BiggerPockets Money Podcast - 252: Finance Friday: Self-Employed Revenue, Health Insurance, and Hiring

Episode Date: November 26, 2021

It takes a leap of faith to leave a W2 job and wander through the hills and valleys of self-employment. With the right skill set, time management, 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 side-gig could become a full-on business, with the need for employees. TJ has put herself in a phenomenal position, both financially and income-wise. She left her job to become a full-time consultant but knows she won’t be able to expand without hiring her first employee. 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? Scott and Mindy have both spent time outsourcing and hiring before. They help TJ develop a roadmap to getting her first hire on board while keeping crucial revenue in the business. This episode also dives into self-employed health insurance, project management, and hiring a junior position that can grow into a senior in little time.  In This Episode We Cover Why it’s imperative to keep your costs low while trying to run a business  What to do once you’ve hit your max capacity for work at your business  Whether or not now is the time for you to hire your first employee Fully mapping out the cost of a full-time vs. part-time worker on your team Putting together a business plan that allows you to forecast your business’s future  Health insurance while self-employed and why an HSA plan may be your best bet And So Much More! Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money Podcast, show number 252, Finance Friday edition, where we interviewed TJ and talk about setting up your business to scale in the future. Yeah, I think that's the main reason I haven't hired anyone right now is that I don't want to hire someone and have them dependent on my income when I don't personally feel like it's stable, right? When it's just me, I don't have any dependents that are looking to make use of my money, then it's not a big deal. If I lean on my emergency fund here and there or I decide to take December off, those are all good. great, but when I'm 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. Hello, hello, hello. My name is Mindy Jensen, and with me, as always,

is my growth-minded business master co-host, Scott Trench. I'm just thrilled to be your CEO co-host, Mindy. Oh, my goodness, that was awful. I thought it was great. They're always awful. It was clever, though. Clever and awful look 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'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 your own business or hire your first employee. We'll help you reach your financial goals and get money out of the way so you can launch yourself.

towards those dreams. Scott, I'm excited to talk to TJ today. She has a very fun problem. She is in the, I'm about to grow a really big portion 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'm imagining like the roadrunner where his feet go like this and then they finally hit the ground and they take off. Once her feet hit the ground, she's going to take off.

fly. Yeah, I mean, she's in this in this awesome position where her expenses are low. She's dual house hacker. She's got a business with all this kind of stuff. And now it's a matter of, you know, do we want to 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 inevitably moving forward towards wealth and abundance over the next five to ten years. So it's just fantastic to see. It's a higher income, but not a crazy high income with that. So kudos to her for building such a strong position.

Yeah. Before we bring in T.J., let's hear a note from today's show's sponsor. Okay, great big thanks to the sponsor of today's show. And my attorney now makes me say, 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

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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. TJ is 30 years old and targeting a work-optional life within the next 10 years. She's recently purchased a new built home and has her expenses dialed in. She's looking to optimize her finances and is actively growing her business, consulting businesses on their business practices. I'm actively growing the use of the word business in the introductions here. T.J, welcome to the Bigger Pockets Money podcast.

Thank you for having me. I'm so excited to talk to you today because I think you have an interesting set of circumstances and I think you're not the only one in this set of circumstances. So let's jump in and see where your money's going. What are you bringing in and where are you sending it out? Great. So, yeah, coming in the door, I recently just transitioned from working full-time as a IT project manager to full-time as a consultant. So this year, my finances are a little wonky,

but I'm looking at bringing in a little under 150K this year based off of the leads I have right now. And after taxes, that's about 9K a month. Awesome. And is there any additional income? Yes. So I have a couple, and they're really just small, right? But I do have one PPM or syndication. and that's bringing in about $125 a month. And then I'm actually part of a research study that gives me like $25 a month. Well, that's cool. I like those research studies. Yes.

When you're in college, you can generate a lot of income like that. Well, let's get a picture of net worth. So what are your assets and liabilities and however you want to present those? Sure. So from an asset perspective, I've got several retirement accounts and all sorts of fun things. on the traditional retirement side, that's about 95K on the Roth side. That adds up to about 55K. And then I've got a 529 plan that just kind of 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 on to 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's really just because I like to have the line of credit to have that flexibility. And then this property, I'm actually house hacking it. So I have a roommate. Awesome. What's the mortgage? Do you have a mortgage in addition to that HELOC and do you have a

mortgage on your primary? So 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'm in right now is at 235 with a 2.99% interest. And what's the asset value of the house hack? How much is it worth? A 171. That's what it was. Sorry, you have a mortgage for 235. So the condo is worth 171 and you have a $6,000 and then you have a mortgage of $235 and how much is The single family is $350. 350, okay. Oh, nice.

And how much does this all boil up to for a total network? About 450K. 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, you know, FI or personal finance or that's kind of stuff? And what's been, can you give us a quick overview of your story in the past couple years?

Yeah. I would say a lot of it, from just having strong fundamentals. My parents are immigrants. They came to America to do their masters and then stayed. And they've always been super frugal. It's just kind of an immigrant mindset where you're trying to fast track your way to the American dream. And my mom's amazing at finances. So she taught me a lot of things. She actually day in swing trades stocks right now. And look at her portfolio. I'm like, what? How? So I really picked up a lot of that and just like 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. It went, I want to do this. Will you support me? And he gave me that mental space and emotional space to support rather to really decide that this was something I wanted to do. And that's really just the jumping off point. Since then, I've 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. Awesome.

And did you ever have any debt or were you able to just kind of pay off and build this position? You know, have a pretty good launch pad for that journey. I had a good launch pat. I did recently tell a salesperson that my family doesn't 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 like my world of possibilities that I could take out a loan for college. That just like wasn't 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. Awesome. Okay. So what's the best way we can help?

you from this position? So right now my main focus and passion is in growing my business. So I'm doing how I described it is project and operations management and organizational change management consulting. So I help medium to large businesses optimize the way that their business is run. And if they need a particular project to just hand off to somebody so that they don't have to worry about it, that's where I come in. 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? Yeah. So my background is in IT. So I don't currently work with an IT client right now, but a lot of spaces where you need any kind of software implementation, upgrades, things like that, that's 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's the technology they're using behind that. And actually right now I'm helping a marketing department optimize their operations. They don't have any internal project managers. So I'm 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.

Okay, awesome. And how many hours a week is this? This has taken you currently? It really depends on the phase of the project. and also 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't have any time to share with me what their current process is, then I actually have a decent amount of downtime. So that's where I come in as a fractional consultant to help them when they need the help and build them hourly. And then I can juggle up to three clients at a time.

Okay. And what would three clients at a time lead to in terms of total income? Three clients at a time. I actually haven't projected that. With just the one client right now is where the 9K month is coming in right now. And that's at 40 hours a week. Okay. But you think your maximum capacity would be three clients juggling at a time?

Yeah. Yes. Hypothetically, if I phase them correctly so that I'm not starting all three at the same time, then yes. Okay. So if you were able to do three clients at a time, if you're 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 three, a little over 300k a year. Is that kind of how you're thinking about the income potential for your business? Yes, though I would end up hiring some support staff,

right? I would probably get a personal assistant and add a couple of expenses to really optimize that. Yep. Well, so I, and is that kind of where you want to go? Is that what the best thing we could help you with is thinking through how to make that happen and, and, and build the business on that trajectory? Yeah. I think that the long term, like if I were thinking big about the business and it won't 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'm not as versed in organizational change management as I would like to be.

So if I had a specialist in that space, I'd really love to have like a suite of offerings to my clients. Love it. Okay. 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't 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's my immediate observation. That said, I don't know what I don't know. But I'm just going to float that out there and see how you react to that. Does that sound generally along the right trajectory? Yeah, I think that's the main reason I haven't hired anyone right now is that I don't want to hire someone and have them dependent on my income when I don't personally feel like it's stable, right? When it's just me, I don't have any dependents that are looking to make use of my money, then it's 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'm 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. Yeah, I think that that makes perfect sense. And I think that that's, again, I don't like, that's where I'm kind of like, okay, it's almost like remarkably simple. It's not easy, but it's simple in the sense that like, okay, you 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's 18,000 per month. That's good. That's a really, that's a good individual income. That's a really, it's a higher end individual income. but it's 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's kind of like getting that second one and then having the third one in the books, and that's when the hire comes in place.

At least that's one way to think about it. But Mindy, I see you making some faces. Do you disagree? I want to throw out a different option, but first I want to make fun of you because you said, oh, $18,000, that's a good income. Yeah, I'll take that. Yeah, it's a very good income. You know, that's okay.

That's not bad. So I'm just teasing you about that. But no, you keep using the word hire, Scott. She's a consultant. I would encourage her right now in her downtime, and I'm making air quotes. In her downtime, start reaching out to other people. You said something about organizational change management or something that isn't a strength that you have.

Start looking for somebody who has that strength, who can supplement your business when you need them, but you're not hiring them as an employee. Because that's not, it doesn't sound like you putting in a lot of time to learn that is worth your while. It sounds like that's the kind of thing you can, you know, 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? I mean, if you could find a rock star organizational change, maybe. management person to come in and consult with you for, you know, the beginning of this project.

I mean, clearly, I don't know what that is. I don't know if I've done a good job of hiding that. It's good. Yeah, typically best practice would be to keep them on for the duration of the project. But that is definitely something that I, that is a possibility to not have to hire them as part of my org. I think it's 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 W-2 job is actually really difficult. So it sounds like the personal assistant or the project manager would be the first hire that you do. Yes. Okay. and you said that you have several leads on jobs, but you've got one client right now.

When is the next job supposed to start? I actually have a short engagement about two weeks worth of work starting next week when that client comes back from vacation. So I'll be working two jobs in November, in addition to all the other fun things I get to do in November. So it's not actually a lack of demand. some of it's just timing or having some of foresight into what my workload is going to be. Like things like, hey, do I want to just take December off?

Or does it make sense for budgets for people to wait until 2022? So there's not really too much of a challenge in getting somebody in my sales pipeline, but it is more about kneeling down the actual timing. Yeah. You know, when we had Joel Asparza on a few weeks ago, and Joel is building a video, editing business, right? And that with Matt Cakes, 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, you know, decide if it's satisfactory and then begin scaling up to a large degree, right? It's not always that easy, but it's going to tend more towards that type of work product. What I'm 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's just going to be a lot more expensive or harder to subcontract out. It doesn't mean you can't do it. I think Mindy's point is great. You may be able, it may be a lower risk option in the next year or two to think about that. But you're going to probably spend much more. It may be the same percentage difference as if Joel was hiring out

each video individually, but it's going to be, the dollar amount's going to be way bigger. If the contract is 40 grand, you're probably going to have to pay somebody 30 of it or something, something substantial in order to be able to then subcontract it. It's still good. You're arbitraising. I'm making that up 10 grand in that fictional example. But I think, yeah, your business doesn't scale, it scales much better with somebody being paid hourly and you arbitraging, you know, the $40,000 contract for $20,000.

an employee expense. So that's interesting. And I think that that's a, that's the challenge. And again, that's where I come back to like, 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're 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, you know, I want to be careful there because there's definitely a space in the industry where it's really just being a staff. agency looking for project managers and pairing them up with a client. And that's not the space I want to go to because, first of all, it's oversaturated. It's ridiculous. The number of LinkedIn messages I get looking for a project manager, it's not something that I want to join the party for. So it's really 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. 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 legwork into finding younger professionals. Well, where would you find a younger professional? I mean, when we do real estate, when we're talking about real estate because of the bigger pockets aspect of this, there's, we suggest going to local meetups. Are there local business meetups? They're actually, so project managers have an organization that certifies them, the project management institute.

So we do have a chapter in my area that I could start attending. I hadn't attended since I was a student because it's really just a bunch of people looking for jobs. Oh, wow. Is it really just a bunch of people looking for jobs who may not have a ton of experience? 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's 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 also, I'm still in the town where I went to college. And I do have professors that I'm keeping in touch with. So if they have somebody who would be willing to take on,

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's what I'm looking to do. So I'm expanding my network in that space as well. What I don't want to do is convince somebody to do that. when I either don't have the income to pay them or that I don't have a lot of work to give them either. So it's a little bit of a balancing act. When you're in this space, it sounds like you've got some downtime coming up in the form of taking off all of December. When you're 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's plate. How much time are you spending on the menial task? And I don't mean this to be, that's I'm snotty, but the menial tasks like email and calendaring and, you know, all these things that don't 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's plate? And do you have a system in order to pass that off easily? But it takes time to set up those systems.

Yeah, definitely. And this is actually something I do a lot for my clients as well. So it's kind of a funny space where I'm like, I do this for my clients, but now I'm going to offload some of the stuff for my business to somebody else. So it's, it's a little bit of the like letting go of control and delegate thing as well. But I do think one of them. Easy. One of the main things I do want to do because right now I'm operating in like three different

calendar softwares is to have somebody just sit there and sync them all up because that's 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. Well, that sounds like more than five hours with the work to do. What's like a three-year target for the business? Like, what would be, you'd be like, I'm super happy with my business in three years.

So three-year target is definitely to have that personal assistant and then maybe one other consultant at that point. And I'm not picky about like in which space their specialty is in. But that would be the ideal space in three years. Okay. So, you know, your business currently generates, it looks like $110 to $120,000 a year in revenue. Is that right? Yeah. So I just want to kind of point out, like, if you're hiring a, what would be the salary range of someone that you'd be wanting to hire? So for a personal

assistant, I'd probably do $20 to $30 an hour just because the demand for talent, especially the type of talent that I want to mentor is going to be at that price range. For a project manager, that's where it gets expensive. My starting salary coming straight out of college was somewhere around 60K. So we're starting to really eat into the expense or into the revenue there unless that person can independently handle a client all by themselves. Great. So let's say it's 75K for the person.

It's one year, one or two years out of college with that, right? When I think about employee expense, I fully burden it. I say, okay, the bonus, the benefits, all that kind of stuff. That's going to be an incremental 50% on top of the base salary. Right. So that would give you a $3.7.5 on that. So that's 112.5 that you're going to be paying this person. I think I did that right. In all in compensation, that's how much cash is going to leave your business on an annual basis to pay that person's salary. Right. So let's say the other, the personal system, say it's 50K. So same deal. 75K, maybe 80 in that case, because you know, you still have to pay the health insurance and all that kind of stuff. He's going to come out on on, on, on, on that. particular one. So that's 80. So that's $200,000 in cash costs that are leaving your business and order to pay for just those two employees, right? Not to mention your software and all

other stuff. How much do you want to make? That's a good question. So at the bottom of it, right? Like what I need to live off of is about 55K a year. What I'd like to make is at least 150 to make all the rest of this worth it. Okay. So you need 150 in base. And plus bonus or plus plus some wiggle room or is that like kind of just at the profit the business needs to be at the end of the year? Let's say plus a little wiggle room because I'll probably do an S-corpor election and do an owner's draw. Okay, great. And then you're going to have benefits and all that kind of stuff that you're going to want from the business like health insurance and all that kind of stuff. So you say 150. Let's add on 25 to 50 to be conservative. Let's add another

37 to be consistent with your top employee there. So that's going to put you at 200. So now we're fully loaded at $400,000 to $450,000 in cost to get to your future target state. So you need to be able to generate business that does, you know, I guess we could, since you can pull 150 out of that target, that generates about $450,000 to $500,000 annually in revenue in order to get to complete that picture. And the point I'm trying to make here is that I like the systems and all that kind of stuff, but this is a, this is a, revenue game right now. You need to bring in more business and build that book of business. And at first, I don't know how much that scales. I think Mindy is absolutely correct. You should write out all those tasks, the calendar sinking. That's perfect. You're certainly in a position to outsource some of that work that's lower skill that someone else can, that anyone else can

do that doesn't need to do that, you know, the project management that is your professional thing. But I think like, okay, you're saying three contracts, I can juggle three at once. You need to do six in order to, six at once in order to justify this or one, you know, or fewer that are bigger or more that are smaller with that. But that's the name of the game that I see. And so I think that, you know, do you think I'm framing the challenge appropriately with that? And is that sparking any ideas or thoughts on this vision? I like the way you laid it out.

It definitely helps me quantify what the goal is. At this point, I'd 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 like just trying not 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't have the network to do it yet. I don't have everything set up or I'm just waiting until the appropriate time to make those overtures. So what I'm 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've been in touch with, is a junior or senior in college, is hungry and would work for $20 or $30 an hour. Part time, you're five hours, but they're studying to be a project manager or they have aspirations to be a project manager. So as they're learning with you, learning your company on a part-time while I'm in school basis, they graduate. And now you've got a project manager who's 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's the first thing that I would do is really focused on reaching out to all of your professors and saying, hey, I'm,

at a position where I'm, I need somebody five hours a week, but I'm thinking it'll grow. And, you know, having a conversation with them, oh, midterms are coming up. Great. You can, you know, take time off this week. And finals are coming up. Great. I want you to focus on that too. But, you know, 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's called T.J.'s business. And look at T.J.'s business from. 50 miles up and say, if TJ's business was my client, what would I tell them to do? And it's very much cobblers children have no shoes kind of thing where you know what you have to do, but it's 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.

But, okay, so it's not TJ's business. It's Mindy's business. Mindy's business just happens to run exactly the way TJ's 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's really important. If you miss a meeting, that's going to be horrible. I don't want to do all that moving calendar thing either. So I would love to have an assistant who could do all that.

But that's, I mean, that's a great task that you can easily check on, oh, they messed this up. Forget it. I don't want to hire this person. but, you know, 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 and then, you know? Yeah, yeah, for sure. I think an answer to your like, what would I tell you if I was looking at my business as the consultant? It really is just to get like a job description out there and just throw it out there and see what comes back. And I just, I'm totally like definitely the introvert that doesn't want to talk to anybody.

It doesn't happen. I even drafted it in everything. I just need to, and actually I didn't think about just sending it to my professors. Right. I was thinking I'd have to put it on like some kind of job board and things like that. But I think the professor route probably is the better way to go. I would start with the professors and then start with, are there any, the project management institute?

Do they have any, like, Facebook groups or LinkedIn or, you know, there's a lot of technology at our fingertips. Are there any college groups and clubs that talk about project management? I mean, I'm just throwing stuff out here, but, you know, maybe something like that could spark what actually exists. It's a little tough coming out of the pandemic that people basically shuttered all their events and stuff. So 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't line up or just isn't a good first step for them, I don't want to convince them that it's better to work for me than whatever else.

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slash money free. They have going for them. I think that's fair. It would be a good outcome in the next year for you. In the next year would probably be to feel stable in my business operations. Right now I'm kind of 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'm thinking about bringing on people that.

That will depend on income for me. I do want to be stable enough where I don't have to worry about whether or not I'm going to have a tough conversation with them six months down the line. What does stable mean? Stable would be probably signing a client before I'm done with the current client that's bringing in like whatever the problem. Because in the next year, I don't think I'll 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, like, visibility into the future of what's going to happen so that I can plan for it. And I'm clearly as a project manager.

I'm a big planner. So that's what that means to me, really, because there's, like, I'm very flexible in a lot of other spaces. But I don't want this business endeavor to be something that just falls apart because I stop paying attention to it. Okay. So that goal, that goal. You know, I love the focus on a personal assistant because there's clearly an opportunity to go there. But I think we're missing a huge piece of like 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'm hearing is you want to sign a client prior to the engagement editing. That means you need a sales and lead management pipeline. right so there needs to be you have a lead you know this traditional sales funnel here's the amount of leads here's the amount here's where they are in the sales cycle here's where they're falling you know i have my pricing figured out and i have you know all of that kind of stuff right so that's that's an easy to check the box component of the business plan that only you can achieve right only you can construct for at least for now with that i mean you can hire a consultant or something with that but but that would be that would be really high valuable high value work

right then you know creating some sort of forecast with that or some sort of schedule that that compiles those and has those end dates figured out with that kind of stuff you know and and that making it into your calendar where you're like okay my engagement's out to end and i've 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 um that next lead into the business with it otherwise i'm going to be anxious um you know increasingly anxious over the next month while this engagement is ending with that kind of stuff. And that, I think the tool for that that would be helpful is the business plan. So it's kind of a bit back to basics kind of college, you know, 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't think the personal assistant is going to solve as many problems as you think. I think it will solve some of them. But this is a, you're attempting to build a business with an employee with all this. You need to have this traditional sales and marketing operations, finance and forecasting, roles defined and filled. It doesn't mean you have to hire people to do all of them. They just need to get done, probably by you in the short term with this.

And so that's where I think. Yeah. Go ahead. I was going to say, actually, because my major was from the business school, it actually isn't 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. There are definitely parts of marketing that I don't want to do, things like social media and stuff like that. I'm like, I'm sure I could figure it out. It's not like so much of a stretch.

But it's not where I want to spend my time. 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. Absolutely. But I think if you start with what needs to get done in order to move my business forward and then fall back and then outline that, like, okay, somebody needs to post to my Instagram

with this type of content with it or somebody needs to run a Facebook ad campaign with this kind of stuff. Here's how much I'm willing to spend. If you start by mapping out what needs to get done and then putting in place the pieces that move that get the, that forward, I think you're, I think you're going to find that more powerful than just saying,

okay, well, all of this is a catch-all and the personal assistant will take care of all of it. It is possible to hire that incredible personal assistant who can just kind of take on all of these things and do them all well. But you may find on the marketing function, I'm making this up, I don't know, you may find in the marketing function that outsourcing to a social media firm for a hundred bucks a month is going to be much more powerful because they're going to know what they're doing than giving that as an additional task to the personal assistant with that. You may find that an outsource bookkeeping firm

can teach the books much better than the personal assistant can. That may also, the inverse of that may be true. I don't know. But I think that, I just think that there's, like, it sounds like, what I'm hearing is there's a, the next step is this personal assistant. That's surely the case for some of the work with that,

not doubting that. I just don't think it's the only tool in your toolkit to help you kind of get to that stable position in a year from now. And it's going to create a lot of dependency on this particular individual as well if we go down that route. And that's why I'm just encouraging you to think about it from a business planning perspective and say, what actually needs to get done? Who is the optimal person to do that? What's a good short-term solution? What's a good long-term solution with that and map it get out like that? That's just, I think, a more powerful approach.

Yeah, I think that makes a lot of sense that, like, I do need to just. us write out the like individual tasks that are easy to say, yes, this is done or this, we can move the owner around as necessary because it, yeah, it might be the personal assistant. It might have to go somewhere else. It might have to be me. But there's no way to determine that until I have a list. And we stare at it and go, what are you willing to do or what do you feel strong in doing? And then delegate those out appropriately.

And just, just so you're where like at bigger pockets, we do this kind of stuff all the time, right? And we say, like, let's talk about this podcast, right? Mindy and I both work at bigger pockets. The podcast is produced by an employee, but it's edited by a contract firm in the Philippines. Then the video is edited by a firm in Spain, right? Then we have a contractor who listens to the show and comes up with titles and that kind of. So it's like, you know, there's certainly, you know, somebody who's managing that flow, but there's also bits of work product that are best done by certain individuals out there.

and it's much cheaper or more cost effective or better outcome to structure it, we think, that way than to, you know, do all of that in-house with one all-rounder on that front. So, and that's our business. It's completely different. But just a framework to help think through. Yeah. No, that's a great point. And I think what I'm learning through this conversation is that because of where I come

from as a project manager, what actually happens when you said, hey, there's somebody managing the flow. That's what I do. And then typically at large enterprises, what they also don't do is hire the correct people to do all those like, this is the best person to do XYZ. So since enterprises don't hire those people, it actually falls to the project manager to fill in those gaps. And that's been a big part of why I've been successful in project management is because I will jump in when we don't have a body to do a particular piece of work. And that's something I have to unlearn in order to run my business. Yeah. I, I, maybe, that, that's, that, that's more eloquently phrasing what I've been what I've been trying to communicate with this is like

I love it you have you have 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 the the another replicating yourself is great but continues to to avoid the scalability long the long term scalability problem of mapping out each business process with it so you'll definitely I think you should definitely have the personal insistent with all this. Again, not, you know, at least on a part-time basis with all that. I just, again, encourage you to use that tool because I think that it will of the business plan or like don't spend, don't write a 20-page business plan. It's 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. There's a lot of templates out there. If you're looking for the easiest or simplest one, the traction has a really good one. It's a book. It's 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 those thoughts on two pages. It can take you from an hour to a day to fill that in or months, depending on like how long you want to spend on core values and that kind of stuff. But that may be an easy one for you. Okay. Yeah, I'll definitely look into that. Okay. Well, do we want to keep, do we have anything else we want to talk about on this particular subject,

or do you have any other questions about your finance position that would be helpful for us to discuss? A couple others maybe. So the one that pops out at me if I'm looking at my notes is really in the healthcare space because I've jumped off of working W2 and right now I'm on Cobra, but we're also approaching open enrollment. So that's top of mind for me right now is figuring out health care as an independent consultant. Okay. We have in the past suggested if you are relatively healthy, you don't have any chronic conditions. The high deductible plan is the best option for you. But if you have chronic conditions, it may not be. And I was listening, I said this out loud on a show and somebody reached out to me and said, I have run the numbers. This is like my thing.

I ran all the numbers and there is this very teeny tiny space where the, even with a chronic condition, even with, you know, great health, poor health, there's a very tiny space where the HSA is isn't the best plan. The high deductible option isn't the best plan. So I would say if you are going out on the exchange trying to find this for yourself, the options aren't great. There's, they seem mostly they seem like high deductible plans. I would set up an HSA to make sure that you are able to invest the funds that you're, if you're going with the high deductible route. But honestly, I think the exchange is going to be your best option, which isn't a great option. It's more of a catastrophic plan.

You know, if you have your appendix out, that's going to be, I had my appendix out in 96, and it was $27,000 back then. So it's going to be more now because everything goes up. I've had my gallbladder removed. So that was a taxier that I took advantage of a lot of things. So yeah, I definitely am a big fan of the HSA. And it's great to know that somebody's run the numbers and figured out that it's actually long-term more effective to stay in the HSA, even if you have health concerns. So that's definitely something I'm looking at, I think something that will mitigate the whole health concern thing, considering that I've 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's one that was like $1,400 was the deductible. I was like, how does this exist? But I also don't recognize the network it's in. So that's some of my concern is more of like, how good is this network? And that's another thing to consider. I knew somebody who did not like a specific provider network because she didn't like that when she went in, she didn't see the same doctor all the time.

My kids don't know their doctor because they go in once a year. And then it's a whole another year before they go in again. So we don't have a relationship with our doctor. When we ended up with bad insurance, it didn't bother us because we didn't have a relationship with our doctor anyway. So that, you know, it's, it's, there's, what it all boils down to is there's no easy or cheap, all-encompassing answer for health care in America. It is expensive. It is going to be expensive. And it can be a business expense, right, Scott?

She could just, her company, TJ's business consulting, can provide health insurance to you 100% paid, right? I think that may be the case, but I want to be, I want to caveat that where that is definitely going to be the case once you have employees. It may not be if you're being, if you're acting as an independent contractor, for example, then you may not, I don't know, I don't know the structure of your business and how you Yeah, I've actually, I've looked into it. Right now, I'll probably stay sole proprietor. And just because of what a reasonable compensation is for a project manager is on the higher end,

I'll be able to deduct off of my personal taxes, the premiums. But I won't be able to have the business pay for all. I can't do like a health reimbursement plan or anything like that yet. So until I'm, I've got other employees and I'm running as an S-Corp, that's not an option. Yeah, okay. Thank you. Yeah. I, I, I did not know. that. So thank you for educating us on that particular one. But yeah, that makes sense. And that's, yeah, at six, six of one, half a dozen the other, if it's tax deductible versus a pastor to your business. So for now, that doesn't seem like a high stakes problem for you. Yeah. So, yeah, but I mean, I get this question a lot. How am I going to pay for health insurance after a financial independence? How am I going to pay for health insurance as a small business? And I wish there was a

great answer like, oh, go to ABC.com and they're totally going to take care of you. Insurance is a dollar, but there's 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. And when... I want to put out a little dangerous shout out here for this. But like I've considered in the past maybe creating a benefit for Bigger Pockets Pro members of a health care plan or access. to a health care plan that is reasonably competitive. So if anyone listening knows how to potentially help with that, that's an exploration phase,

probably not something coming in the next year, not in 2020, but would be something that I would love to provide downstream because a lot of full-time real estate investors or flippers or, you know, et cetera, 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 sign it in my way, Scott at biggerpockets.com. I love to explore that probably something for the 2023 or 2024 BiggerPockets roadmap for that. Yeah, that's Scott at BiggerPockets.com. Email him. Nobody else. Scott's no longer at inbox zero. No, that's a tough one.

I think the answer is there's no good answer right now. So there's only at least bad options. And you're probably as informed as we are on. on those least bad options for you through the research that you've already indicated on, on the, in the portal there at healthcare.gov, I imagine. Is that right? Warren Buffett connect with Jamie Diamond and, who's the Amazon?

Jeff Bezos and try to like disrupt the system and then decide they couldn't. I think they went into pharmaceutical. That's where I understand Amazon tried. And I don't know if they're still working on it or not. Yeah, that's the thing. I don't know if they're still working on it. I wish they would. I wish that somebody would figure this out.

Warren's really smart. Come on, Warren, step it up. Well, I'm sorry we don't have a wonderful, helpful answer for that one on yet, but if anyone does, we'd love to collect notes. And maybe we can post about this as well in the Bigger Pockets Money Facebook group and just kind of rehash if there's any new or exciting news in that front about what are some good health care options for somebody who is self-employed or it's all proprietor or has a small business that is not eligible for employer plans.

Yeah, for sure. I kind of figured. Yeah, we'll send you a list of like 25 options or something like that that were applicable. There's a couple of edge cases that could be you could qualify for. So it's probably worth a listen because there might be some golden there. But I would say the odds are that it's probably going to be something along the lines of what you've already researched. Yep.

I'll take a look and see. Okay. Awesome. T.J., is there anything else that we can talk to you about today? I think that's about it. Well,

I just want to compliment you on the fact that, like, you're doing really well with your financial position with all this. You're spending very little, your house hacking, you're building a business, all this kind of stuff. You're thinking about scale. I love it.

You know, you've got the two properties now with it. I mean, it just seems like you're off to, off on a current incredible trajectory with building. wealth with all this kind of stuff. And I'm excited to see how things go with your business. Thanks, Scott. It's great talking to you guys. Thank you, TJ. We'll talk to you soon. Okay, Scott, that was TJ. What did you think of her story? Yeah, I thought there were some

interesting financial decisions to contemplate. What'd you think, Mindy? I really liked where she's at, And I think she's in that almost to the point where she's, she's 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? Like you always wait a little bit too long to hire your first employee. I think she's thinking about it. I think you in particular gave her some really great things to contemplate.

And I'm super excited for her business growth in the next couple of years. Yeah. I, you know, I just, look, I feel like when a business has, when a business line or area has that level of revenue, you know, one $60,000 employee on $110,000 revenue is going to eat up 90 grand out of 110 in profits. You know, if you pay anything else, rent or whatever, you're 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's where I think my challenge, you know, to her come from where if you want to hire and get people in full time, that's great, but you need to have the revenue to back it up or you need to have an aggressive path to getting to that revenue that a, you know, your future employees can reasonably believe. And so I think that'll be your challenge. There's a lot of ways, there's a lot of betweens here and there, you know, part-time assistant,

you know, hourly contract, all that kind of stuff that can de-risk that. But that's, I think, you know, the big challenge there where, you know, last thing you want to do is is have to eliminate the position because the revenue projections didn't pan out. You know, Scott, I think that you gave her some really great things to think about and consider that maybe she hadn't quite gotten to yet herself. So I think this conversation is really, helpful for TJ to start thinking about gross patterns. And, you know, when you get really busy, it's really easy to say, oh, I want to hire somebody. 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's always,

always the top. Okay, Scott, should we get out of here? Let's do it. Ooh, 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 slash finance review. We don't need to use your name, your video. We're not here to out you. We're not here to catch you in lies. We're 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's talk. Biggerpockets.com slash finance review. Okay, Scott, now should we get out of here and you say, Let's do it. Okay. Let's do it now. From episode 252 of the Bigger Pockets Money podcast, he is Scott Trench and I am Indy Jensen saying,

don't be a punk skunk.