How I Made it 5x Easier to Quit My Job and Start a Business
Yesterday I was brainstorming with David from Tropical MBA semester II about some ways to bring in revenue across a wide variety of sites we are working on. We were discussing the following thought experiment:
Would you rather make $1,000 in monthly income from eBook sales or $4,000 from providing consulting services (for example helping a medium sized business with their SEO efforts, copywriting, and web development).
It didn’t take us any reflection time, “eBook sales!”
In other words, not all income is created equal.
Of course passive income from real estate or ebook sales is better than a paycheck, but if you take it a step further and decide how much more valuable it is and stick numbers to it has the potential to be a watershed moment. It was for me.
I set out to make a ratio. How much more valuable is location independent money than “job” money? My gut told me that if I could generate 20K in income from working on projects I had equity in from anywhere on the planet that would be equivalent to 100K made at my job. That’s a 5X multiple. The 5X multiple was a profound shift in thinking for me and it lead directly to me getting over my worries of falling behind.
I would be just as “rich” making 20K as I was making 100K at a job.
If I could generate 20K of income I wouldn’t be falling behind at all.
Looking at things this way flipped my perspective and gave me courage.
So I quit.
So how do you determine how much location independent income is worth to you?
Take an inventory of the experiences you want most.
I wanted to ensure that I could afford all the experiences I wanted in life. It’s amazing to me now that I didn’t have a specific idea of what I actually wanted in terms of experience.
So I set out to take an inventory. What were the big things I wanted to do?
Start a business
Buy a laptop (didn’t have one when I read 4HWW!)
Record a record album
Study blues improvisation
Invest in other smart entrepreneurs
Move to a new country for a year
Move to another one after that :)
Go on a long motorcycle trip and cross borders
Travel through countries with just a backpack
Write blogs and make a podcast
I thought if I could do the things on the list above I wouldn’t be falling behind at all. I’d be getting ahead! I’d be rich!
What was striking about my list was that it wasn’t very cash intensive, even something like “investments” can be done without a lot of cash– this blog is an example of that. There are many awesome things that are cash intensive that don’t show up on my list (raising a family and sending your kids to elite schools is an example), however its my experience that most incredible experiences are much more time and mobility intensive than cash intensive.
A relatively inexpensive experience that I value very highly like motorcycling across South East Asia for a few months might be impossible to acquire, even for very high earners. In my case it would have been next to impossible to start regularly obtaining these kinds of experiences within a 5 year timeframe without a radical change.
What’s your ratio? How many multiples is ‘location independent’ money worth to you?