Focused - 29: The Spreadsheet

Episode Date: September 5, 2017

So you're thinking about going out on your own. It's time to build The Spreadsheet, a tool to let you gauge your potential income and expenses and give you a realistic view of what it will take to succeed.

David Sparks and Jason Snell spent their careers working for the establishment. Then one day, they'd had enough. Now, they are independent workers, learning what it takes to succeed in the 21st century. They are Free Agents. Welcome back to Free Agents, a podcast about being an independent worker in the digital age. I'm David Sparks, and I'm joined by my fellow host, Mr. Jason Snell. Hi, David. How's it going? Excellent, Mr. Snell.

Today, have you got your little accountant's hat on? You know, the little green felt hat? I don't. You know what I'm talking about? I don't. I was thinking, yeah, I'm going to get a lamp and an eye shade and uh an adding machine and start doing the numbers before we do that we should talk at least mention um to those out there who are listening this is uh relay support time it's the relay anniversary time and we want to just remind people if you would like to support this podcast or any other relay podcast directly this is a great time to do it you can go to relay.fm membership

and sign up and if you do sign up to support any show on the network, or you can support all the great shows, you get access to a whole bunch of bonus material, including pod special podcasts for anniversary week that all the different podcasts are doing, including free agents. And David and I did an episode that is all about all about like the stuff we do when we're not doing our jobs. And just a chat we had in person a few weeks ago. And that is as if you listen to this episode, by the time it is posted, it will already be up and on the site and in the feed. So relay.fm slash membership if you'd like to support the network and all the great shows. slash membership if you'd like to support the network and all the great shows so just a little note before we get started talking about money and a spreadsheet to talk about about money yeah

that was a fun episode because we talked about what we do when we're not free agents exactly right fun yeah exactly the reason for all of this well star wars talk in there unsurprisingly yeah it's kind of hard for me to resist. No, it's good. I'm a man of very limited areas of focus. We also talked about your, uh, your, uh, revival of,

of playing a musical instrument. That'll be just a jazz revival. The jazz revival. It's in there. It's in there, but that's from, from members only. Oh,

there's so much in there. So much in there. Okay. Um, so we make reference on the show quite often to talking to guests and even just among ourselves to in quotes, the spreadsheet. And so a lot of people write in saying, what is the spreadsheet you keep speaking of? And can you please explain it to us? So I thought this would be a good time to get into the spreadsheet. to get into the spreadsheet. Generally, the spreadsheet is something that you start building as you're thinking about going out on your own. It's a list of your anticipated income and expenses.

I think it's a way to bring some objectivity to the decision to jump. And the spreadsheet was a big deal to me. I don't know if it was a big deal to Jason or not. Yeah, I mean, we did some spreadsheets. I don't know if it was a big deal to jason or not um yeah i mean we we did we did some spreadsheets i don't know if we had the spreadsheet but and as i mentioned on the show before my wife has an mba even though she's now a librarian and uh she and i did some number crunching uh in various places maybe not as quite as definitively capital s spreadsheet as you but we absolutely did the same thing yeah yeah i feel. I feel like there's, to me, that was the first material step towards really making this happen. It's like, it's this concept in your head

and suddenly you sit down and say, okay, if I were to do this, you know, what could I count on? What is it going to cost me? Those kinds of things are things you really need to ask yourself as we've talked about, you talked about throughout the show. So the spreadsheet for me started in Apple Numbers, and I had two tabs. One was income and one was expenses. And I started thinking about that stuff, and it took me some time to kind of put it together, and I'd noodle on it and sleep on it. But if you're sitting out there thinking about making a move,

maybe it's time for you to start your spreadsheet. So let's just talk a little bit about what goes in that, starting with income. One of the things that I think we're going to talk about again and again is the idea that you can't, you got to keep things equal and you don't want to make a mistake. And we'll say this later too, but I just wanted to say it here. There are lots of numbers that you think of as what your number is that are not necessarily the real number. And so that's something to keep in mind. With income, you can measure what you believe your salary is. You can measure what gets put in the bank, which is not the same as your salary, right? And likewise, for the money you bring in, the money you bring in is what you can measure.

Or you can measure the money you bring in after your expenses or after taxes or all sorts of other things. And it's really important to make sure that you're comparing like to like because the danger is that you measure like a thing before taxes have been taken out, let's say, versus a thing after taxes have been taken out and think that they're comparable when they're not. So it's one thing that's important about income and really numbers in general is to make sure your numbers are realistic and also that when you're comparing column A to column B, they are actually fair comparisons. Yeah. I feel like the one thing you could do even before you start writing down

income and expenses is in your head, try and come up with objectively, what is the number you need to continue to survive? I mean, everybody's at different stages of their life. You know, maybe you've got a fancy house. Maybe you've got, you're living with your parents and you don't have any expenses. I don't know where you are in your life, but that's something you should have in your head. I know when I started making the move, I have a house. I have a mortgage. I have a kid in college. I have certain expenses that I'm just responsible for, and I knew that my number was pretty high that I needed to continue to really make this a go.

to really make this a go. But I think even coming up with that in your brain before you start figuring out income expenses is a good idea because I think it's easy once you start getting in to think of it because you want to go out into so bad that you get a little fluid with that number, which is probably a recipe for disaster. Yeah. In fact, I would say that's the most important thing. And starting with a number, if you can do that is great. You need to find that number. And I think that serves a bunch of purposes. It serves the, it provides the reality of what you need to make it right. And that could be right, very different if you've got a mortgage and three kids and somebody's in college and all of that versus if you're living at home and you know you just need to uh have a you know goal to go rent your own apartment or something like that i mean there are there are high numbers and low numbers but having that number and it

serves the purpose also of uh injecting reality like oh I could make some money doing this thing is not the same as that number is too small versus this number. Having that number to use as a benchmark is very important. And not just like when you're calculating it, but I would say that that number, I assume this happened for you, David, it definitely happened for me. When we got the number and then refined it over time the number became also the benchmark as we were going as i was out on my own the number became like that sometimes it's not like did we meet the number sometimes it's we want to be over that number by a certain amount but the number was used in the calculation of basically is this working or not or do i need to go get a

real job basically that number is super important all the? Or do I need to go get a real job? Basically, that number is super important all the way through. So it needs to be a good number. And you can use it to decide to go out to make your guesses and also to monitor once you're out on your own. I can tell you for me, I looked at how much money we had, and how much I was earning. I took my current salary after taxes and you know, kind of what was I taking home? And it was a percentage less than that. I felt like I could get by with a little bit less than what I was doing. But, I mean, that's for everybody to choose on their own.

But for a starting point, looking at what you're currently making and getting by on is a good starting point. If you have a number that's 50% of what you're currently earning, you're being unrealistic. Right. And keep in mind that if you look at that, I'll just say it again, because it's super important because you can fall down a pit if you don't do this. If you look at the take-home number, that's great. But the take-home number has all of those expenses built into it in terms of taxes and things like that, as well as perhaps paying for insurance which is a different kind of thing you have to calculate out so if you look at the take home number be sure that you're not balancing it against the raw number of income that you would

you would get paid by somebody because of course that will have taxes taken out and you'll have to pay insurance and all of those things too. So making sure that they match is important. But like you, yeah, I actually looked at my take-home number and guessed something lower than that, right? Because it was not, we were saving money, putting money away, things like that. Like that was not the break-even point. It was above that. So that allowed me to kind of lower the bar a little bit in terms of, am I going to make it? Can I do this? Yeah.

And then the whole idea of the spreadsheet is you look at all your income and all your expenses and you get, you know, you do some math and at the end you get a number to see if it matches whatever, if it's up to what your number, we're using the word number a lot here, but whatever it is that you need to make it work. And, and it's just, like I said, it adds some objectivity to the process because you can have all the best desires and goals, but if you don't have a realistic way to getting to the income that you need to survive, then you should not do this. You know, we're not trying to get people to, you know, get themselves thrown out of their homes here.

We're trying to help you make smart decisions about whether or not going indie can work. So you want to talk about income? Yeah, let's do it. All right. So I feel like this is the hardest part, coming up with the income number. I call it the art and science of spitballing income. And I guess it really depends on what kind of business you're going to open up. If you're going to make a business selling widgets, how many widgets can you count on selling?

If you're in the service business, is it a client-based business? How many clients do you think you can service? Or like what Jason does is a lot of freelance writing. How many freelance writing gigs do you think you can get? And so it varies for every type of business. But I think you need to sit down and just think about what are the ways that I will earn income through this business? And what are some practical ways that I can try and figure out how much clients, widgets, writing gigs or whatever I will get as soon as I go out on my own. It's hard. Yeah. Yeah. I'll tell you what I did.

I did buckets. Buckets is what is the way I did it. Yeah. I said, because you don't know, like, you don't know, even if you think you know, you don't know. So, what I did was say, I think I'm going to make about this in this area and this from this. And that could be clients or in my case, it was sort of like from blog and advertising for blog and podcasting and advertising for and freelance. And I just kind of put those down and and some of that was more based on reality and some of it was a shot in the dark but i basically said well if i can do this which seems reasonable and this which seems reasonable and this which seems reasonable add up that number that's a good number i can make make it. But it's hard because unless you're walking out the

door with a guaranteed client, then you can't do that. Yeah. When I was leaving the firm, there were multiple clients there that were, I guess you'd say, my clients or people that had hired me, that I had met, that had a relationship with me. And I didn't think there was really any question that they would come with me. And I don't think the old firm would care because they knew they were my clients. So I looked at approximately what kind of work they had given me in the past, you know, and I, and one of the things in my spreadsheet had is for each client, you know, what's the estimated income I could expect over a year from that client. And I was pretty conservative with that stuff because, you know, I think in estimating income, it's a great

place to be conservative as you're trying to figure this stuff out. So one of the things I did was say, okay, I'm going to get, you know, these X, Y, and Z clients. And I think looking at historical numbers, I can count on, you know on some kind of income in this ballpark from them. And then that added up to a number. And it didn't add up to a number that was particularly high, but it was a starting point for me. And that was something that I was looking at. That's how I went about it. But like I said, it really depends whether you're in good services, client based work, it can really depend.

Yeah, it's totally good. It's hard for us to give global advice here. We have our own personal experiences. But I think one thing that you and I have talked about before, and that we would agree on is, of course, having a diversity of income sources is better than just having one. And I know we've talked about the danger of having one big client is not only are you basically being employed again, if you have one client that pays you for everything you do, guess what? You work for them. Even if it's not that way and you've got to deal with your own insurance and your own taxes and all of that, guess what? You work for them. And in some states and by some legal interpretations, by the way, you are technically an employee at that point. And there are a lot of employers that get really

afraid if they are your only source of income because you are kind of a de facto employee at that point. So diversification is good also because if you lose a client, you didn't lose your whole business. So going out on your own, it's the same story. If you've got a few different streams, that means that in my case, like I underestimated some of those buckets of mine and I overestimated others. But in the end, it all worked out because I had, you know, four buckets that I was looking at and the total number was good, even though like some of the buckets were not as filled as I had expected them to be. Yeah, I had an attorney friend who got an insurance company as a client where they have lots of cases.

And he was just growing gangbusters. And I kept telling him, you need to broaden your client base. You can't just rely on this one big fish. And he added employees. He signed up for a lease for a much bigger space because they had all these people. client base. You can't just rely on this one big fish. And, you know, he added employees, he bought, he signed up for a lease for a much bigger space because they had all these people. And then, you know, you know what happened was some point somebody at the insurance company decided they like some other firm better and they took all their work and he was in a bad spot. So you want

to broaden that out as much as you can. And like Jason, um, to me, one of the most important things about that income spreadsheet was looking creatively as you know, where are the places that I make money? And as we talked about on my, um, my origin show, the fact that I had a, a source of income separate from the law, from the max Sparky stuff that I've done, the books and the podcasts, um, it gave me a bit of a cushion and the ability to really make the jump. So be looking for that. I mean, part of making the spreadsheet is maybe planning years in advance that you're going to start that diversification. So you have that cushion when the day comes. But income is important. So first thing you want to do is make a nice spreadsheet of your income.

And we'll talk about expenses next. But first, I want to talk about a sponsor today. And we'll talk about expenses next, but first I want to talk about a sponsor today. And this episode is brought to you by Eero. Never think about wifi again. Use code free agents for free overnight shipping on your Eero system. Now, if you haven't heard of Eero, let me tell you about it. I've got it in my house. I'm using it right now. They've created the dream wifi setup. It's fast, a reliable connection throughout your house, and even has works in the backyard. So now's the best time to get on board with Eero. They've just released their new super slick second generation devices. They've introduced this tri-band generation model along with the Eero Beacon, which allows you to build a Wi-Fi

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That's Eero.com with the promo code FREEAGENTS for overnight shipping. Thank you, Eero, for your support of the show. All right, expenses. Yeah. Expenses. To me, the expenses part is where you can get a lot more accurate uh with expenses right right i mean that's the sad truth of it isn't it is your your expenses are much more fixed than your uh than your income because

your income can come and go and the expenses exist right so um we've talked about setting up your workspace and all of those things. And, and, uh, and there are lots of different ways to do it. I would say that, um, number one, I'm going to say it again, taxes is a huge expense. And if you're a freelancer, um, you may be, if you're an employee, you may be used to the idea that you get paid after taxes have been taken out that's what generally happens as an employee the taxes get taken out of your paycheck up front and given to the government basically and so by the time it comes time to pay your taxes for the year you may roll your eyes and have to write a check to the irs but guess what um most of the tax has already been paid by

you it just never even got into your hands. When you're a freelancer, that doesn't happen. That does not happen. And when you go out on your own, you may discover very quickly that you will get hit with a huge tax bill at the end of the year, which is scary. You should probably pay estimated taxes, although they don't ask you to do that until you have that first huge tax bill. And this is a very common and terrible and scary mistake, which is people spend the money thinking that it's like a paycheck, but it's not a paycheck because the taxes haven't been taken out yet. So number one thing to do when you're factoring in what your expenses are going to be is to at least try to estimate how much

money is going to be taken out by taxes at the end of the year because you need to save that money. And that is not your income. That is an expense essentially goes right back out that percentage of, of your tax. So that's step one. And then there's all the other things that come with, with, uh, having to pay for things that your employer gives you for free as part of your job. Let me just wind back to step one for a minute. Um, if you're going to do this in the blind, if you're a CPA and you're going out on your own, you're going to have a good idea what your taxes are. But if you're anybody else, you probably don't because taxes when you're self-employed are higher than when you're working for the man.

So I would recommend at that first step when you're making the spreadsheet, find a CPA friend, find someone that you say, Hey, I may, you know, be looking to hire you, or just maybe you already have somebody that you've worked with to do your taxes in the past and say, I'm thinking about going out and this is the kind of business I will run. And this is the roughly anticipated income because you've done that part. know what are what is a reasonable expectation for taxes and usually they give you a percentage you know they're not going to give you an exact number but they'll say you know 25 35 some some percentage and i think you build that in right there so so don't just do that by flipping a coin talk to somebody who actually

prepares taxes and can give you you know an educated opinion as to what that number is. Yep, absolutely. Talk to the experts. And that's a big one. The other thing, then, let's get into the other stuff that you may buy. When you get started, we did a whole show on where you work from. And one of the reasons why both Jason and I kind of went towards the lower end on that stuff is that we want to keep that expense down. We're always thinking about that bottom line, the income high, the expenses low allows you to stay free.

But what kind of business are you going to make? And we did a whole show on different options for you as to where you go. But the fancier you go with your facilities or your office, the more money you're going to take off that income to pay for that. And you need to have a realistic idea what that is. One of the things I did was I went around because I knew I was interested in these offices where you could rent a conference room and get an idea for that. There's several of them in my area where I live. I went and visited several of them and I had lists of questions and I looked at how well they were made and how nice it was. So people were going to come visit me there. I want to make sure it's a

nice location. And how much do they cost? Because there's a lot of different costs in that area. But maybe you need a full-time office or maybe you need a co-working space, but go around and look. Don't just get on the internet and look at prices. Actually, go look at a few of them because your spreadsheet gets better if you have more information. Yeah. Something that's related to that too is this idea that you have ongoing expenses and you have one-time expenses. So keep that in mind too. You're going to have an initial investment, which is not the same as ongoing.

So like a computer or anything like that, if you need to buy a computer when you go out the door, that is a one-time expense. Or at least if it recurs, it is going to recur every three years, five years, seven years, depends on how you use computers. So you could either figure it as just like, look, that's a one-time expense. I'm not going to worry about it. Or if you really want to, you can break it down into, let's say I'm going to buy a new computer every four years and

find the price of the computer you're going to buy and divide it by four. And there's your annual expense of the computer amortized over that time. And that's fine too. But setting up your office, if you're going to work out of your house or whatever, that is a one time more or less versus the ongoing stuff. But, you know, ongoing stuff is is is key. I think the reality is that most of these expenses are going to be small, like paying for Photoshop for a year or Creative Suite for a year, right? Or Office 365 for a year. It's a hundred bucks or a couple hundred bucks. It's not a huge deal. But if you're renting an office or paying for a phone service like you do, or paying for access to office space, things like that that are more expensive and ongoing, that is something you need to keep in

mind. Yeah. I feel like, and there's a good, I think, point to be made here. If you're going out on your own, you don't necessarily need to buy new computers and you don't need to buy, you know, copy machines and everything that people think they need when they start up. I would ask you to take a real good look at any initial startup expenses you intend to incur. Like if you have a two-year-old computer that's working fine, starting a new business is not the reason to go spend two or three grand buying a new computer. In fact, it's the wrong time to do that. You're better off going with the older computer if it's going to get you through for a year or so. And as

you get the business going, then the business can pay for the computer and maybe even help you on your taxes. So it all works, you know. But I always tell people when you're starting a new business, don't spend a single penny that you don't need to. So take a real good look at the things. Like you don't necessarily have to buy a new desk. i'm not saying you shouldn't if you really want a new desk and you think that'll help you that's okay but but make it a conscious decision don't just accept that you need to buy all this stuff as soon as you start yeah totally now we should talk about the most expensive things the ones that i feel like are i mean we mentioned rent facilities things like that if you need to do that, we talked about it. Maybe you do.

Maybe you do. Although even there, I think you and I both said, like, can you do it from home? Can you do it short term somewhere? Don't make a huge investment on something because you don't know how this is going to go. But beyond that, I feel like one of the biggest expenses in this is insurance, especially if you live in some place like the united states where you need to have your own health insurance this is the single biggest expense for a lot of people going out on their own is is paying for their own health insurance and you've got to factor that in and and if you're in a uh if you're in a state where there's a state insurance exchange or something like that you should be able to at least price what uh that

cost is going to be but it is uh. But it is potentially a huge cost, and you need to factor it in. Yeah. And that's another thing, you need good information. In California, I went on, the exchanges are great in California. I went on, I saw the vendor I wanted. I wanted to try and stay with the same one that I was working with at my old job so I didn't have to change doctors. And I got two or three different prices from them for the whole family. And my wife and I sat around and looked at that number for a while and eventually gulped and said, okay. But you should know that.

I mean, don't spitball any of these expenses because with a few phone calls, a little bit of internet research, you can get very accurate information. Another thing I would encourage you to think about when you're doing insurance is also liability insurance for whatever the business is. As the lawyer Dave here will tell you, if you ever get sued, having that liability insurance could save your bacon. Just paying a lawyer to defend you in a case is super expensive, and it can kill a business. So get yourself a broker and say, okay, I'm getting help. Maybe we've talked about in the past, what happens if you get sick? Well, disability insurance is another thing you should put on your spreadsheet. But getting a full insurance portfolio to get your business started is very wise and expenses that you should absolutely

consider. Yeah, absolutely. Legal's another one. I mean, if you decide you're going to inform a corporation, you're going to have to pay a lawyer to kind of put that together and manage that for you. And if your old business was paying for your retirement, you should probably think about that. Definitely. You know, and so maybe, you know, you need to put some money away for your retirement. So all these things start adding up. The 401k that you took, you know, you maybe took advantage of and maybe didn't. You should have taken advantage of it.

But that's, again, deducted from your paycheck, right? So that's not reflected in your take-home if you're using your take-home as the plan. And it's not going to happen unless you set up a business and build your own company 401k or something. You're probably going to be paying into something like an IRA that you need to do yourself and you need to factor that in. And maybe that's not one of those things that is immediately necessary if you're going out on your own and it might be rough at first. Maybe you're not putting into retirement right away, but you know, I think you need to consider the long run. Like if this isn't tenable for you to make a living doing this and save for retirement, it's that, that in the long run, that's a problem. Even if it may not be a problem in the first year, if you can't get to a point where that's part of what you're spending

money on, um, you've got a problem. Yeah. One of the things I did once I started getting the spreadsheet in shape was I started talking to some friends that are in the industry. You know, I had a pretty good idea on the Max Barkey publishing side, but on the law side. So I had some friends that ran their own firms or little solo attorneys, and I sent them my spreadsheet and I said, here's what I'm looking at. What am I missing? You know, you guys run businesses that do the same thing that I'm talking about doing here. You know, what are the pieces that I have not put in here? And like one of the feedback I got from several friends is you don't have any line item in here for it. It costs a bunch of money. Well,

I'm a nerd. I don't need that. But it was good to know that they were looking for something that I wasn't paying. And, um, I think that's a great idea. If't need that. But it was good to know that they were looking for something that I wasn't paying. And I think that's a great idea. If you're going to go and open up a design studio, talk to somebody else who has a design studio and ask, what are the expenses that you have? They'll know. Right? They'll know. And they'll probably share.

But they'll know. They'll be able to tell you the pitfalls because there will be pitfalls in whatever particular business that you're going into and i definitely talked to some freelance writers before i went out on my own sure i spent a lot of time talking to glenn fleishman who's been freelancing for you know more than a decade and he had some great perspective because he's been through it all and that was very useful in making sure that i was basically checking my own assumptions that can be really powerful well we i feel like we should talk about how you put your spreadsheet into action. But before we do that, I want to talk about our second sponsor in this episode, which is FreshBooks. Hey, all you freelancers out there, you probably already know how important it is to make smart decisions for

your business. We talk about it all the time. FreshBooks can save you up to 192 hours. That is a very specific number with their cloud accounting software for freelancers. That's ridiculously easy to use. It simplifies tasks like invoicing, tracking expenses, and getting paid online. And that drastically reduces the time it takes for more than 10 million people who use FreshBooks to deal with their paperwork and it can help you too. FreshBooks automates late payment email reminders so you can spend less time bugging your clients about paying you and more time actually doing your job, which is really great. And when you email that invoice to the client, FreshBooks will also show you if they've seen it or not, which means you won't have that game of like, hello, did you see it? Can you pay me? They know if you saw it or not. And that's very helpful to FreshBooks has

more than 10 million users. But guess what? They are a pretty small company, even so even supporting all of those people. And that got them the title of small giant on Forbes's list of the best small companies this year. That's pretty cool. So if you're listening to this and not yet using FreshBooks, what's wrong with you? Try it. Give it a try. There's an unrestricted 30-day free trial for listeners of free agents. No credit card required. All you have to do, go to freshbooks.com slash free agents and enter free agents in the how did you hear about us section. That that's it 30 days free try it out it'll save you time you'll be able to track your expenses huh just like we're talking

about and you should definitely check out fresh books thank you to fresh books for supporting free agents and all of relay fm so uh so jason the spreadsheet for me was a big deal i mean i i i don't know if i think i i have a warm feeling in my heart for my spreadsheet, which sounds a little weird, I know. But it was the first real step I think I took towards moving out. And it's where I started to realize that it may be possible. When I was thinking about the decision whether whether or not to leave the spreadsheet was like my warm blanket at night, you know, I would get up and I'd think, Oh, well, I didn't think about, you know, liability insurance. I'd get up and I'd start adding to the spreadsheet and start

putting it together. And it just gave me a place to kind of put a lot of neuroses and, and try and work through it. Um, so I, I don't know how useful this is to everybody, but if you're out there thinking about it, I think a spreadsheet's a great way to kind of get yourself prepared to make a move. Yeah, I think so. It's not a catch-all, but it's helpful. I definitely, you know, I was doing a lot of back of the envelope. I wouldn't call it a spreadsheet, but back of the envelope when I was thinking about going out on my own. And then, of course, my situation was a little bit different where I did some calculations and then I tried to leave. And then they're like, no, no, no, please stay.

And then I stayed. And then I was basically given a date like, okay, now this is the date. And so, you know, it was a little less formalized maybe than that. But definitely it was a touchstone when I was planning it of like, could I do this? And then after I left, it became the it was the beginning of a useful tool of how is it going right then once you're on the sea once you're once you're making that journey, then you keep checking back in and looking at the numbers. And this also requires you to, you know, be tracking your expenses and tracking your income. And that's super important that as you're doing your business, you also need to be doing this because you need to get a handle on it from month to month or quarter to quarter or week to week or however you want to do it about how you're doing. And when you're doing that, that spreadsheet, those numbers becomes useful because you can see how you're

deviating from it up or down. And that allows you to react and modify what you're doing and also get a sense pretty quickly of how things are going and how much runway do you have, you know, and is this working or do you need to start polishing up the old resume? Yeah, I was looking at my spreadsheet, you know, my escape spreadsheet recently. And it's interesting to me that, you know, I was pretty dead on with the expenses. But like I said, you know, that's something that you can accurately predict, you know, how much they're going to charge. On income, I was grossly off. I mean, I actually ended up doing better on income than I was than I expected. And some of

the clients gave me more work. Some of them gave me less, but the thing that I didn't factor in at all really to my spreadsheet, maybe this was a mistake was new work. You know, once I went out on my own friends and lawyer friends in the community sent me clients and even from the max Sparky stuff, some people are like, Oh, I would like to have you as my lawyer. And it worked out for one reason or another. So I picked up several new clients that I just didn't really have on my radar that I would be doing that kind of work. So you can do as much planning as you want. But think about the upside, too. But I think in hindsight, I wouldn't do it any differently. I like the fact that I was very conservative on income going out because that way I knew I wasn't really letting the family down and just taking too much of a risk.

Somebody could probably boil down a lot of what we say here in terms of some sort of specific advice, and we approach it from some different fronts. But like planning, being realistic, not going into it. I mean, you could just quit your job and be like, I guess I'll figure it out now, but I wouldn't recommend it. You wouldn't recommend it. Planning. It's good to plan. It's good to get a reality check, right? Like maybe you figure out that, oh, this just doesn't work. And that doesn't mean you don't necessarily go out on your own, but it might mean you recalibrate sort of like what kind of work you're going to do. It's like, oh, I thought I could get away with just doing this. It's like, I mean, like if you had done a spreadsheet of like, okay, I don't even want to be a lawyer anymore. I just want to, you know, podcast and write about computer stuff.

And then you do the spreadsheet and you're like, oh, nope. It's good. And you didn't want to do that. But that's something to keep in mind too about um being realistic about what your mix of work needs to be so that you don't take uh 100 of your work or 80 of your work is the lower paying stuff and you just do a little bit of the higher paying stuff it's like no you might not be able to do that you can figure all that out if you plan so it's always good to plan and be realistic and not because the danger and we say this all the time here because anytime as we both said somebody uh comes up to us and says i quit my job because of you you're like oh boy i feel so responsible i hope it i hope this person's going to make it work it's really

important to uh to not go in on just hopes and dreams that you need to go in with uh with some planning and with your eyes wide open because that's what's going to make it work is that you need to go in with, uh, with some planning and with your eyes wide open, because that's, what's going to make it work is that you've, you know, what you're getting into when you do this. And I guess I should say one other result of the spreadsheet may be that you say, well, you know, this isn't going to work for me right now, but what if I saved money for six months or what if I tried to build up the clients that I can get with this new business over the next year? So that income number changed. And it's to go back to our talks about your home office and things like that. This is the kind of tool that you look at and say, well, I really

want to rent an office, but I can't. That won't work. But if I don't rent an office to begin with, I think I can make this work. And then you try to grow your business to the point where you if you find out that you actually do need to rent an office, you can do that. But like, that's a way to say I need to get the expenses in line, I'm not going to be able to do this if I if that is an expense that I do that I'm going to pay for. So maybe I won't pay for that expense. And then suddenly it starts to work. So you can gauge upfront, which is good, right? The last thing you want to do is fail at going out on your own because you paid for some expense that was not purely necessary. And that was the difference. Well, we do a feedback show every once in a while. So if you did a spreadsheet and it went horribly

wrong or horribly right, let us know what works. Yeah, you can go to relay.fm slash free agents. That's where you go. And there's a contact link there, so you can email us. You can also tweet at us at freeagentsfm. This episode is up at relay.fm slash freeagents slash 29. You can go to that if you want. And you can go to our Facebook group and talk to your fellow free agents, facebook.com slash groups slash

free agents group. Well, we'll be back in a fortnight with more conversations about being out on your own. But until then, David, it's been a pleasure as always. And we'll see you all in two weeks. Bye, everybody. Thank you.