Automate Your Business

Archive for the ‘Planning’ Category

When transitioning from full-time employed with a side-line in IM, to full-time IM or half-and-half, it’s important that you know where you stand financially before you make any major decisions. I’ve been doing this planning recently, so I thought I’d share my thoughts here.

I’ve done this in an excel spreadsheet for convenience (see the link below for a template – it doesn’t have some of the automated calculations that my one has, but my copy includes some info not available on this template).

The first column is “Expense Name”, and the second column is “Amount”. In column 1 I’ve listed all my regular monthly outgoings, just putting the name of the expense – everything from “mortgage” (the biggest bill) down to “(UK) TV license” (the lowest bill at £10 a month). Then in column 2 I’ve listed the actual amount I pay each month.

Next, in that same column I’ve added the items that are reasonably regular but do have a little bit of variability – for me, that’s the food and petrol (gasoline for those of you in the US), telephone, and on-demand TV costs, all of which hover around a certain figure each month, but obviously can be a bit higher one month and a bit lower the next. In each case, I’ve written the highest amount it normally is (looking at my account history, not by guesswork), so that I’m planning for the worst case.

Next, I’ve added rows for additional amounts I need to save each month, either towards the higher cost items that you pay on a regular but less-than-monthly basis (eg, once a year, once every 3 months, etc), which might include things like car insurance, annual or seasonal train tickets, season tickets to the home matches of your favourite team, Christmas costs, etc).

And then further rows for the “big occasional things” (holidays, an “emergency fund” etc).

And then any long-term investment that you’re doing.

If you’ve got debt, now’s the time to be honest with yourself and write down two numbers:

• If it’s a fixed repayment like a loan, write down how much you pay each month.
• If it’s a variable repayment like a credit card, write down how much you would have to pay into that debt to maintain it at it’s current level (ie, the total of how much extra you charge to it each month + the interest charged on it each month). Compare that to the current minimum payment, and make sure that you’ve got the higher of the two figures written down. (Remember, if you make no additional transactions against your card, but you only pay off the minimum, it’s still possible that your overall debt will increase if the interest charged is greater than the minimum payment).Secondly, add another row detailing the amount you’d like to be able to pay in excess of that each month in order to pay off your debt even faster. Obviously, write one line per source of credit.

Next, I’ve added a few rows detailing the budget I’ve allowed myself for everything else that varies wildly – socialising etc.

Then add the things that are currently covered by your employer, but which you’ll need to replace when you leave your day-job. This would include things like healthcare, pension/401K (is that the right word for the US?), child-care benefits, other perks, annual bonuses, overtime payments, etc.

And then add your taxes, if you need to pay them out of what you actually “take home” from your employer or on-line income.

Finally add all your on-line costs – hosting, autoresponders, memberships, software leasing.

So - now you have a list of all your expenses. Order them by size, with the largest bill at the top.

Next I added another two columns: “Covered by day-job” and “Covered by online work”

Starting with the largest, if the bill is covered by my regular employed income, I colour it green in the “status” column, and I kept going down the list till I’d “spent” all my day-job income. (You should not colour in green all the items that your employer currently pays, as when you transition away from your day-job, you’ll need to make those figures up, from your online income).

(At this point, if you’ve got anything left that’s not green, it means your current lifestyle is not covered by your day-job income. That might be good or bad, depending on your personal circumstances, but it does mean that if you suddenly lose your online income, you’ll be in trouble).

Then, again starting with the largest expense that isn’t green, I colour it green if it it’s covered by regular, repeatable, predictable, sustained IM income, until I’ve “spent” all my online income and don’t have enough to cover the next-lowest bill.

Everything else I colour in red. Anything red at this point is the difference between your current regular income and your current regular outgoing. Presumably this means you are either dipping into savings, increasing your debt, or just managing to say afloat via irregular peaks in your online income or day job. Again, this could be good or bad – just make sure you’re aware of the shortfall here.

I’ve then added up the “everything else in red”, and that gives a number I need to earn online in regular, repeatable, predictable, sustained IM income before I’m breaking even. Note that I said “breaking even”, not “being better off”.

And that’s the spreadsheet I’ll be updating every month.

The trick is the “regular, repeatable, predictable, sustained IM income” piece. You’ve got to be ruthless with yourself. Just because you made $500 last month, doesn’t mean you’ll make $500 this month, unless it’s in a recurring income model (eg, a monthly membership site – either your own or affiliate income from such a site). Even then, you’ll need to keep topping that up as people drop out of the membership site and your income slowly drops.

So this is a useful exercise. But all it does is crunch the numbers. It shows you your typical income and outgoings, but there’s no thought behind it. Believe it or not, I don’t believe that a dollar is a dollar is a dollar (or, as I’m British, a pound is a pound is a pound). I’ve got some more thoughts on how to analyse the numbers (and the data behind the numbers) to extract some deeper information , and I’ll share those in a later post.

Excel Template

Here’s a sneaky one to watch for. After just announcing that my “early discount announcement” list was discountinued, and updating the page to remove the subscription form, I had someone immediately join the list.

I did some digging around, found their referrer, and they’d gone to Google’s cache of the site.

Naughty person.

So, if ever you need to make sure no-one can join a list, download something, take advantage of an offer etc, because they were didn’t react quick enough to your emails or blog posts, make sure you check the cache and disable the offer from that as well.

[James - that was clever, so I'll let you off, you naughty boy!]

A customer emailed me recently to say that someone (he says his host, but admits it might have been him, by accident) had deleted the backups from his server in order to save space. Fortunately, there was nothing wrong with his site(s), just that he was left with no backup to restore in case of future problems.

Realising that it’s a bit of a risk having no backups, he wisely went on to purchase the Cpanel Auto Domain Backup script that I sell. Which means that not only will he have backups made overnight, but he’ll have them both within Cpanel and also FTPed to another location. Ideally this will be a different physical location, so if his host server farm goes up in flames, his backups are safe somewhere else. Don’t laugh – similar things have happened to me.

Are you exposed to a similar risk? If so, take a moment to review the backup software.

I posted this on the Warrior Forum last week during a spare 5 minutes with internet access, whilst away on holiday, and thought I’d share it with you as well.

It’s easy in this IM business to be busy. Busy creating products. Busy writing articles. Busy reading email. Busy doing research. Busy writing software. etc etc

But one thing that I think many of us might not be busy doing is “thinking”.

I’m on holiday this week. I’ve got some web-access for limited stuff like checking my personal email, checking support tickets, etc, but I’m not “working” as such. Heck, I don’t even have handy the logins for my sites’ cpanel/FTP access, so I can’t really do much.

But my brain has been working. Whilst I’ve been playing with my son and nephew, dining outside in the first bit of really nice weather I’ve had whilst off work this year, walking in the park, vegging in front of the TV in the evening, getting a bit more sleep, etc, my brain has been chewing things over.

And it’s taken one simple idea that I’ve had on the backburner, and fleshed it out. I’ve now got a good, workable, and more importantly – easy to implement – outline of how a new service will work.

I’m sure if I’d been “busy” this week, I won’t have had that outline come to mind quite to quickly, effortlessly, or in as workable a design.

Remember to build some time-out into your schedule!

Some ideas:
* Play – REALLY play – with your family (young or old)
* Get back to nature for a while
* Go for longs walks round the neighbourhood
* Explore new places or try new things
* Sit in the garden
* Grab a coffee in a outside cafe and watch the world go buy

Are backing up your data? All of it?

If not, take some time out to make sure you are.

I’ve finally knocked up a solution where I can simply log into a central web-based control panel, add the details of a new domain, and it automatically gets backed up daily. The ZIP file is also backed up to my PC (to one hard-drive).

I have PC backup software running which then backs-up everything in that folder to my second hard-drive.

Trust me. Take precautions. Don’t wait till something goes wrong.