Why I Gave Up A Million Dollar Consultancy
Early last May, from a hotel room in the outskirts of Omaha, Nebraska, I decided that 2012 would be the year I severed my relationship between being somewhere and doing something with my income.
At the time, I was the CEO of a ten-person consultancy. We were thriving, and it seemed like the world was my oyster. But, my God, I was miserable. What happened in that hotel room was a confirmation of suspicions I’d been thinking over for a few months. The idea that I was living life around my company, rather than the inverse.
A few people I tremendously respect, notably Patrick McKenzie and Nathan Barry, just published their annual report for 2012. This post is my report for the year, but it’s also a reflection on why I decided to go down this path. I hope reading this will help you determine whether you want to go down the path of products.
Why I Gave Up A $1mm+ Consultancy
I think consulting is a fantastic means to an end. If you want quick cash (and a lot of it), booking yourself and a team of people with client work is a great way to get there. Granted, I made lots, and lots, and lots of mistakes along the way (as an aside, my Consultancy Masterclass workshop is is pretty much: “how to avoid the same mistakes Brennan (and Obie Fernandez) made.”)
But consulting can be draining, and once you stop working the money dries up.
But Brennan, that’s the point of having employees, right? I thought so, but what I learned through a dire phone call while in that Omaha hotel room was that morale is really important, and galavanting around the country and the world (granted, most of my travel was for business) was really starting to affect the team back home. Project quality started slipping. “I’m here to work for/with Brennan, and he’s never here” was what my Number #2 was reporting back. Today, I know how I could have managed that — I know a lot of consultancy owners who travel a lot, and their companies don’t suffer.
But at the time, I got this really bad feeling. While I wasn’t exchanging my time for a invoiceable hour any longer, I was still largely beholden to being in the office and being there during normal working hours.
And this isn’t why I settled on entrepreneurship.
Deciding To Go Full Steam On Products
The first morning I woke up to “payment received” notifications was a pivotal moment of my life. Sure, a $12 subscription payment pales in comparison to five-figure wire transfers, the sort of payment notifications I was used to. But the thing was, these payments came without needing to sit in on conference calls. Someone who I’ve never even talked to was paying me.
A little context first: About a year and a half ago, I signed up for Amy Hoy’s 30×500 Product Launch class. I’d been dabbling with an “AirBnB for X” idea — which was really me wanting to play with a few new Ruby libraries I hadn’t yet played with — that was going nowhere. Creating a working app was one thing, I did that for a living. But how do I launch this sucker?
All my hopes and dreams for my startup were smashed against the rocks the first week into Amy’s class. It was, by far, some of the best money I’ve ever spent if only because I ended up aborting a really bad idea that I was investing heavy amounts of time into. But this class also permanently altered my perspective. I learned that businesses will spend money on killing pain or making more money. I only had to look at my own consultancy’s monthly expense report to realize that: $100 over to Harvest, another $100 to Pivotal Tracker, a little more than $100 to GitHub, and the list went on.
In December of 2011, from the corner office in my consulting company, I started writing Planscope. I’d done my homework — I went well beyond “wouldn’t it be cool if this existed for my company”, and was 100% confident when writing my first line of code that it’d be successful. I’d put my ear to the ground and listened to what people who build projects for clients struggled with, and flipped their pain points around.
So after some things happened at the consultancy that allowed me a clear break, I hired my replacement and went full-time on Planscope.
SaaS Takes Time
I launched Planscope, and realized “Oh wow, a few hundred dollars a month — even at a 20% growth rate — is pretty much nothing.” I’m finally almost at the point where I could shut down everything but Planscope and pay my monthly bills, but I have a penchant for expensive food (and being the father of two girls is more expensive than I originally thought!)
But after burning through the savings I had built up running the consultancy (saving was never my strong point), I had to make more money if I wanted to live the lifestyle I was accustomed to. I knew I could get back involved with my company and make some quick cash consulting, but I’d have to write that off as dead time. It wouldn’t do anything to help Planscope grow, except of course for being able to eat my own dogfood (Planscope is a project management tool for consultants.)
So the question was:
- Could I suddently grow Planscope’s revenue to pay for the life I want to live?
- Or could I do something else (that wasn’t consulting) that would make me quick-ish money and help grow Planscope?
I ended up taking the middle road: I took on a part time, multi-month consulting engagement, and decided to build another product.
Amy Hoy got me to reflect on my customer base and see what problems I could solve with the knowledge I had. Think of it as scalable consulting. I do it once (give advice), and can resell this information ad infinitum.
This led me back down the same path that I took to build Planscope: digging up the pains that businesses have. But instead of writing code and building software that solves problems, I’d solve problems through information.
So I wrote a book, which had much higher sales than I ever imagined were possible (aren’t authors all starving? Oh right, I’m self published — no royalties!) But what really surprised me was how my book enabled Planscope to grow faster. People read my book, liked my philosophy, and realized my project management tool was inline with that philosophy. It’s a lot easier to read a book than it is to switch up project management software.
The book was launched, and people started immediately asking for my advice. Instead of maintaining a few dozen unrelated email threads, I setup a weekly newsletter (which has now grown to over 3,000 subscribers) to whom I’d push free advice to each Tuesday morning. Outside of the altruistic side-effects of a free newsletter, I’m actually performing high-touch sales on thousands of people at once. I’m cultivating an audience who trusts my opinion and has received a lot of value from me in the past. This makes, oh, selling a $1,199 workshop exponentially easier than if I were to run a paid AdWords campaign for the same workshop, which I daresay would be a fool’s error.
But that’s exactly what I’ve done. A select group of my subscribers are at the point where they want to stop playing guess-and-check and really start to scale up their consulting business. In turn, I’ve reinvested this income into my life and my businesses.
Why do I publicly state my income? First, I don’t think I have an unusually higher competitive advantage than anyone else. I just happen to be good at executing, and ship products that people want to buy — so I’m OK with transparency. Second, my blog is my diary. This is an archive of sorts, and I hope this time next year I’m able to look at this milestone and see even more growth. Lastly, if me circa 2011 had seen that real profits could be made this way, I wouldn’t have waited so long. I want you to realize that if you’re good at creating things that solve problem’s for other people, you can succeed.
If it’s not obvious yet, all of my product’s are cross-sellable. There’s a high likelihood that a Planscope customer could also buy my book on freelancing rates. This allows me to build up a mega audience in this niche and continuously provide value. Anyone involved in SaaS products understands lifetime value — I’m just factoring other product revenue into my lifetime value (LTV) calculation.
- Consulting: $128,000
- Planscope: $29,904
- Double Your Freelancing Rate: $33,024
- Consultancy Masterclass: $40,993
- The Blueprint (presales): $2,512
This doesn’t take into account my consultancy salary, especially through my tenure as the CEO (roughly until mid-summer 2012), but the total product income was $106,433 — and if you include the few consulting gigs I’ve taken to “play customer” for Planscope, that brings up the total to $234,433.
All in all, a very good year. Almost all of my product’s have fairly large margins (e.g. I’ve only done a small bit of paid advertising and I haven’t hired anyone but myself,) so I haven’t listed out any expenses.
A Moment of Reflection
I’ve successfully made the transition to largely remove the equation of “I will work X and get paid $Y” from my life. Truthfully, this decision was made when I decided to go from being a solo freelancer to a consultancy owner. But I was still tied to a 9-5 working schedule, even while at the top. While I’m still a good amount of hours a week (it takes to write a book, develop/design/market/support a SaaS product, and so on,) I now let life come first.
The only memories I have of my 4 year old daughter’s first school performance, her first art show, her first time peddling a bicycle are captured on my wife’s iPhone. I wasn’t there. I was too busy working. I know there’s a high correlation between old age and wishing things had be done differently… I’m in my late 20s, but I already realize the regret in missing out on my children’s lives is going to haunt me forever.
But no more.
If you’re like I was a year ago and want to take the path of building a business around your life instead of a life around your business, I hope my story will help or inspire you to stay the course. There’s absolutely nothing wrong with starting or joining a world-changing startup, or a world-class consulting company, and giving it your complete attention — it’s just not for me. I know my priorities, and my goal going into his has been to point my working career toward that end.
Follow along with the story on Twitter at @brennandunn – here’s to 2013!
What would raising your rates do for you this year?
A 50% increase in rates will bring you $ more this year (or 5 X)
A 100% increase in rates will bring you $ more this year (or 12 X)
A 200% increase in rates will bring you $ more this year (or 52 X)