management. I'll say, what do I want done at the fundamental level, right? As it ties into my strategy where the business is going. I put that down into a job description. Simultaneously, I create a second document called a scorecard. And I say, 90% of candidates should not be able to meet the

requirements of this scorecard. So only the top 10% will be able to complete this scorecard, right, or be able to complete this in the first 90 to 180 days. So I know what good looks like, at least in my opinion, for the role that I'm hiring for when I begin doing it. I interview based on that circumstance. And I have different people involved depending on who the hire is, right, with those types of things. Then I asked the candidate to put together a 30, 60, 90 day plan for what's going to happen. And this is an executive. This would not be necessarily someone that would be entry level if you choose to go that route with this.

And then I can say, okay, great, after the end of 90 days, I'm going to assess this person based on whether they've completed enough of this list for me to feel like this was a good fit and a good decision for the business with that kind of stuff. And I can go from there. And so how do you kind of develop those types of hiring and performance management protocols alongside your strategy? How do I, you know, how do I run the business? What's my cadence? Is it a weekly meeting?

Do I have a monthly reporting package? Do I have some sort of quarterly all hands or whatever it is? All of those things I think are tools that you're going to have to develop and fiddle with and learn from, you know, over the next couple of years if you want to build a bigger business. And you can stop whenever you like, but you're just going to have to shrink your business at that point to get the hours back, right? shrinking from 500,000 or a million to 800,000 to 750 or whatever it is, you know, is a choice you'll be able to make really at any point, I think, down the line. But all of that is challenging, I think, and fun. Yeah. I guess I've thought about getting the business coach or doing some sort of program like that. Do you think now is the time, like, again, let's say I choose that

option. Like, is that like a piece of it that I should get in place like pretty much immediately or should I be at a certain stage for that to be really helpful? A business coach, I think, could be very helpful for you. Um, it would be, you know, I've hired five coaches over the years and haven't have found a kind of a mixed bag of, of whether I've gotten really good value out of them or not until my current coach and boss, our chairman, Mike. So I think, yeah, go ahead and try it. I would kind of maybe treat it the same way you are treating a hire, though. What do I want from this person?

What does good look like in the first 90 days? If no change has happened and I do a bunch of wishy-washy fluff, this is not going to work. But if I'm actually driving towards outcomes that have the potential to change my business, maybe you've got a good coach there and you can kind of go with that. And you've got enough income to make both investments simultaneously, a coach and an employee with that. So you have a lot of good options, I think. Stephanie, is there anything else you'd like us to chat about before we wrap up here? No, I think this was great.

I mean, thank you so much for helping to lay out my options and giving me frameworks to think about it. Yeah, I think just on my own, I wasn't doing it. So it's just really helpful to have you both, like, give your perspective and give me these things to think about. and ways to think about my options and what matters to me. So this is great. I really appreciate it. Thank you for coming on. And thank you for giving us a new challenge here that I don't think we've encountered on the money show with this, which is a great problem.

You know, I was like, I was like, well, you just need time to pass and you'll be rich. But that's not really the issue here, right? It's, it's, you have a business and it's overwhelming you. And you have the opportunity to either dramatically improve your life from a work-life balance perspective or build something special, maybe do both over a period of time. And that is a fun and interesting and unique challenge that we haven't had on here before. And I had a lot of fun discussing it. So thank you. One thing here is, is I'm limited to my perspective in growing a business, which I found to be incredibly challenging and demanding of my time and mental energy for a long

period of time. And I have not been able to do it part time, nor would I really have that option, given the circumstances of bigger pockets with this. But I bet you that there's a lot of money listeners out there who have built consulting or services-based businesses that they started and worked on in the beginning. And if anyone there has advice or can contradict or find that happy medium that maybe there's a way to grow the business and have the quality of life balance in the short run in there, maybe that would be a great discussion for the money thread and the money Facebook group at Facebook.com slash groups slash BP money. And that might be a great place to kind of

start a discussion here and see if anybody has additional advice or insights on how to pacify a services based or consulting based business like what you have here over the next couple of years. Yeah, that would be great. Honestly, I mean, the reality is that I do want both. And so it's trying to figure out, is there a path to that and what that can look like? So that would be All right. Stephanie, I am so excited for what the future has in store for you. I think there's going to be a little bit more of full hands-on work from you. And by a little bit more, I think like three to six months, maybe a year.

But I think that by the end of next year, you are going to be in a position that you love. You have delegated all the things you don't want to do. You get to do all the things that you like to do. and you're able to take vacations where you don't work during the vacation and also just take time off to decompress and do the things that you want to do. And whatever that entails, it doesn't have to be high dollar per hour things in order to, you know, further yourself down the path towards financial independence. It's totally okay to enjoy your life.

And I think by the end of next year, you're going to have the exact life you want. So thank you so much for joining us today and taking time out of your. your incredibly busy life to share what's going on because I think I think there's a lot of people in the same position. I started a business and now it's me so I can't just leave, but I would like to cut back a little bit. I think there's a lot of people who are just like you and I hope this is helpful to them as well. Great. Thank you, Mindy.

Thank you, Scott. Thank you, Scott. Okay, we'll talk to you soon. Bye. Okay, Scott. That was Stephanie and I am so excited and a little bit jealous. for her options in the future. She has pretty much everything available to her,

and that is a fantastic position to be in. Yeah, I mean, she constructed this position. Somewhere in the background that we weren't able to dig out is an extraordinary level of competence and ability to the point where she can command this income as a consultant from multiple clients with these things to set up processes for large businesses, right? So she has crushed it in the past.

She obviously has designed intentionally a life that is very low cost that will give her all the options in the world downstream. And now she's got the choice of, do I want to work less? Or do I want to go and crush it and build a big business? What a good problem to have, but like I mentioned earlier, I think it is a real issue. And it's going to impact your life depending on what you choose there, right? And you're going to give up certain things in order to go after building that business that you might not be able to get back in other ways. But I, you know, personally, I've personally chosen the route kind of maybe being in a similar position a few years ago to Stephanie to going all in on running a business and growing a business, this one, bigger pockets. And I haven't regretted that, I think.

I think I really like that. I think it's helped me develop a skill set that will be valuable to me throughout my life and have a bigger impact over that. So I kind of encourage that ladder of choice. But again, the point is to give yourself the option to have this decision and then have the high-level debate. It's the best problem to have, I think. You know, Scott, you just noted her low expenses. And I think we need to focus on that just for a moment. That's super important. She has a very low expenses in relation to her income. And that is what is opening so many opportunities for her.

She doesn't have to work, work, work to sustain her lifestyle. She has, and it just came up casually in the conversation. She has three years of expenses sitting in cash right now. That means that she can take bigger risks with her company. She can take bigger risks with her time and she can take bigger risks with her plans because she has so much just sitting there right now. This is in addition to the four times her annual spending that she makes over and above her annual spending now. So I guess she makes 5x her annual spending.

That is just so many opportunities that produces so many opportunities because she's not wondering where her next meal is coming from or wondering how she's going to pay her rent. She has no problem paying any of that. She's got it in the bag and now she can start to take more. risks and I'm so excited for her opportunities. Yeah, I think she is doing phenomenal with that. I think that the emergency reserve, we don't really get into this in the show, but I think the way she's structured her financial position makes a lot of sense to me at the highest level. In spite of the fact that it's three and a half for whatever years of spending, she also does have to pay contractors overseas and those types of things. And she may have working capital constraints

in her business to a certain degree, or they may come up in the future, given the size of her business and the number of people that she's working with. Where I think that's a smart approach to have a little extra cash in her position, relative to, for example, if that was a salary that she's being paid by a company, then, you know, we'd be really focusing on the asset allocation, I think, a lot more than, you know, investing in the business or those types of things. You know, if you're going to hire somebody, you know, she'll have to spend some of that, and that'll change your revenue profile and all that kind of good stuff.

So just think that as a business owner or as a consultant, that's a responsible position that makes a lot more sense to me versus how we would be talking about it from an employee perspective. Yep. And that just brings to brings home the concept that personal finance is personal and the suggestions we're giving to Stephanie are based on her personal position and her personal circumstances. And somebody in a similar position, we would probably have different. suggestions for based on their personal position. So I just, I have so much fun recording these because it makes me think about, you know, what would I do? What should she do, you know, given these specific situations, which are never exactly my situation. So, you know, this is just a lot of fun. I want to ask our listeners, if you have a situation that you haven't heard before,

we are trying to tell every single money story. If you would like to share your finances with our listeners and get some advice. I said advice. I meant suggestions because of course this is not advice. We would love to talk to you. Please apply at biggerpockets.com slash finance review. And if you're not a member of our Facebook group, please join us for fun and kind of nerdy money conversations at Facebook.com slash groups slash BP money. Okay, Scott, are we ready? Let's do it. From episode 220 of the Bigger Pockets Money podcast, he is Scott Trench and I am Mindy Jensen saying, may the force be with you always.