Early Exit #6: Building your Exit Plan

Here's my framework for building a successful early exit plan.

You’re reading Early Exit Club — a newsletter about leaving the 9-5 workforce to build a $20k/month solo business by Nick Lafferty

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Introducing the Early Exit Club Directory

Before we get started I wanted to quickly advertise something I built over the weekend.

I’m calling it the Early Exit Club Directory of Solopreneurs.

(Still workshopping the name so if you have a better one please respond)

There are 538 of you subscribed to this newsletter.

And from talking to y’all over the past few weeks I know many of you have your own businesses.

So I wanted to put together a public directory to help you get more clients.

You never know when you’re going to need a designer, growth marketer 👀, freelance writer, or a marketing ops expert.

Click the button below and fill out a quick form and the directory will automatically update with your information.

Hell, submit the form even if you don’t have a business yet.

Maybe you’ll get your first client this way.

And let me know if I missed anything in the form, I’m sure I did.

The 2 Paths to Self-Employment

There are two paths to self-employment.

1. Planned

2. Unplanned

I’m on the planned path even after surviving two layoffs in 2022.

But not everyone is so lucky.

Many of my friends took the unplanned path through layoffs.

But I’ve also heard from people who yolo quit because they just couldn’t take it anymore.

Even when my company was going through layoffs I felt ok because I had grown my emergency fund and I had some passive income.

This week’s newsletter focuses on how to start a planned approach to self-employment, but it also prepares you in the event of a layoff too.

My Early Exit Plan

My plan truly started about 4 years ago when I started blogging at nicklafferty.com

And it took me until 10 months ago to really start monetizing it.

But you don’t need a blog to get started.

And you don’t need a 4-year head start.

What you need is a goal and three things to get you there:

• Short-term revenue

• Knowledge of your monthly expenses

• An emergency fund

What’s your ultimate goal?

Start here.

What’s the point of this? What do you want out of life?

A guest on my podcast used to work at an Amazon warehouse but he hated his life (those were his exact words).

He realized he had to do something about it so consumed as much content as he could about starting his own business and he took action.

129 days(about 4 months) later he had a thriving consulting business that was pulling in multiple four-figure clients every month.

His ultimate goal was to build a better life.

My ultimate goal is to stop trading my time for money.

What’s your ultimate goal?

Maybe you want to spend more time with your kids or your spouse.

Maybe you want to work from Portugal for 6 months.

Maybe you don’t want to work at all for 6 months.

Spend time thinking about what your ultimate goal is.

I’ve found journaling to be an effective way to coalesce the ideas swirling around in my head into something real and actionable.

Takeways:

• Spend time thinking about your ultimate goal

• Write it down and come back to it every few weeks

• (Optional) Watch the full podcast episode here.

Track your costs

You should know how much you spend in an average month.

I was never meticulous about tracking this in the past but it’s really enlightening to see where your money goes every month.

I use an app called Tiller (affiliate link) that automatically pulls and categorizes your transactions across credit cards and bank accounts into a Google Sheet.

You Need A Budget(not an affiliate link) is another great option for this.

I take an hour every Monday to review my transactions and categorize anything new.

When I started this journey my wife and I both agreed to be more mindful of our spending to try and keep our costs low.

We’re still doing fun things like eating out and traveling, but we pulled back on some luxuries.

I replaced my fancy $80/month gym membership with a $90/year membership to our city’s gym and we’re actively reducing our Amazon purchases.

We made some other choices that are paying off too:

• We bought a house well below our means

• We paid off my car two years ago when I was making a great salary

This isn’t a personal finance newsletter so I’ll stop there, but understanding your costs is really key to building a successful exit plan.

Takeaways:

1. Track your expenses for a few months to establish a baseline level of expenses

2. Set a goal to replace 20% of that with side income

   1. That’s probably a lot of money! Don’t worry, it won’t all come from the same place and I’ll show you how to break it into chunks.

Find short-term income

My exit plan assigns income to 3 different time buckets:

• Short term

• Medium term

• Long term

I view consulting as short-term income stream because ultimately it’s still trading my time for money.

If you’re looking to transition out of a full time job then consulting is probably the easiest way to start generating side income.

Consulting is great because it brings money in the door right now.

But how do you find clients?

The short and unsatisfying answer is put yourself out there.

Share your perspective on a topic you know a lot about.

Create content and share it with the world.

Do it over and over again.

Post on LinkedIn and stop caring if people will disagree with you.

I’ll share my content creation frameworks in a future newsletter to give you some ideas.

You’ll never make a single penny online if you never self-promote.
— Dan Koe

If you don’t know Dan Koe, he’s a brand advisor for 7-8 figure creators, influencers, and social media brands.

Here’s a great video he made about productizing yourself:

He recommends a few approaches in that video, but the one I relate the most to is marketing to yourself.

Imagine you’re selling something to yourself.

• What are you working towards?

  • Understand your goal

• What’s preventing you from achieving it?

  • Understand your blockers

• What would happen to your life if you didn’t achieve this goal?

  • Solve your blockers

Now take that same framework and apply it to someone else.

Here’s an example from my consulting business:

• A startup wants to grow total signups and revenue this year (the goal)

• But they don’t have the time or marketing knowledge to do it efficiently (the blocker)

• So I need to put together a framework for helping startups grow quickly and efficiently (the solution)

Takeways:

1. What unique service can you provide people to create short-term revenue?

2. What content could you create that attracts people that need your service?

3. Build an offering that solves their problems.

4. (Optional) Read Alex Hormozi’s $100M Offers (affiliate link)

Build an emergency fund

Emergency funds do one thing: they prevent you from freaking out when shit goes sideways.

It means you don’t have to worry about your HVAC breaking a few weeks after you quit your job because you can cover it without a problem.

But building an emergency fund takes time.

I started bulking up my e-fund after I survived my first layoff.

My company was building up their cash runway, so why wouldn’t I do the same thing?

I had also been saving money to exercise the stock options I had been granted.

Instead of spending them on a potentially over-valued company I decided to allocate that money for my e-fund instead.

How much do you need? 6-12 months of expenses is a good range to target.

You might want more or less depending on your unique circumstances.

Remember: any side income you generate reduces the amount you need in your emergency fund.

If you need $5,000/month to live and you generate $1,000/month in extra income, then you only need to cover $4,000/month of expenses instead for 6-12 months.

Takeways:

• Save 6-12 months of expenses in a high-yield savings account

Wrapping Up

There’s never been a better time to start your own business.

My goal with this newsletter is to demystify the steps, income, and frameworks towards starting your solopreneurship journey.

Everything I write about is based on my experience.

But my path isn’t the only path.

Your unique experiences, background, and knowledge means your Early Exit plan will surely be different than mine.

So I’d love to hear from you.

If you haven’t already responded to me, or shit even if you have, hit reply again and tell me what’s up.

Tell me how you’re feeling this week.

Do you have an exit plan?

And thanks again to everyone who’s responded so far, it’s been great to meet with you and understand your goals!

Don’t forget to add yourself to the Directory of Solopreneurs (I swear a better name for this exists..)

See y’all next week,

Nick

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