How does everyone think about opportunity cost on either continuing on with a regular job or working on your own business?
How does everyone think about opportunity cost on either continuing on with a regular job or working on your own business? I am looking at a $200k reduction in my consulting revenue by working on this side product half of the time. One side of me is thinking if I just continue on with my consulting, I can just slow roll it to retirement in about 10 years. The other side of me says that I really like making my own product and I way more enjoy doing that. The outlook for the product then has some lofty goals since it should ideally replace the lost income. I suppose I can say that I enjoy this more and I am willing to make less money. This has been one of the internal struggles I have had lately about continuing on with my own product.
What about everyone else? How do you guys think about this and what have helped or inspired you?
Some people value money. Other people value time. I used to frame opportunity cost in terms of money. Once I started framing it in terms of time, it became a no brainer that I should maximize the time I spend doing things I love and minimize the time doing everything else. So, if I were you, and I had the luxury to forego surplus income in exchange for more time to do things I want to do, I'd do it in a heartbeat.
Totally this. If you dont NEED the lost money, Time is the real cost.
I like this thought. I have been trained basically since I was a teenager to go get a good job and work hard all your life until you retire. I think I have to do some untraining of that and think in a way where I am doing what makes me most happy given that I can still support myself financially.
I know the feeling. Took me over a decade to untrain myself and it is still not completely out of my system.
I’ve recently made a similar decision (going from consulting into full-time employment in my case) that I’m very happy with so far. It was not easy! Feel free to email me if you’d like to discuss privately.
I think one frame of looking at this is chances of regret. Not saying the consulting gig is bad or anything, but if there is a chance in 10 years you will regret not going with the side project, I would do the side project 100%.
Selling services is my fav way to bootstrap something new!
One of the beautiful things about consulting reveue is that time is just one factor you have control over. You can also control pricing, packaging, who your clients are, and the value of the services you offer.
When I started shifting away from consulting services is figured out how to earn more for my time. But instead of using that "more" to make more money, I used it to reduce my time allocation to clients and point that time towards the things that would pay more durably but also more slowly.
Quoth the @patio11: charge more!
If im understanding you correctly, you are saying you shifted away from consulting and used that time to build something that pays the same in a more durable way?
First, I increased my consulting rates and made them more efficient.
Then I reduced the amount of hours I worked (without sacrificing income).
Then I used those hours to build my businesses where assets can continue to be sold over time (instead of selling the time itself).
Ah gotcha. That makes sense. I suppose I have been raising my rates over the last 12 months. I guess I am also now use to that income or having that income as the standard and want to keep that level. But I get what you are saying. Maybe im a little unrealistic here.
Then raise them again, but this time focus on reclaiming time instead of increasing income :)
Good point =)
I think less about opportunity cost and frame it more in terms of runway.
If I think I can get it running to where it would likely replace my current income or beat it within the runway/backup funds that I have in reserve, I leap.
I admittedly am more comfortable with risk than most people. So I've had to learn by (expensive) experience how to measure my own estimates against reality. My general rule (as an optimist) when convincing myself if it's a reasonable risk, is to first estimate what I think it could be in a year if it is successful...then cut that down by half or two thirds and ask if I can make that work inside my reserves.
I am an optimist also. I have runway to last for a while so I am good on that front. Another thing I think of is that when I project out the revenue and it is hard to say what it really would be but I think it is conservative. It would take me about 3 years to get the revenue stream to where it would equal the current loss of revenue from the current consulting.
There is a big risk where this could turn into nothing. Hopefully, I can figure that out in 6 months or faster.
I suppose im just looking for some encouragement =)
Another option might be to outsource that risk a little. Could be you can pay someone else to do the building you intend. That's not always an option but it's a good exercise to think through.
Thinking out how you might give instruction detailed enough for someone to else to build from is often a good way to see where you can make trade-offs or cut features that could get you to market faster and cheaper. Outsourcing when your day job earnings are sizable could cost considerably less per hour doing it all yourself. Doing that also has led me to find other people's products that can help me along the way. Landing pages, some marketing, even some API integrations are all things that can be leveraged cheaply and save you weeks depending on your skill set.
Of course, that's a tough change of mindset in a lot of cases so it might not be time for that.
That is a good idea. I think initially it makes sense for me to prototype something out as there is a lot of trial and error on what I want to do (im making a slack bot that helps people troubleshoot infrastructure, https://managedkube.com). I am going to take this advice and see what I can outsource and what I actually have to do. We are doing a lot of customer interviews and that takes up a lot of time. Wont be able to outsource that but definitely the tech stuff. I come from a tech background and sometime it is hard for me to give up control of the code =).
killer concept
Thanks