Tag: finance

When is it time to quit my 9-5?

This is a guest post from Pariss Athena. Enjoy.

Dear new developer,

Honestly, I don’t think there’s one absolute answer. I believe the answer depends on you and the risk you’re comfortable taking. However, I do think there are things you should take into account before jumping the gun. This is how I personally knew it was time to give my notice and take my business full time…

Everyone’s situation is going to be different. This is my story.

I announced that I was launching Black Tech Pipeline (BTP) in June of 2020. Around this time is when everyone was really riding the Black Lives Matter train, and claiming their allyship after George Floyd’s murder.

This was not why I decided to launch. Weeks prior to the pandemic and quarantine, I was constantly tweeting about launching BTP “in the next weeks.” Those next few weeks just happened to fall during a tragic time.

But these two things did contribute to the eagerness of announcing my launch:

  1. I knew my performance at work was dropping. I stopped attending happy hours, and engaging in conversation. It wasn’t because there was something wrong with the company I worked for, my focus just shifted.
    I was rightfully distracted by social media and the flooding of content surrounding the injustices happening in the Black community. Knowing the work I should be doing full time vs the work I was actually doing full time made me annoyed with myself. I wanted to just help create impact in my community. That’s it.
  2. I was pissed the hell off.

I want to preface this by saying that I know I have the privilege of already having a platform and a following. I know that contributed to the traction my launch announcement received.

I had been writing newsletters surrounding Black Lives Matter a few weeks before announcing my launch, and those newsletters gained lots of traction on social media, which gained me more subscribers. I decided to announce the launch of BTP in my newsletter, and the response to the announcement was sign #1 that I was going to be on my way out of my job.

My calendar was flooded with calls. I had 15 minute breaks in between calls from morning to evening. I was talking to employer after employer wanting to take advantage of BTP’s services. Aside from calls, I received emails non-stop. Not just from employers, but from opportunity extenders of all sorts. It was tiring but good problems to have, especially before even launching.

On top of my performance dropping at work from being distracted by the political climate, I was now also distracted by BTP’s calendar being completely booked. Having so many calls booked seems promising, but until I had client agreements signed and invoices paid, I wasn’t going to leave my job, especially during a pandemic.

Plenty of employers expressed interest. They loved the origin story of #BlackTechTwitter and how it led to me building Black Tech Pipeline. There were lots of promising words, but you can’t go off of words of interest to determine your safety net.

The way I determined my safety net was by looking at my finances with my mentor, Leon Noel. I kept in mind what I was making annually at my 9-5. I already knew what I was charging for my services so I also used that to think about worst and best case scenario. He told me to ask myself:

  1. At the very least, how much do you need to make to pay your bills on time?
  2. Are you willing to give up your typical lifestyle?

I looked at my pricing model and mapped out how many clients I’d have to have per month to get by. And not just how many clients, but:

  1. Which services would those clients have to pay for in order for me to get by?
  2. And when those clients pay me, how much money do I have left over after putting 30-35% into savings for tax time and personal savings?
  3. And if I don’t want to live a life of just getting by, how much money do I need to make, with tax deductions in mind, to live the life that I want to live?
  4. How much money would I like to make annually? What will it take to get there? Can I project that?
  5. Is it possible that I can stay at my 9-5 and balance my business at the same time?
  6. Could I potentially hire someone to help me out so that I can do both?

Those numbers and questions are extremely important and it’s what you should think about before making the decision to bounce from your 9-5.

Sign #2: Personally, time was not on my side. It came to a point where something had to give. It wasn’t fair to continue working my 9-5 when I wasn’t giving it my all because I was busy prioritizing my own business. I also wasn’t willing to give up potential clients, miss calls, and wait to reply to business emails for the sake of my 9-5.

Sign #3: Potential clients turned into paying clients. Agreements were getting signed, and invoices were being paid. That sounds dope, but that’s not enough to say you’re secure. The question is,

  1. With the money you’ve been paid + your savings (if any), would you be able to quit your job and be able to pay your bills for the next 6 months, even if you got no other paying clients?
  2. How many signed/not yet paid clients do you currently have?
  3. What’s your projected paying client rate for the next month?
  4. What are you going to do if you don’t have any new business coming in?

These are the risk questions, and you have to be very real with yourself when you answer them. The last thing you want is give yourself optimistic answers and then be left with late payments, debt, and serious financial hardship.

My personal answers: I’d be fine. I determined this by the tangible money I had been paid. I didn’t count the client agreements signed because anyone can back out of an agreement before the work begins, something could delay the process on their end, etc. I made enough to feel confident in giving my job my notice, and to continue living the life I want to be able to live. I only considered signed agreements when I thought about future business expectations: “I have {x} many clients potentially secured for {x} services, which will keep me financially stable for {x months}. I also have {x} many potential client calls lined up for the next {x weeks/months}.”

I also double checked with my mentor, and when he approved, I felt even more confident in leaving.

It was bittersweet, but I gave my notice. It was time. ✨Shout out to G2i for being the best employer I’ve worked for since entering the tech industry. Amazing culture, dope people, and doing the work of solving the broken vetting process.

Now, I don’t know what’s going to happen with Black Tech Pipeline. Maybe things are only going well right now and we’ll struggle later down the line. I don’t know, I hope not. I will do everything in my power to make this company successful, but there’s only so much that I have control over. That’s the risk. That’s entrepreneurship for ya.

If I’m being totally honest, a job will always be there. Companies will always be hiring. I know- I’m a recruiter.

— Pariss

This post was originally published at Black Tech Pipeline.

Pariss Athena is the creator of the movement, hashtag, and community #BlackTechTwitter, and Founder of Black Tech Pipeline.

Know your runway

Dear new developer,

When you are considering a career move, whether to a startup, a sabbatical or further schooling (basically any time when your income will exceed your expenses) it pays to calculate your runway. There are various kinds of runway (social, emotional, financial) but the easiest one to calculate is financial. You do this by tracking your monthly net outflow (expenses minus any income) and knowing your savings. Dividing the savings by the outflow gives you the months of runway you have. At the end of your runway you will have no money, which makes living hard. That is something you want to avoid.

How can you avoid the “I have no money” outcome? First, calculate your runway regularly. Once a month is optimal. Second, be aware how long it would take to get a new job (this will probably be an estimate, but ask folks with similar experience who have found jobs how long it took them). Third, before you start, decide on a number of months of runway that will cause you to start seeking other sources of income. Fourth, get a job before you need to.

If you look like you are going to run out of money before you are done with whatever you are trying to do, then you have some hard choices. You can quit or pause your task, increase your income (drive for Lyft, etc), decrease your expenses (move to a cheaper home, etc). Decreasing expenses is the option you typically have the most control over, but it can be unpleasant. It’s the course I recommend, however, because it typically is the least distracting (though if you are cutting expenses to the point that you are hungry all the time, then that may not be the case).

The reason to get a job before you need to is that desperation makes interviews tougher (more pressure). Even if you find a job and get the offer, you will accept a job that isn’t the best fit just to bring in some income. If benefits aren’t important, you may want to consider contracting as a stopgap to allow a more relaxed interview process while stopping the bleeding.

Whew. Sounds stressful. Why would you ever put yourself in situation where you needed to think about runway?

Pulling from savings and not maximizing your current income is a form of investment. When I joined a startup as a co-founder I leveled up my skills around devops, customer empathy, community building, and product management. When I took a sabbatical I learned how much I truly loved building software (I remember reading an article about RDF in an internet cafe in another country).

It can absolutely make sense to invest savings and time into something that will drawdown your savings rather than increase it. Just keep in mind how long you can invest so you aren’t unpleasantly surprised.

Sincerely,

Dan

PS This post was inspired by a comment from a Meetup participant, but all thoughts and mistakes are mine.

Learn about personal finance

Dear new developer,

If you have a job, you’re probably making pretty good money. I know when I started I was making a lot more money than I ever had before (it was $42,000 per year, but this was in 1999). Man, it felt good to just buy what I wanted to buy and not worry about it.

But one thing that I did was set up my 401k and contribute to it. It’s better to save to a 401k from age 25 to 35 than from age 35 to 65, thanks to the magic of compound interest. There’s a whole lot of assumptions, but if you contribute $5000/year for each of those years and the rate of return remains the same (BIG assumption) the person who started saving at 25 will have $60,000 more at age 65. So, take advantage of time and put money away.

I am not a finance professional, but you will be well served by getting smart about personal finance. Books I like:

There’s of course a lot of options to read about personal finance online as well. As a good overview, this post talks about ten personal finance lessons for software developers. My favorite point:

[C]onsciously make choices about where time is spent and one of the best things that’ll help you do that is to have a goal.

Personally, I saved as much as I could when I was a new developer, but you may make a different choice. I have a friend who invested in solar companies because it was in line with his values. I have other colleagues who didn’t start investing until they were in their thirties. There are many paths. All I’m recommending is that you make an informed choice.

Sincerely,

Dan