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Rethink Your Life: Options for Scaling Back, Downshifting, and Relocating
I was talking to prospective client “Sarah” about her expectations for first-year earnings as an entrepreneur. She told me, “Well, at a minimum, I must earn at least $350,000 a year. I live in New York and it is an expensive place. And although I am not married yet and don’t have kids, when I do, I will want to take time off to be with them. Schools can be sketchy in certain parts of town, so I need to live in a good neighborhood. And that is expensive.”
In the meantime, she was totally unsure what kind of business she wanted to start. And the slightest suggestion of taking one concrete step toward setting up a business set her on edge. “I know you think two weeks is a long time to register my domain name, but I am really busy at work, and guests are coming in this weekend . . .”
“Have you considered selling crack?” I said.
Of course I didn’t say this. But I sure thought it, as I was desperately trying to work with her expectations and be realistic at the same time.
Hope for the Best, Plan for the Worst
I may incur the wrath of Internet millionaires everywhere who started businesses in their pajamas and in two months were pulling in six figures.
But I believe that although all of us are capable of doing great things and kicking sales through the roof and creating a killer app and writing a bestselling book, most of us won’t do it. The law of averages says that not everyone will have raging success their first year.
This is not because you aren’t smart or hardworking or even because you have a bad business idea. It just means that sometimes things are harder or take longer than you think. And as my husband and I learned in 2008, market conditions can turn a good situation into a very bad one in the blink of an eye.
Even the Most Likely to Succeed Benefit from Scaling Back
By contrast with the “slightly optimistic” Sarah, my client Carmen, who was getting ready to launch full-time into New Demographic, a diversity consulting firm, said: “I think I am selling myself short by only planning on matching my salary the first year. Instead of trying to match what I currently make, why don’t I try to triple it? Would the process really be that much different?”
In Carmen’s case, she had a very popular blog and podcast that she had been diligently building on the side of her “day job” for three years. She had spoken at many conferences. She had prominent mainstream press coverage in CNN, USA Today, and The New York Times. And when I asked her to do something, she would almost always double the result in half the time. She would shoot for getting a $5,000 fee and get $10,000.
In her case, I encouraged her to go for it and make a plan based on an annual target of triple her current salary, but to have a backup if she fell short. Even if you are a go-getter with a great track record like my client Carmen, it makes sense to hope for the best and plan for the worst. Starting a new business is a unique opportunity to question all of your assumptions about your life.
• Do you really need a car?
• Is private school absolutely necessary for your kids?
• Are weekly manicures a necessity?
• Do you have to go on an extended tropical vacation each year?
• Do you have to pay for your kids’ entire college tuition?
Do You Really Need a Big House in the City?
It is easy to think that the place you live is a nonnegotiable thing. What you don’t consider is that the reason we tend to gather in large, expensive metropolises is for our jobs. Traditional jobs. Jobs that require us to be in a chair in an office during the day, in which case we need to live somewhere close enough that the commute won’t kill us.
So if you are leaving behind the idea of a job, can you at least entertain the thought of scaling back some necessities? Here are some reasons:
• The location you think you must live in may change dramatically once you are doing work you love. No one was more surprised than I when I moved from the San Francisco Bay Area to Mesa, Arizona. I was a fourth-generation Californian with a deep love for my “City by the Bay” and all of its wonder: great food, spectacular hiking trails, and a wonderful, diverse, and open culture. Did it take awhile to get used to realizing that Taco Bell is the nearest thing to authentic Mexican cuisine? Of course it did. But the reality is, my life is great because I am doing work I love, am married to a man I adore, and I only have to work about a quarter of the time I would if I lived in the Bay Area.
• Your need for expensive toys or vacations is often correlated with your level of loathing for your job. When you can’t stand your daily working existence, your need to escape rises dramatically. Often, you think you must indulge in luxurious vacations with lavish food, endless tropical drinks, and extreme extracurricular activities in exotic locations. You reason, “I must make this one week the absolute antithesis of my daily life the other fifty-one weeks of the year.” The problem is, at about day three you begin to dread the return home, and your frantic need to enjoy every second can lead to disappointment. By contrast, when your everyday working life is pretty darn happy, a family Scrabble night can provide as much emotional connection, fun, and stress relief as a week-long stint in Jamaica. Minus the sun damage.
• Focusing on the quality of your close relationships is the fastest way to increase overall happiness. The Beatles were right: money can’t buy you love. Our scarcest commodity these days is time to spend with close family and friends. When you reduce expenses or a huge home that takes all weekend to clean, you free up time to hang out with your friends and family. It makes me sad to think of the typical evening scene for many “corporate employee” working families these days: if they happen to hang out in the same room, Mom is on her laptop checking e-mail, Dad is working on a presentation, and Sister is texting her friend on her cell phone while Brother is playing video games on the Xbox.
• Creating a slow ramp-up plan will ease the pressure to produce high sales results immediately in your new business. Your dreams may include buying a nice new home or living in a favorite city, and there is absolutely nothing wrong with that. Our family plans include a custom-built ecological home in Sedona, Arizona, which isn’t cheap. But until we are ready to handle that financial responsibility, my husband and I have manageable expenses and can grow our businesses at a reasonable pace. If you scale back your life while you ramp up your business, you will have more time and savings to experiment and fail, build relationships with new clients, and work the bugs out of your products or services.
Here are three questions to ask yourself to see if some of your “big dreams” are driven by true needs or “social self ” expectations based on losing face:
• Am I worried about this change because of how it would feel to me on a day-to-day basis, or what others would think about me?
• Where does this belief come from?
• What do I truly crave?
Don’t Take My Word for It
I made the choice to move from a very expensive urban area that I loved to a less ideal location, but one that allowed me to have a tremendous quality of life.
I think the best way to get a feel for what is really involved in scaling back, downshifting, and/or relocating is to hear directly from people who have done it. The three entrepreneurs featured here took specific steps to design a business that fit with their life plan.
The Ultimate in Scaling Back: Zen Habits
Leo Babauta is a smart and gentle man who runs the very popular blog Zen Habits. Up until a couple of years ago, he was an overworked and out-of-shape father of six, a smoker, stressed, and in debt over his ears. I interviewed him about his own journey simplifying his life.
You have shared a lot about your personal journey to simplify your life and strengthen your financial practices on your blog, Zen Habits. Where did it all begin?
My journey really began in November 2005, when I decided to finally quit smoking, after numerous attempts and failures. I was probably fifty pounds overweight, with no time for exercise, and was eating very unhealthily. I was deep into debt and was racking up more debt all the time. None of my dreams were becoming realized and I was constantly stressed, disorganized, and depressed.
I made a promise to my daughter and my wife that this time I would quit smoking for good. I was fully committed, and so I did a ton of researching into changing your habits. The things I learned about changing habits—things like public accountability, not allowing any exceptions, finding replacement habits, learning to identify your triggers, and especially the power of positive thinking—I decided to try to apply to exercise. I started running as a way to burn off stress, now that I wasn’t smoking. And I applied those same techniques I learned while quitting smoking to my running. And I was successful!
It was a revelation to me. Soon I started learning more about changing habits, and started applying these techniques, one by one, to new habits. I started eating healthier. I started waking early. I simplified my life, became organized, got productive, started eliminating my debt, became a vegetarian, and then tackled a marathon. There seemed to be no end to what I could do, with positive thinking and some simple techniques.
What are the most important things you did to get control of your finances and simplify your life?
Simply to identify what’s essential, and then eliminate as much as possible everything that isn’t essential. When you want to reduce your spending, you need to figure out what your needs are, and then stop spending on everything else. That, of course, also requires a change of habits, using the same techniques I’d learned through quitting smoking and becoming a runner.
If people are overwhelmed with too much to do, where should they begin?
They should always start with one habit change at a time. Tackling too many things at once is a good way to fail. If you do one thing at a time, you can focus your entire being into that one change, and you make it more likely that you’ll succeed. I think the best way to start is through exercise—it reduces stress, gets you into better shape, gives you a good overall feeling, and teaches you the power of a positive attitude. From there, you might start to simplify your life, reduce clutter, and then reduce debt.
What advice would you give corporate employees with high personal overhead who are considering starting a business?
If your personal expenses are going to take away from what you can spend on your business, you need to cut back to the essentials. Learn to control your impulse spending—create a spending plan and stick to it. Learn to do things that are fun but don’t cost a lot of money. Focus your energies on creating the business rather than on shopping or eating out or entertainment. Learn to relax without spending money, through simplifying your life and through exercise and meditation or doing things you love.
How did you make the transition from corporate employee to entrepreneur? How did your simplification efforts help this process?
I started by working on my business in my spare time. I had to really identify the essential tasks and keep myself focused. I also always kept my mission in mind: to liberate myself from my day job. And that mission became central to everything I did, and kept me focused if I started to get distracted. Eventually I made enough income from my business to quit my day job.
Simplification efforts were key, as I had a lot of regular work on top of the work of starting a new business, so I could easily become overwhelmed. I had to keep things as simple and as focused as possible if I wanted to do both jobs and still have time for my family.
What are some of the biggest myths about simplifying your life and getting out of debt?
The biggest myth is that you have to live like some kind of hermit, and that it’s hard and unenjoyable. Simplifying is really about doing the things you love, and getting rid of all the clutter in your life. Getting out of debt is just another facet of that process—cutting back on extraneous spending while still doing the things you love.
Another myth is that you have to try to do everything at once, in a major life overhaul. That’s not how I did it—I did one little change at a time, until it became a regular part of my life. Done this way, you can make major changes over time without realizing it, because all you did was one little step at a time.
How to Evaluate Alternative Places to Live
If going into an office is not required to do your work, where would you choose to live? Would a nice suburb in Kansas compensate for the funkiness of San Francisco or the nightlife of New York? Could you give up the social network of Atlanta for the small-town charm of Americus? Would Leeds be as good as London? Would the sleepy beach town of Recife be better than Rio?
Interview with Matthew Scott, Entrepreneur and Business Coach
What was your concern about staying where you were (San Diego) to start your own business?
My first concern of starting my business in San Diego was the cost of living. Like many other entrepreneur start-ups, I did not have a new client base that matched my salary from my corporate position I was leaving. We began the search for lower cost of living places on the West Coast providing a great or even improved quality and cost of living.
What were the criteria that you and your wife developed for good places to live?
• Climate
• Most affordable West Coast locations
• Quality of public school system
• Diversity of outdoor environments and activities
• Environmental conscience
• Diversity tolerance
• Urban city usage. Would we actually make our large urban city a place that we spend time or would we never venture into the big city?
• Entrepreneur friendly? No sales tax, economic incentives . . .
• Home resale valuation
• Major airport within thirty minutes
How did you develop the criteria?
We moved extensively during my professional career. To be exact, nine moves in the past twenty years. Some of our criteria were developed as a result of living in each region of the country.
How did you go about your research? Did you visit each place?
First, we decided upon the region (West Coast) where we wanted to live based on the best all-around ranking of criteria I mentioned earlier. We reviewed Money magazine and Outside magazine listings. We also read books that provided a great listing of potential towns or cities based on one’s preferences.
After we conducted our research, we narrowed our choice to two states. From those two states we plotted a thirty-mile radius around the desired metro cities and then began to conduct online research on various towns and cities. After this research, my wife and I took a one-week vacation and flew to both areas. We contacted various real estate agents and let them provide tour guides to answer our questions.
After we decided upon the exact area we wanted to live, we intensified our search for a home. In our case, we took a four-day vacation and ultimately found the home we were looking for in the town we wanted to live.
How did you ultimately decide upon Portland?
It met all of our criteria offering the best in quality of life and cost of living. We moved from a more expensive area so we took advantage of the equity and appreciation and purchased a much bigger home at a tremendous cost savings compared to what it would have cost in San Diego.
Also, Portland turned out to be the place my wife and I both felt was collectively our dream city with our dream home aligned with our desired lifestyle in an area very supportive of entrepreneurs.
Blowing Up the Job Model Entirely: Going Location-Independent
If you consider Leo and Matthew’s experiences radical, imagine throwing out all notions of home base and taking your work on the road.
This is what Lea and Jonathan Woodward did when they left the stability of corporate jobs in London and set off for a “location-independent” lifestyle. Working from anywhere with an Internet connection, they have lived and worked in Panama, Buenos Aires, Toronto, the West Indies, Dubai, Thailand, Hong Kong, and South Africa. They share their lessons in two books, X Marks the Spot: The Indispensable Guide to Living and Working Wherever You Want, and Creating a Location-Independent Business.
What was your work situation before you decided to go out on your own?
Both of our work backgrounds were firmly rooted in the corporate world; I was a management consultant and Jonathan was an in-house graphic designer.
I always knew I didn’t want to end up as a management consultant but in the absence of knowing what else to do, not having a “ big idea” for my own business, and getting trapped into that whole “big salary, couldn’t possibly live without it” mindset, I didn’t take the plunge until a life-changing event forced me to rethink everything. Jonathan has always dreamed of being a professional illustrator but likewise got caught up in the cycle of earning a salary and not going after his dreams.
When my mum died we both took leaves of absence, went traveling together and I hit upon the idea of becoming a personal trainer upon my return. So I duly qualified, set up my own business and was slowly growing it when Jonathan was let go from his job.
What led you to believe it was possible to “work from anywhere”?
When we first had the idea to do this, it was right after Jonathan had been laid off from his job and my business was still pretty new and not generating enough of an income to support us. Jonathan had never really thought of going freelance or running his own business, but we agreed that we no longer wanted to be at the mercy of an employer and we’d rather make our own decisions and be in control of our own future.
Having decided that, I was convinced that we didn’t need to be paying such high prices for the lifestyle we were living in the UK and was very taken with the idea that if we were living somewhere with a far lower cost of living, then it wouldn’t put so much pressure on our business to make much money. Once I’d convinced Jonathan that this was a great idea, we began to research where to go and how we could do it.
How did you simplify your life in order to be on the road so much?
We sold our apartment, got rid of a lot of our things, and then put the rest into as small a storage room as we could manage. We did come back to the UK after the first six months on the road and culled all our things again and moved into a smaller storage room; that passage of time helped remove some of the emotional ties to things we just didn’t need anymore and couldn’t see needing in our future.
After our first few destinations, we also realized that we rarely used half of the clothes or items we carried with us, so cut down that to a minimum too; we now travel as light as possible (often with no more than 30 kg between us). Our mindset these days is very much one of minimalism—if we need something, we can always buy it, but when we do, we ask ourselves how much we’re likely to use it again in the future and whether we can live without it.
How do you choose where to live/work from?
At first it was determined largely by the weather and costs of living; but because the places we’ve lived in so far have been quite varied, we learn each time about what we do and don’t like and therefore have a better idea about what to look for when we’re choosing where to go next time.
From a practical perspective, there are certain things we always consider as a matter of course and priority:
• Internet access (vital for running our business)
• Language (we started off in a country where we didn’t speak any of the language; we won’t make that mistake again!)
• Cost of living (ideally we prefer it to be lower than we’d pay in the UK)
• Weather
• Visas and permits
How long do you plan on working this way? Ever considering “settling down”?
At the moment, we have no desire to stop what we’re doing and change our lifestyle to settle down. We’ve thought about where we might settle but a big problem is that we don’t know where we want to settle! Plus we both get bored of our surroundings easily and the nomadic lifestyle suits us way more than we thought it would.
So our standard answer is this: we’ll stop when we feel like it and when we no longer enjoy it!
How has the financial side of this lifestyle been? Any lessons?
Plenty of lessons! Some of them are the usual business start-up lessons everyone probably learns; things like the importance of cash flow, learning to focus on profit, not just income, and how to set the right key performance indicators (KPIs) to measure your business performance.
Our lifestyle, however, has added some additional challenges such as having to manage the cash flow so we have the cash to pay three months’ rent in advance all in one go, factoring in flight costs and the additional “setup” costs whenever you move to a new place.
Given that our initial objective of leading this kind of lifestyle was to help minimize outgoings, maintain the same quality of lifestyle and take the pressure off our relatively new business, I’d say we’ve largely achieved that; plus the freedom we feel to be able to move around to different countries (e.g. when the economy is challenged in one place or when our pipeline is slower and we need to live more cheaply) is a major benefit for us.
Tips for Evaluating the Location-Independent Lifestyle
Here are a few of their tips if you are considering a nomadic lifestyle:
1. Have you already done some traveling in your life and enjoyed it?
2. Do you yearn for a different culture/environment after staying in one place for too long?
3. Do you like challenging yourself?
4. Do you consider yourself to be flexible and adaptable?
5. Do you speak one or more foreign languages?
6. Do you have dependents to support or friends and family who rely on you?
7. Do you have the finances to support this lifestyle for at least six months without earning anything else?
8. Do you like your creature comforts and having your “things” around you?
9. Do you dislike constant change and always like to know where you’re going to be next week?
10. Do you like routines and strict schedules?
You Can Always Stay Put
Starting your own business certainly does not mean that you have to give up your current life and move to the spare bedroom of your parents’ home. But I hope that the entrepreneurs profiled here have stimulated your thinking a little bit, and given you some ideas for how to clean out, scale back, and perhaps relocate so that you have the space, time, and money required to start up your business without pressure. As my go-to Web consultant Paul Hyatt of Open Range Inc. told me after moving from San Diego, California, to Durango, Colorado, and finally settling in Wichita, Kansas:
Decide your priorities, and where you live follows that. Now, some people believe where they live is their top priority. Obviously they would not consider moving! For the rest of us, I suggest that you do not get “boxed in” by your physical location. Do your homework before you move, make several visits. To get a jump-start on new friendships and relationships, visit churches, schools, grocery stores, parks (whatever activities you do in your current location), particularly as you narrow your list. Try to spend at least one extended visit in the worst time of the year weather-wise if you are going into an unfamiliar environment in that regard.
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