Categories
Life Small Business Work

Should You Give Up On Your Dream Job?

I think many parents do their kids a disservice when they encourage them to ‘pursue their passions’ or that they ‘can be anything, if they put their mind to it’. For 99% of the world this is fairytale advice for a brutally pragmatic world.

Once kids leave the protection of home, they have the same relentlessly boring bills as the rest of us. The gas, electric, water and phone companies don’t put your bills on hold while you pursue your dream of becoming a creative director at an advertising agency or fiction writer.

The trouble is, many kids are encouraged to pursue their dreams and end up trapped. They get to a point where the have to decide whether or not to abandon something they’ve believed in for years.

Here’s the trouble with pursuing your dreams:

  1. Most people have the same dreams, so the competition is fierce. What happens when supply (in this case labour supply) is high? Prices (e.g. wages) fall. While a select few might make it, most do not. Although Johnny Depp might make millions per movie, the median hourly wage for actors in America is just $20.
  2. Even if wages are fair, if the supply of labour in a given field is high companies will work staff to death. Don’t like it? There are dozens of other wannabes waiting to take your place. Video game developers find themselves in this predicament all the time.

People decide to abandon their dream job either because it doesn’t pay the bills or because it sucks up their entire life. For most, neither is a great way to live.

If you’re going to survive in this world you must find a job that pays decently, provides a good work-life balance and doesn’t come with the constant threat of redundancy. These kinds of jobs are usually highly skilled, appear boring and don’t attract a ton of interest.

I’m not suggesting you trade an ‘interesting’ career for a ‘boring’ career. Quite the opposite. Careers that are sold as ‘interesting’ – like advertising – can actually be quite disappointing in reality. Every industry has mundane tasks and BS politics. When there is an endless supply of 20-something year olds willing to do anything to enter an industry who do you think will be doing those mundane tasks?

In contrast, when you’re the only actuary within a 5 mile radius, you can be more picky about what you work on.

I used to take a lot of pictures. People often commented that I should get into photography professionally, and for a while I entertained the idea. I found it enjoyable and was reasonably good at it. Before making any irrational decisions, I conducted more research and discovered two things: 1) The top photographers earning a living from their craft are true masters. While my friends enjoyed my work, I was still far from being the crème of the photographer crop. 2) I noticed many top photographers also write books, teach courses, etc. Nobody gets into photography to teach. This means they’re doing this to supplement their income. If the top photographers can’t make a living strictly taking pictures, what hope is there for me? 3) Most professional photographers warn hobbiests that the business of photography is 50% sales, 25% administration and 25% actual photography. So if you truly love taking pictures, the business of photography might be wholly unsatisfying. Discovering all this was deflating. I felt like I found something I loved and was good at. But I was also realistic. I have bills to pay, mouths to feed and didn’t want to destroy a fun hobby. So I didn’t quit my day job.

I hate to be a downer but most people eventually realize that their dreams won’t come true. There are tons of charlatans willing to sell you a dream, but if these people could truly make dreams come true they wouldn’t be selling shitty courses. Everyone arrives at a point where they realize they can’t do what they really wanted. And whether you’re mid-career or just starting out, it’s never too late to have a backup plan.

But don’t take my word for it.


Below is a surgical breakdown of what happens to almost all rock bands, originally written by Steve Albini, the manager for Nirvana and Pixies:

There’s this band. They’re pretty ordinary, but they’re also pretty good, so they’ve attracted some attention. They’re signed to a moderate-sized “independent” label owned by a distribution company, and they have another two albums owed to the label.

They’re a little ambitious. They’d like to get signed by a major label so they can have some security—you know, get some good equipment, tour in a proper tour bus—nothing fancy, just a little reward for all the hard work.

To that end, they got a manager. He knows some of the label guys, and he can shop their next project to all the right people. He takes his cut, sure, but it’s only 15%, and if he can get them signed then it’s money well spent. Anyway, it doesn’t cost them anything if it doesn’t work. 15% of nothing isn’t much!

One day an A&R scout calls them, says he’s “been following them for a while now,” and when their manager mentioned them to him, it just “clicked.” Would they like to meet with him about the possibility of working out a deal with his label? Wow. Big Break time.

They meet the guy, and y’know what—he’s not what they expected from a label guy. He’s young and dresses pretty much like the band does. He knows all their favorite bands. He’s like one of them. He tells them he wants to go to bat for them, to try to get them everything they want. He says anything is possible with the right attitude. They conclude the evening by taking home a copy of a deal memo they wrote out and signed on the spot.

The A&R guy was full of great ideas, even talked about using a name producer. Butch Vig is out of the question—he wants 100 g’s and three points, but they can get Don Fleming for $30,000 plus three points. Even that’s a little steep, so maybe they’ll go with that guy who used to be in David Letterman’s band. He only wants three points. Or they can have just anybody record it (like Warton Tiers, maybe—cost you 5 or 10 grand) and have Andy Wallace remix it for 4 grand a track plus 2 points. It was a lot to think about.

Well, they like this guy and they trust him. Besides, they already signed the deal memo. He must have been serious about wanting them to sign. They break the news to their current label, and the label manager says he wants them to succeed, so they have his blessing. He will need to be compensated, of course, for the remaining albums left on their contract, but he’ll work it out with the label himself. Sub Pop made millions from selling off Nirvana, and Twin Tone hasn’t done bad either: 50 grand for the Babes and 60 grand for the Poster Children—without having to sell a single additional record. It’ll be something modest. The new label doesn’t mind, so long as it’s recoupable out of royalties.

Well, they get the final contract, and it’s not quite what they expected. They figure it’s better to be safe than sorry and they turn it over to a lawyer—one who says he’s experienced in entertainment law—and he hammers out a few bugs. They’re still not sure about it, but the lawyer says he’s seen a lot of contracts, and theirs is pretty good. They’ll be getting a great royalty: 13% (less a 10% packaging deduction). Wasn’t it Buffalo Tom that were only getting 12% less 10? Whatever.

The old label only wants 50 grand, and no points. Hell, Sub Pop got 3 points when they let Nirvana go. They’re signed for four years, with options on each year, for a total of over a million dollars! That’s a lot of money in any man’s english. The first year’s advance alone is $250,000. Just think about it, a quarter-million, just for being in a rock band!

Their manager thinks it’s a great deal, especially the large advance. Besides, he knows a publishing company that will take the band on if they get signed, and even give them an advance of 20 grand, so they’ll be making that money too. The manager says publishing is pretty mysterious, and nobody really knows where all the money comes from, but the lawyer can look that contract over too. Hell, it’s free.

Their booking agent is excited about the band signing to a major. He says they can maybe average $1,000 or $2,000 a night from now on. That’s enough to justify a five week tour, and with tour support, they can use a proper crew, buy some good equipment and even get a tour bus! Buses are pretty expensive, but if you figure in the price of a hotel room for everybody in the band and crew, they’re actually about the same cost. Some bands (like Therapy? and Sloan and Stereolab) use buses on their tours even when they’re getting paid only a couple hundred bucks a night, and this tour should earn at least a grand or two every night. It’ll be worth it. The band will be more comfortable and will play better.

The agent says a band on a major label can get a merchandising company to pay them an advance on t-shirt sales! Ridiculous! There’s a gold mine here! The lawyer should look over the merchandising contract, just to be safe.

They decided to go with the producer who used to be in Letterman’s band. He had these technicians come in and tune the drums for them and tweak their amps and guitars. He had a guy bring in a slew of expensive old “vintage” microphones. Boy, were they “warm.” He even had a guy come in and check the phase of all the equipment in the control room! Boy, was he professional. He used a bunch of equipment on them and by the end of it, they all agreed that it sounded very “punchy,” yet “warm.”

All that hard work paid off. With the help of a video, the album went like hotcakes! They sold a quarter million copies!

Here is the math that will explain just how fucked they are:

These figures are representative of amounts that appear in record contracts daily. There’s no need to skew the figures to make the scenario look bad, since real-life examples more than abound. Income is underlined, expenses are not.

Advance: $250,000

Manager’s cut: $37,500

Legal fees: $10,000

Recording Budget: $150,000 Producer’s advance: $50,000 Studio fee: $52,500 Drum, Amp, Mic and Phase “Doctors”: $3,000 Recording tape: $8,000 Equipment rental: $5,000 Cartage and Transportation: $5,000 Lodgings while in studio: $10,000 Catering: $3,000 Mastering: $10,000 Tape copies, reference CD’s, shipping tapes, misc expenses: $2,000

Video budget: $30,000 Cameras: $8,000 Crew: $5,000 Processing and transfers: $3,000 Offline: $2,000 Online editing: $3,000 Catering: $1,000 Stage and construction: $3,000 Copies, couriers, transportation: $2,000 Director’s fee: $3,000

Album Artwork: $5,000 Promotional photo shoot and duplication: $2,000

Band fund: $15,000 New fancy professional drum kit: $5,000 New fancy professional guitars (2): $3,000 New fancy professional guitar amp rigs (2): $4,000 New fancy potato-shaped bass guitar: $1,000 New fancy rack of lights bass amp: $1,000 Rehearsal space rental: $500 Big blowout party for their friends: $500

Tour expense (5 weeks): $50,875 Bus: $25,000 Crew (3): $7,500 Food and per diems: $7,875 Fuel: $3,000 Consumable supplies: $3,500 Wardrobe: $1,000 Promotion: $3,000

Tour gross income: $50,000 Agent’s cut: $7,500 Manager’s cut: $7,500

Merchandising advance: $20,000 Manager’s cut: $3,000 Lawyer’s fee: $1,000 Publishing advance: $20,000 Manager’s cut: $3,000 Lawyer’s fee: $1,000

Record sales: 250,000 @ $12 = $3,000,000 gross retail revenue Royalty (13% of 90% of retail): $351,000 less advance: $250,000 Producer’s points: (3% less $50,000 advance) $40,000 Promotional budget: $25,000 Recoupable buyout from previous label: $50,000 Net royalty: (-$14,000)

Record company income: Record wholesale price $6,50 x 250,000 = $1,625,000 gross income Artist Royalties: $351,000 Deficit from royalties: $14,000 Manufacturing, packaging and distribution @ $2.20 per record: $550,000 Gross profit: $710,000

THE BALANCE SHEET This is how much each player got paid at the end of the game. Record company: $710,000 Producer: $90,000 Manager: $51,000 Studio: $52,500 Previous label: $50,000 Agent: $7,500 Lawyer: $12,000

Band member net income each: $4,031.25

The band is now 1/4 of the way through its contract, has made the music industry more than 3 million dollars richer, but is in the hole $14,000 on royalties. The band members have each earned about 1/3 as much as they would working at a 7-11, but they got to ride in a tour bus for a month.

The next album will be about the same, except that the record company will insist they spend more time and money on it. Since the previous one never “recouped,” the band will have no leverage, and will oblige.

The next tour will be about the same, except the merchandising advance will have already been paid, and the band, strangely enough, won’t have earned any royalties from their t-shirts yet. Maybe the t-shirt guys have figured out how to count money like record company guys.

Some of your friends are probably already this fucked.

-Steve Albini

Categories
Small Business Work

Start Your Business Tomorrow

Many of my readers desire to work for themselves, either by building a business or starting some kind of side hustle. However, out of 100 people who say they want to start a business, maybe 1 actually does.

The problem is people put too much pressure on themselves. They look at their desired end state from miles away and fail to take the first step. Frankly, it’s daunting. Where do you start?

A business is formed by pushing an idea into the marketplace and adjusting based on feedback.

People also over-think what it is they want to do. Instead of thinking like a startup, they think like an established business with 50 employees. Instead of starting with a single action, they ruminate over the 100 things they’d like to do.

Often, the best businesses start off as a single simple idea. Forget the plan for the future. Instead, choose your mission and pick a single task to help bring that mission to life. Most importantly, take action. Don’t strive for perfection – there’s no such thing. At the beginning, action is your success metric.

Here’s the thing: businesses aren’t built on a linear path. Many successful businesses end up being quite different from the original idea. A business is formed by pushing an idea into the marketplace and adjusting based on feedback. Of course, I’m not saying someone doing web design for local retailers will end up manufacturing next gen batteries. There has to be some continuity around the mission. Instead, it’s the delivery that adapts.

    A web designer providing services to local retailers exists to help small businesses. Perhaps they start by offering web design services, but discover that sole proprietors need full marketing services or staffing assistance or who knows what else. Or perhaps the web designer starts by providing customized services to local retailers, but then builds pre-made DIY templates that can be used to drive world-wide ecommerce.

    Of course, none of that would happen without taking the first step of approaching the local sushi shop that lacks a basic web presence.

    Stop thinking about the business you want to build. Instead think of the purpose you want to serve, the skill you want to share or the mission you want to accomplish. That becomes your centre of gravity. Allow the supporting activities to evolve as you test out your idea.

    Now pick your mission and identify one way to move your mission forward. And do it tomorrow.

    Categories
    Small Business

    Why I Would Never Start a Bricks and Mortar Retail Business

    Those of us growing up watching sitcoms like Friends have, at some time or another, had the thought of starting a cozy coffee shop. Running a local gathering spot, hanging out with customers who become friends, toying with decorating ideas and promos, picking the music playlist…it all sounds more like fun than work.

    Central Perk Coffee Shops Are One Step Closer to Being a ...

    Others have romanticized about boutique clothing stores, cannabis dispensaries, record stores and so on. The dream of opening a sweet little local spot sounds great, assuming everything falls into place. However, so many things have to go right in order for a bricks-and-mortar retail store to succeed.

    The problem with physical retail is that you can have a great idea and a viable business but still fail.

    ==> A great business in a bad location will fail.

    ==> A great business opened off season or at the wrong time (e.g. when there’s road construction) will fail.

    ==> A great business not promoted properly will fail.

    ==> A great business with the wrong merchandise mix or pricing will fail.

    ==> A great business with weird hours will fail.

    You get the point.

    There are tons of ways a bricks-and-mortar retail business can fail, despite being a great concept. Of course, many of these problems are fixable over time. Unfortunately, the bills – rent, heat, hydro, staffing, etc. – don’t stop while you figure things out. Once the doors open, the countdown to bankruptcy begins.

    Even if you luck out and successfully launch a bricks-and-mortar business, you’re still vulnerable to the changing physical environment. I’ve seen numerous local business collapse due to unexpected traffic changes, construction or criminal activity. The obvious wild card today is the lockdown due to Covid-19. The pandemic simply isn’t survivable for many retail business, many of which existed for years.

    Sweep away all the negativity for a minute and let’s say you manage to build a profitable retail business that survives for years. Believe it or not, you’re still probably SOL over the long run. Once a retail business becomes successful, landlords see the opportunity and try to grab a share of the profits by raising rent once the lease is up for renewal. I’ve seen landlords triple rents on successful small business, squeezing every drop from the business. Given this, even the most successful bricks and mortar businesses are fleeting.

    The few small retailers that actually last decades often own their physical location. Unless you’re a national chain, there simply isn’t any other way around it.

    I love the flavour local retailers bring to a neighbourhood. I enjoy interacting with proprietors and supporting these businesses with my money. However, I warn anyone expressing interest in opening a retail business with a physical location. The chance of building something long term is so slim it just doesn’t seem worth the effort.

    Edit (October 8th, 2020): As I was walking today I remembered another major reason I would never start a bricks-and-mortar business. You need to be there ALL THE TIME. Depending on the type of business, opening hours might be 10-12hrs daily. That’s 10-12 hours a day, sometimes 7 days a week you need to be present, regardless of how sick or tired you feel. Have a migraine? Tough. Want to take a vacation? Tough. Bricks-and-mortar retail needs boots on the ground, and if they’re not the owner’s boots it can get prohibitively expensive.

    Categories
    Investing Small Business Work

    The Great Wealth Transfer to Big Tech

    Apple, Amazon, Facebook and Alphabet all reported blowout quarterly results this evening, with all beating analyst revenue expectations by billions of dollars. The market completely underestimated the growing market power these companies command.

    This momentum – at a time when GDP declined by 32.9% – suggests the recent massive stock market out-performance of these companies vs most other companies might be justified. The economy has rapidly shifted from “face-to-face” to “virtual” and a relatively small proportion of companies are benefiting at the expense of the rest.

    Much of this shift is permanent. I mean, virus or no virus, is anyone really excited about going to a fucking mall again? Or take the crowded bus? Even meetings are more tolerable now.

    Nah, I’ll spend my commute time on doing something pointless on my phone, possibly even spending money. And when I’m working I’ll use MS Teams instead of airplanes to meet people. People and businesses have discovered cost savings they should have known existed.

    And the companies that don’t benefit? Commercial real estate. Travel. Restaurants. All the places that sell the things we realized we didn’t need while under quarantine. Many are small businesses. Maybe eventually these businesses will recover, but until then it’s big tech’s time to gather all the nuts.

    Is it any wonder why Amazon, Apple, Facebook and Alphabet have done so well? We’re witnessing a great wealth transfer to big tech.

    Apple

    Amazon

    Facebook

    Alphabet

    Categories
    Small Business

    Free Websites for Toronto Small Businesses

    If you run a small business in Toronto, check this out:

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    Here are the details:

    Leveraging Toronto’s technology community, the City of Toronto and Digital Main Street have brought together a range of partners to build and optimize online stores for Toronto’s independent businesses and artists at no-cost.

    Thanks to volunteer developers, business students, and corporate partners, Toronto’s independent small businesses and artists can access ShopHERE to get their online store built and launched with hands-on support throughout the entire process in just a matter of days.

    What do you get:

    Choice of an online store customized with their information, branding, logo, etc.

    Hands-on assistance setting up and launching their online store.

    Training to support their online store, including topics such as digital marketing, shipping and inventory management.

    Access to free tools to help support the launch of their online stores.

    Here are the requirements:

    Be a business located or artist in the City of Toronto that:

    • Pays commercial property taxes in the City of Toronto (rents or owns commercial property)
    • Have fewer than 10 employees or fewer than 25 employees if they are a restaurant or bar
    • Not be a corporate chain or franchise
    • Or must be an artist located within the City of Toronto

    Learn more or sign up here.

    Categories
    Small Business

    7 Opportunities for Entrepreneurs Right Now

    With change comes opportunity. Look, I’m not making light of the tragic situation. Over 96,000 Americans are dead because of the current Covid-19 pandemic. Many more will die.

    However, we still need to make a living. And now is a good time to consider the opportunities opening up due to the massive upheaval the world has just experienced.

    Before I continue, in no way do I suggest taking advantage of shortages or vulnerable people. Quite the opposite – I think there is opportunity for entrepreneurs to genuinely help people and businesses impacted by the changed world.

    Consider this a brainstorm session. I won’t get deep into the pros, cons, feasibility of each idea. But I hope to kick start some ideas that you can run with and make your own.

    If you have any of your own stories, please share them. I’d love to learn more about what you’re doing.

    Here are some quick ideas. I’m just dumping them on the page as I enjoy an adult beverage. No editing. No second-guessing. (So please excuse the mess…hopefully a string of words below sparks something in you.)

    1) Masks

    I’m not talking about hoarding or flipping medical n95 masks. Those need to go directly to medical staff.

    Instead, I think there is a big opportunity to create and sell cloth-based masks for the general public. Suddenly, a new product category exists and is ripe for innovation.

    What can be done to add value to the mask, which is generally viewed as a commodity? We’ve already seen the plain black masks, but where are the designs? Where is the branding? The differentiation? Hmmm…

    2) Virtual events, entertainment, tourism

    Large jam-packed events – like conferences and concerts – aren’t coming back anytime soon. Even smaller in-person events are likely to decline in frequency, as business travel wanes and people remain hesitant to meet in person any more than necessary.

    There are many existing companies that got into the virtual events business almost overnight. These companies probably could use help.

    There is also an opportunity to build and promote your own virtual events. Because overhead costs (e.g. space rental) have been slashed, virtual events require fewer attendees and can be profitable with smaller audience sizes and fewer sponsorships. This creates the opportunity for smaller highly targeted events. At the same time, the potential audience for a single event has suddenly gone global – anyone with a good internet connection is now a potential attendee.

    Finally, the total cost to attend conferences (beyond event tickets) has dramatically fallen, opening up the option to audiences that were previously out of reach.

    3) Servicing remote workers

    A huge segment of the workforce is now working from home. Many of those people will never return to a normal office again.

    After a while, sitting at the kitchen table in your pajamas gets real old. People need a proper physical space with proper ergonomic equipment. But what else will people need when working from home? What are the new problems these folks will need help with? Possibly, time management, segmenting work from home, new home distractions, social isolation, new methods for staying relevant, etc.

    Businesses that manage a remote workforce will also need help working through the implications. What are the best practices? Will any intermediaries be needed? What tools are needed? What business challenges arise?

    Essentially, new situations create new problems that require new solutions.

    4) Retail

    Retail?!? Yes…and that’s not the gin talking.

    Some big retailers with a lot of cash and access to credit will stay afloat during the Covid-19 economic disaster. Unfortunately, many other retailers will die – either voluntarily or via bankruptcy. As this happens, the bigger, stronger retailers are salivating at the market share they will get to absorb.

    The CEO of Macy’s recently said that $10 billion of retail sales will be up for grabs. Why should Amazon and Wal-Mart be the only beneficiaries?

    Customers will be in transition. Brands will disappear. Regional competition will fall in areas. Surviving small retailers will need help. Commercial real estate rents might decline in areas. More retailers will need an online presence and delivery options.

    You’d think there’d be a few opportunities for new ideas. Amirite?

    5) Virtual everything

    Every brick-and-mortar business has started providing online services in some way. While most people are familiar with online shopping, until now few would have ever considered online fitness classes, therapy sessions or doctor visits. Yet, that’s what we’ve all been doing for months now.

    I think many will continue to use virtual services in the future for the convenience. Who wants to waste 2 hours going to the doctor’s office (and paying for parking) just to get a prescription refill?

    So businesses that previously required an expensive physical presence can now be created in a basement. Suddenly, the barriers to starting many types of small businesses have fallen.

    6) Online learning

    This one’s simple. Do you have something to teach? Then build a brand and teach it using the multiple avenues available online. Videos, subscriptions, online teaching platforms, etc.

    People have been warming up to online learning for a while, but I think the lock-downs have only accelerated this trend. The entire public school and college system has gone online, legitimizing what was once considered ‘alternative’.

    While traditional brick-and-mortar institutions have the brand value, they also come with an enormous price tag. People have increasingly questioned the ROI of college education. Now, with the realization that most of the glitzy peripherals isn’t core to the college education, the door is open to new 100% virtual educational providers.

    7) Homesteading

    Previously, people that bought skids of T.P. and canned soup were called preppers. Today, we’re all preppers, aren’t we?

    This all started with the Great Toilet Paper Panic back in March. Now we’re all baking sour dough and starting vegetable gardens. I think people have discovered the comfort in having a few life skills, and many will become lifelong closet homesteaders.

    What can you offer those who want to make their own wine or repair a broken fence? How can you help them achieve their objectives? What would you need if you were starting a new hobby?

    ***

    OK guys. Brainstorm’s over. Take what you want and discard the rest. Ideas are connected, so think about the second and third order effects of some of the problems and opportunities described above.

    Perhaps more importantly, start fast and start small. Learn whether you can make $1. Because if you can make $1 you might be able to make $10, $1000, $100,000 and so on. Better to fail fast and find out early.