Businesses Should Have 3 Months of Savings? It’s Not as Simple As You Think

The COVID-19 outbreak has given rise to memes the way you’d expect from the year in its name. Most of them probably die quickly on the vine, but some have shaped up to make their way into my feed over and over.

And of those a lot are poignant and hilarious.  Some on the other hand, induce a lot of facepalm in me when I read them:

• The Venice canals have magically healed themselves, so maybe there’s a silver lining to this whole thing.
• Grocery workers should have higher salaries because we’re collectively grateful to them at the moment.
• The virus severity is a left-wing conspiracy to make Trump look bad (though I think that one seems to be subsiding).

But perhaps nothing brings palm to face harder than this one:

They tell us that families should save at least three months worth of expenses to cover for emergencies, but businesses lay people off and need bailouts after a week.

The relationship between meme and trope is often a tight one.  And this meme walks hand-in-hand with the “corporate fat cats vs honest folks” trope.

Remember this trope, and I’ll return to it to explain why I brought it up a little later.

My wife and I own a small business. It employs 4 salaried full timers and somewhere around 100 contractors who do varying amounts of part time work.

And, counter to the meme, we have banked enough expenses to survive (without layoffs) for three months.  But, if anything, this “of course you should have” attitude actually makes me hate the meme more, and, in this post, I want to explain why.

Painting with a Broad Brush: Not All Businesses are GigantiCorp

I want to elaborate a little about my business in particular, because the story of building this business is going to underscore a number of points I’ll make.

The business, Hit Subscribe, is a bootstrapped company. (Briefly: we’ve never taken investment capital or loans, and instead built the business exclusively on cash from sales.)  My wife and I founded it together, about three years ago, and did all of the work in it, initially.

Over the last three years, we’ve grown steadily, backfilling ourselves with contractor help and, eventually, full time employees. That brings us to the current state, with the worker situation that I’ve mentioned.

Remember the “corporate fat cat” trope? I mentioned that because the skeptics reading this are gearing up to object, “you’re not who I’m talking about — I mean Giganticorp!”

Well, fine, but two things.

• First, in that case, you should probably qualify exactly who you’re shaming in your meme.
• And second, the road to war chest doesn’t magically get easier as you grow.

To underscore why that is, I’m going to tell the story of growing the business and the fight to build a war chest.

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Employment Teaches You How Not to be a Free Agent: You Have Stuff to Unlearn

Recently, I was doing something that occupies a surprising amount of my time these days: using LinkedIn for lead gen.  This involves researching companies, connecting with people, and, occasionally, consuming LinkedIn.

It was in that latter capacity that I stumbled across this post, from Jonathan Stark.  I nearly spit out my coffee.

It’s funny, right?  But the thing is, it’s also true.

Seriously.  I could probably write an entire post about why telling prospects that you’re “passionate” is a bad idea, both from a positioning and a realpolitik perspective.  But that’s not what I want to talk about today.  At least, not entirely.

When I read this, an idea for a blog post snapped home in my mind.  It had been kind of rolling around, not fully formed.  But then I read this and the basic thesis struck me.

Learning to be a good employee is tantamount to learning to suck at being freelancer/business owner.

Of course, this isn’t exhaustively true.  Very basic qualities like competence, diligence, and “EQ” will serve you well anywhere you go.  But in many important ways, the instincts you develop while advancing as a corporate employee serve you absolutely terribly if you decide to go off on your own.

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Be a Freelance Web Developer? You’re Asking the Wrong Question

I get a lot of reader questions about freelancing.  People interested in freelance web development or freelance mobile development or what have you.  I applaud the desire to go free agent, and I think you should do it.

But I think you get a lot of bad advice about how to do it.  Bad advice at a philosophical level, that is.

Today I’m not answering a specific reader question, though.  Instead, I’m just going to talk about going freelance.

I did this years ago and have had a good run.  But I really wish I knew then what I know now.  Hopefully I can help you get to joy a lot quicker and in less roundabout fashion than I did.

And don’t worry.  I’ve stated that you’re asking the wrong question, so I will, eventually, get to what you’re probably wondering — what is the right question?

Freelance Web Development?  Here Are Some Tips (That Help Us Make Money Off You)!

If you google advice about freelancing as a developer and about freelance web development, specifically, you’ll probably find a lot of advice from a certain kind of site.  Fiverr, Upwork, and Toptal are all happy to help.  They’ll tell you how great it is, saying things like:

• Be your own boss!
• Have work-life balance.
• Choose your projects.

And they’ll offer you advice, like:

• Beef up your breadth and depth of tech stack knowledge to have the most opportunities.
• Build up your portfolio so that you can show it off.
• Create and promote your personal brand through a website, user groups, conferences, etc.
• Get your business affairs in order.

All of this is actually good advice for your immediate future.  Full stop.  This stuff will help you blast out of your salaried job and into the world of self employment — they’re right about that.

But here’s the rub.  All of these sites are providing advice to you on how to be a good product for them to sell.  Think of these the way you’d think of recruiters giving you job search advice.

They want you to do an excellent job with the next stage of your career and go exactly no further.  This makes sense, since they earn their revenue pairing freelancers with companies in need of short term labor.

Freelance Development is Basically Just Job Hopping

If this whole thing sounds familiar, it should.  It looks an awful like recruiters helping you from job to job as soon as you’re willing to jump.

The difference?

The world expects you to jump as a freelancer, but feigns shock when you do it as a salaried employee.  Freelancers jump — it’s what they do.

But make no mistake — the difference is only that you jump perhaps a little more often and that people expect it.

Do you want to know what I thought freelancing would be like when I started?  I’m actually chuckling a little as I type this.

I’d had some moonlighting gigs in the past where I did 5-10 hours per week of work in my spare time for someone.  So I just assumed that I’d find 4 app dev clients that wanted about 10 hours per week of work.

I’m not chuckling because this was or is a stupid thing to assume.  I’m chuckling in irony because of how much the world turns out not to work that way.

You get into freelancing assuming that you’ll have a bunch of clients and diversity of work, handling multiple projects at once.  But what you’ll wind up doing is taking sequential gigs with periods resembling job searches in between.

This is a Hamster Wheel

You’re going to need something more than this, eventually.

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