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Saturday, March 11, 2017

Sales Pass $2,100 Ten Days Into March And More On The Self-Employed Lifestyle In Saint John

My posts have grown less frequent, largely because I have been very, very busy with the business, as it grows, and what was formerly our routine gives way, and a new routine takes hold. I expect that every business goes through this transformation several times as it grows. However, I wanted to talk a little more today about our new life in Saint John, New Brunswick and about why Steph and I believe that it is the smartest move we could have made. We are both convinced, despite the fact that it is stressful, that a lot of people would find the self-employed lifestyle to be better suited to them. I will explain why in a minute, but first I wanted to share an important update about the business.

Today, we have surpassed $2,100 in sales, after a mere 10 days into March 2017. In addition, we had very little in sales for the first three days of this month, so that in reality, that $2,100 was made over a period of 7 days. That's an average of almost $300 per day - almost triple our average when we were in Toronto, in November 2016. What is particularly encouraging about this is the way in which those sales have steadily built up. We didn't just have one customer make a single $1,000 purchase, though we have had one $400 purchase and one $200 purchase. No, we have had a mixture of large and small orders, including many from first time customers that are in the $100-$200 range. This means that our reputation is beginning to precede us. The way things are going, it looks like we could easily have a $4,500-$5,000 month. It won't be the first time we have done this well, but we are beginning to notice a pattern of increasing customer engagement and more months that are consistently better than our benchmark of $3,000 in monthly sales.

Before I get into talking about the stress of being self employed, I want to talk a little about the life that Steph and I have been able to build since we moved here to a little neighbourhood on the west side of Saint-John, in New Brunswick. I am convinced that most Canadians outside of New Brunswick know very little about this province, and as a result it suffers from a lot of bad press about the lack of employment and the weather. However, life in Saint-John is not at all like the rest of the maritimes, as I will soon illustrate, though it shares some similarities.

The first thing I will start with is where we actually live. We bought a 2,400 square foot home on a double corner lot of a tree-lined street for $132,000. The neighbourhood is not that much different from how neighbourhoods in East Vancouver, or Toronto used to look. However, it is far, far more affordable. The house itself was built 145 years ago, and has most of the original charm associated with homes of the 1870's: the 12-inch high baseboards, and trim around the doors; the solid wood doors; the wainscotting on the walls, the elaborate banisters, the plaster walls and decorative plaster accents around the light fixtures; the old fixtures, and so much more. There is a beautiful garden on this double lot, that we can't wait to landscape when the rest of the snow finally melts, which it should do in a few more weeks. It has a fully working fireplace in the living room, and there are three fully furnished bedrooms that we do not use, two of which have their own bathroom, so that should we decide to, we can go back to operating a Bed and Breakfast here. But for the moment, we can host all our friends in style.

That is the house. The neighbourhood itself is very friendly. We had met all our neighbours within days of moving here. We are having one of our neighbours over for wine and appetizers tomorrow at 4pm. Steph is actually in the kitchen baking as I write this, getting a spread ready for our guests. We are planning to invite all our neighbours over eventually, and we are confident that we can actually become part of the local community. I have already found the local stamp and coin shop, and have gotten to know the local dealers. They have invited me to the join the local stamp club, and already I have been to 3 meetings. Because we work from home, we are able to get all our chores done during the week, which means that we have ample time on the weekends to have guests over, and can really work on building relationships with our neighbours. We are located approximately 2 minutes from the main highway, but despite this, you could hear a pin drop in the house at night. Being so close to the highway though, and the way that the city is laid out, means that we can be practically anywhere in the city that we need to be in less than 10 minutes. This in turn means less wear and tear on the car, and a tank of gas lasts us a month now, compared to a week in Toronto. Insurance is lower too. We pay just over $78 a month for our car insurance.

So we are very comfortable in our home. Our cats, Viktor and Meeko are much, much happier here too, as they have lots and lots of room to explore, as well as their own space. Saint John itself though is a very beautiful city, with a spectacular harbour that has wonderful views; a nature park that the Irvings constructed for the local residents; a beautiful old downtown with lots of restaurants and pubs, though Steph and I have yet to try most of them, and beautiful parks. There is always parking available here, and the vast majority of the time, it is completely free of charge. When you do have to pay downtown, it is $2 a hour rather than a daily $20 rate that kicks in after an hour like in Toronto.

You might be thinking, "What about the weather though, don't you get a ton of snow? Well we do get snow, and yes the weather from December to March is cold. Most days are between the low positives and -15 to -20 degrees Celsius.  This means that for a home as old as ours, we have to pay about $800 a month in the winter months for heat. But that is a small price to pay compared to our mortgage, which is just under $800 per month. All told, the cost of carrying our house, which is also our primary business premises, is less than $1,300 a month - less than 50% of what rent in Toronto was. The difference is that we own this house. "Yes, but I read that Saint John is shrinking, so doesn't that mean that the real estate values will continue to drop?", I can hear you saying to yourselves. The answer is maybe, but we don't really care. Why? Well because we are saving so much over renting in a large city, that it doesn't really matter to us what our house is ultimately worth, since we are not planning to leave any time soon. Of course, there is always a very strong possibility with the rising prices in Vancouver and Toronto, and the pressure that this is placing on wages, that some industries may eventually choose to locate here. If that happens, which I actually think it will, then the house prices have nowhere to go but up.

But the very best aspect of our lifestyle is that we can wake up when we want. We actually get up most days around 9 am or 10 am. Now, we work very late - usually for me until 2 am or 3 am, which is why we are up so late. But the wonderful thing is we no longer have to get up at 6:30 or 7 am to commute to an office. We get to decide to spend our day on work that matters to us, tackling our "to do" lists in the order that we want, without having to worry about obtaining approval, and without having to worry about optics, or inadvertently stepping on someone's toes. We get to decide whether or not we did a good job that week, not someone else.

That brings me to the issue of stress. There are days, when sales are low, and I see the bills that we do not yet have the funds to pay and I start thinking "wouldn't it just be easier to go work for someone else and get a salary?". I used to find myself thinking that quite often when my savings ran out several months ago. But what I have noticed, is that we always make enough money to pay all the bills, and now we are even making enough to start reinvesting in the business. Yes, it is stressful when you first face that uncertainty. But it is a different kind of stress. It is a stress that you can manage, because as a self-employed person, you ultimately have control. One way that I mitigated the uncertainty is that I started doing some part time contract work for a local accounting firm, which is a definite win-win because the local firm gets my skills for $40 an hour, which is dirt cheap for them, without having to make any kind of commitment to me. All I have to do is 10 hours a week of outside work to make $400 a week or $1,600 a month - all without any source deductions of any kind being taken for the taxman.

This brings me to another aspect of self-employment that is vastly different from working for a salary: the tax aspect. When you work for someone else, between 30% and 40% of your money goes to the government. When you factor in your required contributions to the benefit plans that your employer offers, the actual amount is higher. When you work for yourself and you start your business from tax-paid savings, all that money that you have invested in your business is a loan that you have made to your company. You are allowed to take that money back over time on a tax free basis, since the money that you originally invested was already tax-paid money. If you invested enough money and can keep your cost of living low, this means that you can live for the first few years on your shareholder loans. You can only do this if you incorporate your business into a company. With a company, you will have to pay tax on the company profit, but the rate of tax is much lower - only 15%. You can decide to pay minimal salaries when the business becomes profitable enough, or you can pay up to $30,000 of dividends every year, without having to pay any personal tax. Thus with our cost of living being as low as it is here, we can eventually take only dividends from the company, and pay only about $6,000 of tax every year instead of both having to work for a salary in Toronto, and having to make $150,000  a year between us to fund the same lifestyle, while paying $25,000-$35,000 in taxes.

Why does the government let you do this? The answer is simple: because you are not benefiting from the system in any way. When you work for yourself there is no EI. You pay as you go for things like dental care and drugs. You are paying your own way and you are building a business that has the potential to create jobs for other people. The government has an incentive to reward this kind of behavior, and so they do, with tax incentives. The interesting thing though is that as an employee, you are generally not benefiting from the system most of the time either. Unless you get sick, you generally put much more into your employee benefit plans than you take out. You generally are working harder and harder, in order to avoid having to go on EI, usually because EI is not sufficient to allow you to pay your monthly expenses, but you are still paying in - for years and years, maybe even decades. The feeling of security that you have, that you will always have income every month is really little more than an illusion. The reality is that you can lose your job anytime for reasons that have nothing to do with your performance or competence. If you work for a public company, all it takes for that to happen is a decision by management to downsize, phase-out a product, close an office, or merge with another company. If you work for a private company, where you are treated like family, all it takes is for the owners to sell the business and retire. There is no guarantee that the new owners won't have their own people that they would rather have in your role. Then you're gone. I have seen this happen all the time with my former client's businesses. So I know what I am talking about.

Another reason why the stress of self employment is different from office stress, is that after a while you begin to see that success in business is incremental in a way that it is not when you work in a company. What I mean by this is that for your business to succeed, you have to have a good business model, but beyond that, you have to execute it over time, by doing the right things consistently, over a very long period. Even if you have the best idea or the best product, you still have to put yourself out there and convince people to buy your product or service. You have to build business connections and nurture your relationships with your customers. You have to recognize that the sales cycle is often, much, much longer than you think it should be.  Reality TV shows like Shark Tank and Dragon's Den give off the false impression that business success should be instant if you have a great business idea. But the reality is that rather than eschewing the "tire-kickers" and ignoring them, you have to recognize that they are "customers under development". Think about it. We live in an age of information overload and overhwhelm. Most people nowadays do not want to be sold to, and just want to be left alone. So when someone expresses an interest in your product or service, it behooves you to engage with that prospect and work to turn that initial expression of interest into an eventual decision to purchase, and from there into an ongoing relationship. Sure, not everyone that you engage with will become a good customer. But the thing is, you have no easy way of knowing, in advance, who will, and who will not become a good customer. So you have to focus on perfecting your business model and providing value to all your potential customers.

Most of the activities that will yield the best results over time will be those things that yield no immediate benefit. This is why building your business requires so much focus and discipline: because there are no immediate, external rewards. Instead you have to have a long term vision that will kick in and reward your efforts with a vivid mental picture of your eventual success. One good example of an activity that requires consistency, yields no immediate benefits and is immensely valuable over the longer term is blogging. Our blog is over 150 articles long now and gets over 6,000 visits a month. It is now one of the drivers of sales in our business. It is the best evidence that we can provide potential customers that we know our Canadian and Nigerian stamps, and that we are trustworthy. Because we are providing interested collectors with free, in-depth information, we are building rapport with them long before they make the decision to buy from us. It wasn't always this way though. The first posts I wrote barely got any visitors at all. I remember 10 visits being a big deal. But as I wrote more posts, my posts got better, with the information being more in-depth. Eventually our readership began to steadily grow, and I believe that we still have a long way to go before we maximize our readership.

The good news though, is that if you do things like this consistently you will start to develop a loyal following of customers who will come to you because they like what you do and are willing to pay you to do it. We aren't the cheapest stamp dealers out there by any means. Most of our competitors can and do sell individual stamps much, much cheaper than we do. But most of these competitors are completely unfocused in the sense that they sell stamps from all over the world. This means that there is often a very high chance of them not having a particular stamp that a specialist collector is looking for. Because they are competing on price, and they generally do not have the time to describe their stamps to a level of detail that would suit most specialist collectors, they are not well positioned to serve this market. They are not able to develop the type of relationship with specialists that enables them to pre-sell rare pieces or charge robust prices because the specialists can see that they can't possibly be experts on anything, and are just jacks of all trades. So yes, we lose business from generalist collectors, but we gain business from specialists. Business from specialists in the end is much more profitable than business from generalists.

As you develop this following of customers, you will experience the most amazing sense of satisfaction that comes from seeing your business grow. It is like getting an "Employee of the Month" award every day. Your stress level will drop as one group of customers steps forward and buys from you while another group is laying low after having bought from you the month before. Eventually you will reach the point where you realize that your business will not likely fail, unless something cataclysmic happens, and this will be the most liberating feeling you can have. We aren't there yet - not even close. But we are beginning to see signs that we will ultimately get there. This feeling of personal growth is something that everyone at a job wants, but few experience.

In contrast, when you work in an office, the emphasis is usually on what makes you look good in the short term, rather than what maximizes value over the long term.  The reason for this is that management and ownership is often separate, and management is transient. They are not necessarily focused on building the business in the same way that you are when you are your own boss. They are concerned with meeting their goals, and what they have to do to reach those goals is often at odds with the long-term best interests of the business, or it is only very loosely aligned with those best interests. Your job is usually a series of projects and you strive to do well on each project. Your value to the company is generally only as much as your last performance review.

The problem with this is that the behaviors that make you look good in the short term are often at odds with what maximizes value over the longer term. Management may not have the vision, the inclination or ability to ride out the ebbs and flows in your success, they way that you do when you are your own boss. When you do luck out and work for a smaller owner-managed company, it is possible for you to maximize your value over the long-term by choosing to work for someone whose vision matches yours. But ultimately, the greatest spoils of your success do not go to you. They go to your employer, and somewhat rightfully so, given that your employer shouldered all the risk by hiring you and training you to the point where they could profit from your work. A lot of employees do not realize this, thinking that their employer is always getting rich off them. While that might be true of employees who have fully honed their skills and are productive, there is often a period for many hires where the employer is losing money while the employee ramps up their productivity and settles into their role. Also, for every good employee, an employer has often had to suffer through many bad ones that cost them a lot of money. So from your employer's perspective, they are don't necessarily see themselves as profiting all that much from your efforts. When you own your own business and you succeed, all that success is yours because you have earned it.

Of course, none of this comes without some major sacrifices. Those sacrifices so far, have included:

  • Having to live frugally for 2 years before making the decision to leave our jobs so that we could invest almost all our extra income into the business, in our case buying stock, and saving for living expenses for the first year and a half that we were unemployed.
  • Having to borrow the rest of the money that we needed from investors, and having to devote most all of the extra income the business will make over the next few years paying them back.
  • Having to really cut out most all extras so that we could pay the bills on what little the business has made while it has been getting established. So no more annual vacations that involve flying or staying in hotels. No more eating out 2-3 times a week. No more beer in the fridge every Friday. 
  • Having to work harder than ever before. My typical week now is 70-80 hours of work. 
  • Having no sense of security, even though my sense of security as an employee was an illusion too.
However, all of these things will return to our life eventually, and when they do, we will appreciate them all the more because we haven't come to take them for granted. We don't have to save up for retirement, because we can work for the rest of our lives in our business. As I have said before, once you become used to not having most of the "extras" you will find that it really isn't a big deal. If you are spending 70-80 hours a week doing what you love and perfecting it, you will be much happier without those "extras" than someone who has all those things, but has no real freedom because their fate is tied completely to a job that they don't particularly love, and could lose at any time. 


  1. 1. House prices ANYWHERE outside the GTA is reasonable - it isn't just a Saint John thing.
    2. Did the cats tell you that they are happier now than they were a few months ago?
    3. The 'Toronto parking' comment is a bit overstated - downtown parking isn't that bad on nights or weekends - certainly not $20
    4. Working from home allows you to set your own hours (wake up late etc.) -again, not a Saint John thing. Were you not doing that in TO?
    5. You could have done the part time contact work in Toronto - and made significantly more money doing so had you made that choice.
    6. I don't think your work week has changed all that much - you noted how hard you worked in accounting, often taking work home. I do recognize that your commuting time has vanished though.

    1. Hi there!

      I appreciate your comments, though I think you completely and utterly miss the entire point of the lifestyle change I have made and why I write this blog.

      My journey is all about discovering what really matters to me and devoting my life to what matters to me. It is NOT about making the most money or having what you would regard as all the trappings of success.

      If you are happy with your life in the corporate world and with living an urban life that revolves around your salary then power to you! Don't change a thing.

      But if you aren't happy with that life, then it's good to really examine what matters to you once you have stopped looking for all the reasons you can to convince yourself that staying the course is the best thing.

      Every argument you make here is fallacious:

      1. House prices are nowhere near as inexpensive anywhere in Ontario than they are here. Show me the type of house I have described anywhere else for $130k. So it actually IS a New Brunswick thing at the level I am actually talking about.

      2. I know my cats are happier because I can observe their behavior and pick up on their non-verbal communication. If you had cats you would understand this.

      3. My comment on parking here is All the time. I can go to the heart off downtown first thing in a weekday morning and park in a prime spot for $2 an hour. You are comparing apples to oranges with your comment, because that same spot on the evenings and weekends is completely free and it's vacant most if of the time.

      4. Yes I was doing this in TO. My comment was simply a re-iteration of how wonderful that flexibility is.

      5. Yes I could have gotten contract work in TO, except I probably would have had to commit to more hours and the extra expense of living there would eat up most of what I earned.

      6. Yes I work harder than ever before. But I love every minute of what I do and I don't have to put up with any more corporate BS which used to waste half my day. That I would say is pretty damn significant. I got to do that in TO while I had savings, but I wouldn't have been able to continue doing what I am doing if I had stayed.

      When you are committed to making a business succeed, you will do whatever it takes to see your idea through. That's why we moved here. I'm trying to show other people that it CAN be done. But it takes creative thinking.

      Like I said, if money and status symbols are what matter to you. Then there is really no point in reading my posts, because there are so many other blogs out there that will tell you what you want to hear. But if you want to follow your dreams, you have to start by realizing that the life you have bought in to is actually NOT a good option.

    2. Terrific post! I wish I could leave my dead end job right now and start my own business. Maybe some day. I don't think that commenter above understood what you were driving at. I think you made a smart move and I bet your cats are a lot happier with more room to roam!

    3. Thanks for the kind feedback.:). I do actually think he or she does understand what I am driving at, but his or values are just different.

      I am very hopeful that others can be inspired to follow their own journey and know that it is not impossible. It all starts with the recognition that everyone has a superpower that they can harness to help other people. That is really the cornerstone of all successful businesses: helping other people in some way. The trick is to relegate money to the back burner so that it doesn't become the sole focus. Most people don't recognize that they have superpowers because they take them for granted and they assume that there is no way to use them to make money.

      To find out what yours is, look at how you spend your spare time. What do you like to do? What are you an expert at? Then once you find out what that is, ask yourself: "What product or service would make my experience in doing this thing I love even better? If you are not sure if enough other people share your need for that thing, you can research it by seeking out online groups that share your interest, joining and raising discussions.

      The internet has created such an amazing opportunity to connect with people for free and glean information that so many opportunities exist. But to take advantage of them, you have to be disciplined and be active online almost daily. Eventually you will build your connections and your knowledge of the market. Once you know that a market exists for your product or service, you now have the basis to make a plan to produce that product or offer that service, and you can begin to identify what you need in terms of resources.

      Then you can start making a plan to turn that vision into a reality. When you do that, going to work will become easier because it is no longer a dead end: it is your rock - your source of stability while you develop your plan.

      Eventually the time will come to jump. That is the toughest thing to do because it requires you to believe in yourself. I'm not a big believer in starting a business on the side and waiting until it is big enough to support you comfortably before leaving your job. The reason is simply that making your business succeed requires all your focus and if you are only running your business on the side, it will likely never reach the point where you feel comfortable leaving your job. But having said that, you should only leave after you have prepared a thorough business plan and had it looked over by an accountant. But once you know that you have a solid plan, and you have accumulated enough savings to last you 2 years, there is really no good reason to stay in your job.