Episode Transcript
Speaker0: Hey, what's going on? Welcome to the Doug show. I'm Doug Cunnington. And today I'm going to talk about a piece of paper that I found in one of my journals. I folded it in half and tucked it away. And it's basically a cash flow plan, not exactly a budget, but kind of a cash flow plan. And when I was getting my business started, I think it was about 2016 or so. And basically we're looking at take-home pay of about $10,000 per month, 120K per year on average is what I was shooting for. And I'm going to back into some details. This was just a one pager and i had been running my business for a little while
Speaker0: at that point it is important to note that inflation has uh obviously. Uh impacted the value of money as it does each year every month and that's just something that we have to take into account so, I asked AI, I figured it would be close enough. It's not going to be exact. Uh, but basically 10 K back in around 2016, 10 years ago is equivalent to today's value of $14,040. So about 40%, um, higher. And that's, you know, really important to note your geography may impact things and that sort of thing. That's what we're operating on. So there's a couple, um, line items I'll go through here. Um, if you're watching on YouTube, I'll just take a picture of this page and,
Speaker0: put it, you know, over on the side so you could see it. And if you're listening, then you could pop over to YouTube and just take a quick look. I'll describe everything. I mean, there's only a handful of line items here. And I didn't put a date on here. There's some notes on the side, which I think could be a revision. Maybe after I slept on it, I was like, okay, this seems more accurate. There's some other info on here where I'm like, I'm actually not sure what that is. It just looks like maybe some calculations I was running. But we'll go through the cash flow and I'll tell you where I expected, you know, money to go.
Speaker0: And it served basically as a roadmap. It wasn't going to be perfect. And one thing with being self-employed, regardless if you have an agency or if you run a different kind of business, you don't know how much you're going to earn. There's a lot of volatility. And depending on the industry, like if you did run an agency or anything where you have clients you may be in a situation where. You don't know if the pipeline is going to be full or you have to potentially spend a lot of time on business development to get the pipeline full and then you're working on executing and then you neglect the, pipeline so there's a there's always trade-offs and,
Speaker0: I won't get into too much of that, but we'll see where the tangents go. All right. With all that said, slight digression here. I recorded this yesterday. I tried to. And I, for some reason, the wrong microphone source was selected. So I recorded what I thought was just a wonderful episode. Then i was like oh man let's see how it sounded and there was no sound and i was like oh sometimes there's some issue with the recording software that i use descript, which is some of the buggiest software i've ever used i hate it and love it all at the same time and for some things it's really great and for other things i fucking hate it so,
Speaker0: with that said this is round two maybe i'll actually do better this time. Now, the other side quest is I actually played the electric guitar and I had the amplifier in front of me hooked up and it sounded beautiful, friends. It sounded so good. And the thing is, Georgie is with me now. I'm recording it the next morning. So Georgie is sleeping under the table and the amplifier is a little bit loud, even though I had it turned down quite low. I mean, I think it was only like 70 dB or something like that. I'm nerdy, so I measure how loud things are, but it really wasn't that loud. It was just like speaking voice, but she doesn't like the electric guitar for some reason.
Speaker0: So even if I have it at a very quiet volume, she gets a little bit annoyed. The acoustic guitar though, she's cool with that. So it must be something with the, you know, the amplification, but all that to say I had. Great, great tones coming through. I actually played the same kind of riff here, except it was a lot of overdrive, not fully distorted, but it sounded, it sounded great. And I was really happy with the sounds coming out of the amp. All right, let's get into the line items here. Number one, like I said, we're talking about $10,000 per month on average is what I was shooting for. That was in 2016 whatever you're uh thinking of now you know it's 40 percent
Speaker0: higher but i'm just going to operate on this 10k per month, i wanted that to be the take-home pay and if you're self employed you have to take into account taxes that you have to pay none of this is financial advice by the way consult your own professionals this is just what i did and this is my own personal experience, i set aside roughly uh one-third 33 percent of the top line revenue to pay taxes in the future so that would account for you know federal taxes state taxes and we, lived in three different states over the years that i've been self-employed, and basically oh actually take that back two different states but i did earn
Speaker0: money on the side while i was um. Fully employed with a corporation and I didn't form a business until later. And it was just on the side before that. So all that to say, I put aside money even when I was working for a company because I knew I was going to have to pay taxes on the profits that I made. All that to say, that means I needed the top line revenue coming in before taxes or the gross profits to be $13,333.
Speaker0: Which in today's dollars is about $18,720. So that's what we're working with here. And I'm just going to stop with any caveats on the inflation. Just know it's about 40% more, and we're just going to be talking in 2016 dollars here. First line item is $3,000 to expenses. So this is anything that is an expense to run the business. So this could be software. This could be VAs to help do something. It could be VAs to write content. A lot was spent on software. Well, I will tell you software ended up being fairly expensive depending on, you know, you were spending money on, um you know core software is fairly expensive you have to pay for um,
Speaker0: you know potentially ads or something like that i dabbled with ads here and there but it was never a big piece of what i was trying to do i definitely preferred organic growth or, organic sales and you know whatever medium wherever the platform was, i prefer the organic route. And anything else to run the business. And this includes unexpected things. So let's say I accidentally forgot to pay the credit card bill, which would be unlikely because I had it automated, but let's say I forgot to do something like that and then I had to pay a penalty. That is something you have to take into account. And those kind of like unexpected things that pop up.
Speaker0: The other is around things that aren't monthly, right? So I'm looking at this on a monthly view and this goes for, you know, my personal expenses, my personal finance and my business finance. Like there's some stuff that you pay for monthly. There's a handful of things that you pay for every six months, like maybe auto insurance. There's other things that are annual and depending on, you know, how you're paying for things in your particular cash flow, you may have some expenses hidden. Say, if you just look back two months or three months, you really don't know. The full picture of your annual expenses, which is very important.
Speaker0: So the 3000 includes, you know, all that stuff. And by 2016, I kind of had a handle on what things cost. So email provider, marketing software. I mean, I used to pay whatever five or $600 per year for email pop-up software. And a lot of stuff is sort of built in, but you know, you think about, WordPress plugins, you think about WordPress themes, you think about hosting, you get all these ideas about a new website you're going to start or some business model, you buy the domain, you buy a couple other things, and then you never touch it. So all those things were encompassed by this $3,000 of expenses.
Speaker0: The next line item on here is $5,000 per month to invest. And that was essentially taking profit and money off the table away from online business and putting it essentially into the stock market. This was investments. This was not like 401k. This was not any like pre-tax investments. This went to a brokerage account and this was um you know post-tax and it went to an index fund again not financial advice but that's what we did, it sounds like a lot it's literally 50 percent of what i was planning on bringing home and that essentially was to buy freedom in the future which eventually it did. And it sounds like a lot and it is a lot.
Speaker0: And if I needed the money to pay the mortgage and do other things, that's what I would have done. We essentially kept our expenses level. There's always inflation. We moved a couple of times. So there were, you know, some movements with that. We never moved to a cheaper place, but overall, we. That was money that we were able to invest and it made a huge difference in the long run. And that said, basically if I had any excess, I invested all the rest. So there were certainly times, I mean, shit, there were probably times where I was investing 80%. I mean, I know what the business was costing to run per month.
Speaker0: And if I earned more, then I would just invest all of the rest of it. So we made, you know, huge headway over, you know, years compounding, um, you know, those investments, it makes a huge difference. Okay. Next line item, reinvest up to $1,500 per month. So this is not business, um, you know, expenses from the cashflow perspective of like normally running the business. This is anything that will drive new revenue. So maybe it's like building a new website or it's investing more into an existing website back in those days, right? So that would be... Growing the website so that it could earn more money in the future it could
Speaker0: also be like fifteen hundred dollars per month you know to reinvest that could be like testing ads right like i didn't do that, personally but like nowadays let's say you've developed a sas product right so you want to get in front of new folks maybe you're reinvesting in ads right so you're trying to get your. Software, your ideas in front of other people. Maybe you're doing an advertising campaign and you're trying to be on YouTube channels. You're trying to have people talk to you. You're trying to be covered in some capacity. Currently right now, there are more companies contacting me about their AI products.
Speaker0: I think because I put up one or two reviews, now I'm on the radar a little bit, even though my, you know, my subscriber count is high, my views are low, but I still somehow make it through the filter. So I am, you know, looking at that right now. So if you have something you want to advertise, let me know, shoot me an email. We could talk. And reinvestment is business growth. So I wanted to make sure I had the opportunity to put more in. Now, this is a sharp contrast right these last two line items, I'm like, I'm taking money off the table and I'm moving it to a different industry away from this risk profile of working online, which was really fucking volatile.
Speaker0: And I knew it because I, as soon as I started, I would like, you know, I made a lot of money and then it went to zero. And then I made a lot of money and it went to zero. And I was like, this is not reliable. I cannot quit my job based on this volatility. So it was very important to me to have something more even and there were a few years and there were probably five or six years where. The volatility was less even on the website side so that you were able to like, reliably count on certain revenue coming in there could still be like volatile pieces maybe related to you know seo algorithm changes that sort of thing,
Speaker0: maybe it was commission rates however you could rely on some level of regularity, in knowing that the bottom is not going to completely drop out. Although later it did. It literally did. So we got the 5k per month that I'm saving up to 1500 reinvested. And I had, I mean, it's a sexy thing to say where people are like, oh, you know what? I reinvest everything back in the business. I want the business to grow. I'm putting everything in there. And I mean, it worked for some people. If it doesn't work, then you're like over leveraged and you built a bunch of stuff. I mean, I had peers and friends that literally, I mean, they were taking maybe.
Speaker0: Five percent off the table and investing or they were, increasing their lifestyle and they were you know spending a lot more money, and they didn't save as much they reinvested a ton and maybe they had like good leverage and good growth, but at some point those investments did not give the same return and they were looking at you know previous returns thinking hey if i put in, whatever If I put in $5,000 into this website, I should be able to increase the revenue by X amount. And then that increases the value and then they could sell it. And that works until it doesn't work. And then you've put in whatever, $5,000 into a website.
Speaker0: And not only did the value not go up, it actually decreased. So you're sort of negatively leveraged at that point. And I mean, you don't necessarily owe money unless you've gone in over your head, but all that to say, I didn't reinvest very much. I did a little bit here and there, but it was always well within my budget. I was never exceeding anything that I felt, um, you know, uncomfortable to reinvest. And again, it works really well when everything's growing, but if it stops growing or if the industry changes dramatically, then you're kind of stuck. You're actually in a little bit of trouble. Okay. Next, $400 per month for travel.
Speaker0: So I wanted to be able to go to conferences and network and stuff like that. I didn't go to a ton of conferences overall, just a handful, some smaller retreats or maybe one smaller retreat, but I said $400 per month. And a lot of these, it's like, I just wanted to account for it on a monthly basis, but really I would just like kind of pull the money and let it grow. So maybe every year I would go on to a conference. I would need to get a flight, hotel, food, pay for the conference, maybe some other, buy dinner out for people or something like that. But I would go like once a year and that might cost like 2000 or 2500 bucks,
Speaker0: to get a flight and do the whole song and dance. Maybe it's a cool city. So I want to stay there for a day or two longer. And I wanted to have that ability to go to a conference. Next line item, $50 per month for books. I've certainly tapered back on that. In fact, I went through a decluttering phase recently and got rid of a bunch of books, but. The right book can change your life. They don't cost that much. And I think I never wanted to be in a position where I was like, should I get that book or not? If I was slightly interested in a book, I would always buy it. So hence me having more books than I actually like wanted or needed.
Speaker0: And then years later, I was like, I kind of don't want to read productivity or business books. And I really haven't. I've even moved away from many of those podcasts It's... But I wanted to make sure I could buy books and learn if I wanted to. The next thing related is $100 per month for education or coaching or courses. And I was a big course buyer and consumer overall. Even when I first started, I remember, you know, I agonized like, oh, should I buy this $100 course? Which it was actually very good at the time. And it was like all about link building and stuff like that so a lot of my early core seo knowledge you know i watch videos and read blogs and all that stuff
Speaker0: but i mean i bought a handful of courses, and as time went on by 2016, i was spending like thousands of dollars per course and you know some of the smaller ones I would get were maybe like five to $800. And I got a few of those for like specific things. Like the, the one that I specifically remember is around, um, like evergreen funnels. So it was just teaching one specific thing. Like I said, I think it was about $800. It was under a thousand dollars, but somewhere around in there. And it was maybe like two hours of course material, some video that showed you a few things and say 20 pages of PDF info.
Speaker0: And it was fine. It did exactly what I needed at the exact time that I needed it. And I, you know, more than made the money back, probably 10 X or more. I mean, it paid off for sure. Side note, speaking of expenses, back to that line item number one. The evergreen software and other pieces that I needed like cost money. I forgot about like the cobbled together Frankenstein tech stack that I had where it was like five or six different tools. Some of them directly integrated. Some of them you had to use Zapier. And things would work until they didn't. But all that to say, I was probably paying $1,500, $2,000 a month in just software fees.
Speaker0: And I think over time I simplified, but at the time there weren't as many solutions out there. And yeah, it was a decent chunk. So other courses, I got a course on like copywriting. I think that was probably about 2000 bucks. I got a course on courses, kind of a meta thing, but it really helped me improve the course that I initially created. At the very beginning, I had an ebook. It was a long time ago, folks, right? It was 2013. So it was an ebook, but over the years, it developed into a simple video course and then a much better thorough video course. And then I mean that was the the main sort of online course that I had I had
Speaker0: a few others but that was sort of like the flagship the big one in, I would say maybe four to five main iterations over time but, it largely stayed the same from the early framework it just changed as the world, around the specific business model. So education and training. And then, I mean, that course that on courses, it was, I think it was 3,600 bucks back in, yeah, 2016. And I mean, I am a good student. I did all the homework. I went to every office hour session. I asked questions every time. and, I mean, there weren't many of us that did all that shit, you know. There were a handful of people that would show up, but sometimes...
Speaker0: In the office hours there would only be like eight of us so i could literally like it wasn't exactly one-on-one help but it was pretty darn close, so i think the next item on here is uh or the next line on here is actually just the total which is ten thousand fifty dollars, and i must have you know put 50 bucks on there extra or whatever and then i note on here save excess and or reinvest for revenue generating activities. So yeah, that, that was the goal, you know, even by then I was like, I want to have enough money to, um, you know, generate passive income via growth where I don't have to work
Speaker0: basically was always my goal to not work funny enough. So on the other side of the page, I have a couple notes where I think it was just after sleeping on it, I came back, I said, save the excess, which again, just. Re-emphasizing, over-emphasizing, saving the extra. I noted it was about $2,000 per month for expenses. And basically as a project manager, I knew that whatever expenses I think. I should probably add a little bit more. It's going to cost a little bit more. So on average, I was probably like, okay, things cost, you know, it looks like on average, it's about $2,000 per month. And then I was like, you know what?
Speaker0: You add 50% on there, there's going to be some unexpected things that happen. There will be issues or an opportunity will pop up or whatever. All that to say, I accounted for that. And I was like, to run the business, it's going to cost $3,000 per month. And I think I changed the other reinvest up to $1,500 per month. I was like, you know what let's make that uh 2 000 so bump that up by you know a third a pretty chunk a pretty big chunk overall and then i reduced the travel budget to 300 per year, all that to say this just served as a little bit of a roadmap and a guide so i didn't follow this on a monthly basis i assume I don't remember,
Speaker0: but I assume probably quarterly or something. I was like, is this like getting out of hand? Like, am I reinvesting too much? It is rare for me to take the course or rare for me to go to a conference. So that was not going to pop up often. But if I saw a conference come up, maybe I would look and be like, okay, well, I haven't gone to anything anything in a little while. So it should be totally fine for me to attend this conference. And I don't know exactly how much it's going to cost for me to go. Obviously, we could estimate, you know, a hotel and flights and stuff like that. But you never know until
Speaker0: you exactly, you know, pay for it. And by the way, you know, I mentioned it may cost $2,000 to go to a conference or something like that. It's the little stuff that can add up. Let's say there's some, whatever, a parking fee or you have to get Ubers or something like that. That could add up to a few hundred dollars. and it might not be something obvious, up front because you're like, well, the hotel is this and you don't take into account the extra fees that the city, adds on. We have to pay an extra $40 a night. For just like extra fees, which always pop up. I wish they would just tell you what it is and then you can make a judgment call on that.
Speaker0: But when they add those on, it's like, oh, come on. I didn't know I was going to have to pay the city fee and then the state fee. And then there's, um, you know, livable wage fee or whatever. I don't know. Just tell us how much it's going to be. All right. I think that's it. I.
Speaker0: I was surprised when I found this and I was like, oh, this is really cool. I literally was like going through some journals and notebooks that I have. And a lot of times there's like a pouch in the back cover. And I think I was just kind of flipping through some of the journals to see, the dates and maybe the topics. And I would just put like some masking tape on the binding so I could see like when they were from. And I threw them on the shelf behind me. And a lot of it is just like to-dos and random stuff like it's really not too much occasionally i run across something where i'm like oh wow i really i actually,
Speaker0: put a lot of time and thought into, something that i don't even i don't even remember what it was now but i'm like i have several pages on that and literally don't remember any of it, and then this was uh back there i didn't date it but the other funny thing is, this it was on the back of like page two of my resume so this is a resume circa yeah 2015 2016 or something like that, it project manager for a. Well, I'll just say a mobility company and then a consultant. I can't say I worked at Accenture there. That's fine. I work there. Fine people, very smart. And yeah, it's funny. You know, you work on, I'm looking at this,
Speaker0: I'm like, you work on a project for a year and then it compresses down into, like one and a half sentences. And now I haven't even updated my resume in, yeah probably 10 years or more so it was cool to find this sheet and you know going back and thinking about like, cash flow i'm curious if anyone else um does like you know these you know one one sheet business plan kind of things again this was just cash flow it could have really been on like an index card there was um, not a ton of info on here but it was interesting to see like how i planned and, you know the big thing is like, saving like taking as much off the table as possible and reinvesting just the
Speaker0: minimal amount i mean from the beginning, the volatility really scared me scared my wife too um even though things were successful i mean it took her several several years to be comfortable, with you know me working for myself i mean to the point where i mean i don't think she was really super comfortable. Even after I retired, which is pretty funny. It's like, I've been doing this for like about 10 years. So obviously like I'm, I'm running it fairly well as a real business, not just a hobby on the side, but she was used to, you know, the corporate situation where, an air quotes, I mean, it feels more secure, but it's really not any more secure.
Speaker0: And in fact, you know, once I was able to, put the business together and move forward on a consistent basis where i could, reliably earn money um i mean that gives you the confidence to you know be able to run a business create value, even if i wasn't going to start my own business again in the future. I basically can do operations for a company project management is quite valuable, i have strong marketing experience now a thing is if anyone listens to the podcast they would be like yeah we're not going to hire this guy he sounds like a kind of a bad employee on my other show i talk a lot about um,
Speaker0: laziness and anti-productivity is the the better branding of it but um yeah i'd be surprised if any company hired me. Although there's so many episodes, it'd be really hard for them to go through it all. But, and they probably wouldn't Google like, is Doug Cunnington lazy? On paper, it looks like maybe, but then you would see like, oh man, this guy is approaching 1000 podcast episodes, which is insane, totally insane. But I was tallying it up. Actually, I just realized the episode number. So in this show, we're up to like 640 something. And then the other show is like three something. I could be a little bit off,
Speaker0: but we're getting pretty close to 1,000 and I'm pretty sure should hit that by the end of the year this year. So pretty amazing. So even though I talk about being lazy, I don't follow through as much.
Speaker0: I like doing some activity. I don't want to be too bored. All right. I think that's it for today. If you have any questions, thoughts, or comments, other topics you want covered, you can shoot me an email, feedback at doug.show. And hopefully sometime soon, I'll be able to crank up the Amplified Nation Bombshell Overdrive 50 watt. And I'm playing through an Amplified Nation 12 inch speaker cab. I forget this Celestian speaker model exactly. I think it's a 75 watt rated speaker. I'm just playing acoustic now, but hopefully I could crank that bombshell up sometime soon.
