Edit: I gave up on financial goals in late 2011 after some huge financial and artistic wins... money shouldn't be taken too seriously. For the record, they were all basically on track, some were being massively exceeded, others were a bit behind schedule, but were all happening.
I set my next 10 years of financial goals on June 28th. That was exactly a month ago.
1 year - Critical Thinking [my first book] out. Blog income trickling. Some info products. Some freelancing. Something else, some X-Factor thing bringing in cash. Net monthly income positive. Health insurance. $50,000 in the bank. Expenses = income per month minimum.
3 years - 3 to 5 books out, many products out, blog income robust, some working on big exciting deals. $10,000 per month total, $5000 passive at least. First property owned. $300,000 in the bank.
5 years - 7-10 books out, many many products out, many passive income internet properties, working on big exciting things, $50,000 per month total, $40,000 passive at least. $1,000,000 in the bank.
10 years - 10-15 books out, products still selling well, actively investing in companies as an angel or VC, working on big exciting things, $250,000 per month, five properties owned, $10,000,000 in the bank.
Yifei and I are soft launching our new freelancing business today. I make my first pitch to a potential client in about 12 hours. Before I do this, before I see how things are going to go, I wanted to put this down. I've made $0 in 2010 so far. I made negative money in 2009 from business, because I had some fixed expense contracts that I had to pay/buy out after I closed down my business.
And now, from scratch, I'm predicting exponential growth for myself over the next 10 years. I've got around $9,000 still in the bank, which means I need to make $41,000 over what I spend for the rest of the year to have $50,000 by year end. That's $3700 per month on top of expenses. To err on the side of caution, let's say my monthly personal expenses are $2000. That's $5700. Add a little buffer, and I need around $6000 per month for the rest of the year.
I can do that. The big question becomes, "How can I do that?" And I start doing math.
20 hours per week sounds about right with working on my other projects.
Now, one of my key objectives with my freelancing is to aim for a 10x short term ROI on my rates. I'd settle for a 4x ROI for one of my clients, but I'm aiming squarely at 10x, which is 1000%. To be worth $75/hour by my standards, I'd be looking to generate $750 of value over the next year for each hour I worked, with a minimum of $300/hour.
So this makes me start asking questions - how can I be worth that? And I think the answer is, go to places where they have a proven business model and know what a customer is worth, but are underdeveloped or underinvested in technology, optimization, or system design type stuff.
Gosh, I'm making this sound like it's straightforward and going to be easy. In some ways, I think it is. In others, no. Let's rewind a little bit to 28 June 2010.
28 June 2010 - I started writing out goals based loosely on what I think I could earn/save if I pushed myself. It's worth noting that we hadn't started building our freelancing business at that point. I'd started thinking and writing up specs to do my own freelancing, but Yifei and I hadn't seen each other in a couple years.
I'd been reaching out to old friends, I finally signed up for Facebook, and then I ran into Yifei. Like I do with anyone I'm friendly with, I asked what his current goals are. One of them was to start freelancing, all he had to do was:
I see this as an "execution game" -- I know what I need to do, now I just need to do it. And because of that, my focus is split between the work itself and training myself to be the most effective human I can be: daily exercise, writing down every task in the morning, getting enough sleep, listening to inspiring music -- anything that makes me more likely to be motived and do excellent work.
And I think - well, hold on a second. I've got very heavily used business skills, he's got heavily used technology skills... maybe there's something here. One of my general life habits I'm working towards is "Do more projects with people I like" written in it... the note right below it says, "What projects?" and there's no answer. I wasn't exactly sure, I just knew I wanted to put stuff out the door with good people. So I wrote back -
Want to do this together for a little while as a project? I'm looking to do a different kind of freelancing, more business/revenues/conversion oriented. I put an ultra-raw page up here on my under-construction site:
Again, that's ultra-ultra-raw. But yeah, if you want to get a freelancing practice going, it'd be fun to do it together. Normally I like to set a hard spec I start a business, but I figure we could just set a loose one without anything really hard. We both need the same things right now - a bit of income, experience, a portfolio, and contacts. We could set up a small freelancing gig together, non-exclusive so we could do our own thing too, no expectation to be bound to each other. Just a way to get started since we have complimentary skillsets and working with someone is motivating and gives you someone to report to that you can't let down.
And thus, the seeds of Conversion Dojo were sown.
Mind you, I had no idea it was going to go this route. I knew I wanted to work with people I liked, I knew I wanted to do more projects, and I was re-connecting with people I'd lost touch with. One of them has similar goals and bottlenecks as me - okay, let's do something, interested? And we're starting. Looks like freelancing is going to be a big part of my income this year.
It's interesting, having goals. Then you can start running numbers. This was in my notes:
*Blogging - realizing how little money this brings in. For instance, a 4% commission rate on Amazon, if I want to make $50/month, I'd need to sell $1250 of products on Amazon. That's not going to get me to my financial goals. STILL, I want to be making $50/month off my blog anyways, because it gives me a tangible target for my blog. It means I need to be consuming good media, reviewing it well, doing it for people that also consume good media, and who trust my recommendations. If you assume that 1 out of 100 visitors to my blog buys a $10 item each month, then I'd need to have 125,000 visiting my blog each month to get $50. (Yeah, I don't think anyone's getting rich off Amazon's affiliate program... it means some free books for people, mostly). At the same time, it's very important for me to keep my reputation as trusted counsel by only recommending great value items. Perhaps the largest thing I can do to get more Amazon commissions is review and explain obscure, valuable sources. E-Myth is a great book, but most people that would need it already have it. (You *do* have a copy of E-Myth, right? If not, immediately go read this review because it's the Bible of small business and probably my favorite book. It's not necessary that you purchase through my link, but you have my gratitude if you do.) No, E-myth is going to do it, it's going to be more obscure media like Lone Wolf and Cub that's both: 1) quite valuable, and 2) you likely have not have seen it before.
I'm not editing that, my notes to myself look like that often - kind of disjointed, where sometimes I think "hey, maybe this will be used as the basis for writing someday" and I switch to second-person ("you, go get E-Myth"), and then switch back to first person to write to myself.
So I'm looking to have sets of valuable reviews and recommendations on the blog, and to make $50/month from it. Why? It's a measurable target. I'll need to be in touch with what people from my blog want, consume good media myself, and make intelligent, value-adding recommendations.
The most damning thing about running financial numbers is realizing how little money books sales could make.
Critical Thinking sales: $5 net each, 50 sales per month = $250
Selling an audio program: $20 net each set, 20 sets each month = $400
Selling 50 books makes much less money than 20 audio sets. It's faster to produce audio content than books as well.
Why is this? Well, I don't entirely know. Things are priced funny in society. Books are way underpriced for some reason. So be it, I still like writing books and want to write books, but my primary goal from books is to serve people and connect with good people and to bring the world I want to live in into existence. Writing, when it's going well, it's probably one of the most enjoyable things in the world. One of my goals is to get much faster/more prolific about writing too. But it's unlikely to get me wealthy.
By the way, a little bit of resistance I have - I think of making a set of training audio or DVD's as unfashionable. I don't know why I think this way, I've entirely rejected the system of what university professors consider fashionable and upstanding, but it's still drilled into me. English professors write critique books nobody reads, not audio programs nobody listens to. Books are prestigious and fashionable, audio less so. But, people want audio and are willing to pay for good audio. Maybe this is because you can listen to audio while doing other things, while reading a book takes almost all of your attention? Maybe reading is harder? More active, whereas people prefer more passive? I don't know. But whatever, my job isn't to fight or deny reality, it's to work with it. Make audio and video, get paid. Write books, do a good thing but don't get paid. That's how it works right now.
Other notes I made -
The hard questions -
*Not "can I?" or "I can't", but "How can I?"
*the longer I wait, the faster I've got to move
*This means I can't scale up my expenses/lifestyle as I make money... I need to keep slumming it
*Taxes, 5 days in the USA total this year, and making sure I can get the expat exemption which means not much going back as a result of making this goal
*Running these numbers on every project to look at viability
*Tracking my expenses (this sucked to start to do)
More of my earlier notes -
*Book writing - I did the math and thought about what I'd make net from each book, and it's not possible to make great money off of books unless they have an incredibly mass appeal. Even then, it's no guarantee. So I started thinking, write books to serve people, to train myself, for the experience of it, for reputation credentialing and prestige, to better the world and bring a good world into existence, to make friends and connections, to get opportunities... but I need to do more than write books to get at my goals.
*Digital products - These are generally not regarded as prestigious like books are, but doing the math on them, the margins are much better. This might be why people like Tony Robbins and Brian Tracy who are quite successful produce far more audio sets and video sets than books... books take longer and sell for less. It's crazy to me, I think books are better, but I think people do prefer smoother consuming media. Actually, I went through a shift myself where I now listen to more audio programs than I do read books, because audio can be listened to simultaneously with doing things. But I did the math and it's workable.
Other thoughts - I think the formula for getting wealth is scalable, revenue-generating assets.
I can do this year without scale. Getting my year three goals is going to take more scale. Then I'll need lots of scale pretty quickly. I can be in the process of building things that haven't panned yet out in year 3, but things need to turn on and ramp up fast to meet my year 5 goal. But, I want to be a millionaire in 5 years, so that's how it's going to go. My best friend was a self-made millionaire at age 24 (he's 30 now), so I figure it can be done.
In ten years I'd like to be making $250,000 per month. If I'm still looking at a 10x multiple, then I need to be generating actively or passively $2,500,000 in value per month. That's a kind of a mindscrew thinking about, but it's far enough away that I'm not starting to plan for it yet. It seems doable, though. Anyway, $250,000 per month seems like a decent starting point to reach.
Mind you, I asked you to mark this down while I'm making $0/month, while I've made negative money over the last 18 months. I was low born, I took no money from my parents, left home at 16, and inherited no connections. Outside of my direct family, none of the people closest to me came introduced through my family or any school system or through any help. What I'd do is join high level discussions and actively reach out to help people, I'd study history and sciences and make myself available, try to do right by people. I built all my contacts through scratch, my knowledge from scratch, my money from scratch. Right now, I don't have so much in the way of assets. I have some great friends and acquaintances around the world that I've met over the last five years.
So - here's what I say. Mark it down. I'll be making $250,000 per month in 10 years. It won't have been luck. I'm saying this now while I've got not so much. I've been given not much more than life in this era and birth in a reasonably free land. Mark it down. Watch me. Maybe I'll fail. I think I'll succeed. But regardless, luck will have had nothing to do with it.