Someone recently asked me "So why do you want to start a business?" Simple question. My simple answer was "to make money". That doesn't quite cover it though. Everyone who starts a business does it to make money in some part. But there is more to it for me, like what for and how much?
I want to start a business to make the following amount of money for the following reasons. I wrote this down in a notebook 2 years ago, following one of the 7 habits "Begin with the end in mind"
- Enough money in parent's bank account so that they do not have to think about money for the rest of their life/retirement. So for next 30 years let's say, they'll be in their 90's. I don't want them to think about the every day stuff like utility bills, property taxes, health insurance (stuff that medicare doesn't cover), home and car maintenance/repair. I also don't want to them to think twice about other bigger things like travel. I am estimating at $3k/month or $36K per year or 360K for 10 years and $1,080,000 for 30 years. This is not counting their current savings. I would really really like to put that 1.08 million dollars in parents bank account as soon as possible. Like in the next couple years or at least next 5 years. Because I want to maximize the number of years of life they have to be money worry free. Why? because they deserve it and that's just a fact (also they have never asked nor do they expect anything. They don't know I'm thinking this).
- I would like to have funds set aside for R&C's education, college or whatever they decide to do. Estimating $50k/year --> $200k for 4 years * 2 = $400k for education.
- I would also like to set aside travel funds to explore the world with family every summer. I want to expose R&C to different people, places, and perspectives. But this is also just for fun and because life is short and I miss my exploring days. So for numbers, let's say living in different places for 4 to 6 weeks every year. I imagine we can do this for the next 15 years before the kids move out and on with their own lives. So flights and accommodations will be variable but let's say $4000 for flights for 4 people and $200/day for living/food * 45 days = $9000. So $13k per year. For 15 years that $195,000 for family travel.
- Financial independence so I can spend my time pursuing teaching and learning goals in a way that is independent of money. That's $2.25M of living expenses for remaining 45 years of life at estimated average annual expense rate.
So that rounds out to $4M. That's the number that's been in my head. I don't consider myself a financially ambitious person. I don't want to make 100M or even 10M. 4 would do. And seemed doable, at the time I wrote down these numbers 2 years ago (based on the Indiehacker's interviews I had been consuming).
There is a bit of problem with lofty goals like these. You may think 'oh this person wants to make a million dollars to give to their parents'. That seems like a good reason. It would be hard for someone else to fault me for such a goal. But I think I can! As in
That's great Bhumi but you haven't even made a product that does $1000 MRR yet, like come on!
[shaking myself by my own shoulders, if that's possible]
I have been carrying this in my mind for 2 years now. I rule out projects if they don't have the potential for $4M in revenue in some way. I do working backwards calculations like "If I want to sell a business for $4M, at 4x multiple I would need to make a product that can grow to $500,000 in annuel revenue. That's 42,000 MRR..." I have this index card pinned near my desk.
In reality, you can't start at the end, you have to start at the beginning. This idea of keeping the end in mind sounds good in theory but it hasn't been effective for me. So it's time to put this idea out of mind.
As I imagine doing that, a giant weight seems to be lifting from my shoulders (a weight that no one put there but me). If I'm honest I still want to make all of the above things happen, especially the first one. But I will allow myself to put that aside for now and focus on action and learning.
A few months ago I had a chat with a founder who actually runs a $1M+ ARR SaaS. I asked him a bunch of questions and at the end he said this "you seem like a very thoughtful person, a planner. And my advice to you would be 'just get on with it!'" Can't disagree there.
My only requirement for projects then is longevity/compounding. Is this something I can do for a long time sustainability? And maybe it's useful to others. My hope for my work always is that it's useful to others. But maybe that's too much pressure too. Just do work that I can keep doing for a long time and that's it for now (and keep shipping things even if I can't figure how I'd make money from them).
Whew. Feels good to get that out of head and on paper. Though it is painful at the same time.