Escaping the bad expense trap

Hello my friends!

I have so many things to write about and to share, but as the time both yours and mine is limited, lets concentrate on the most important of them. It is Sunday afternoon, I am home and it is quiet here as my son Alexander is sleeping. I have even just switched from keyboard to writing on an iPad not to wake him up with the noise from the keyboard. To cover the news I can say that my business is growing steadily and I just got some new people in my team, that is good in many ways. I will cover the startup news in my next blog post, but this one I want to devote to final 3rd part of my thoughts on personal finance.

Back from Finland and planning 2nd holiday

The best place on the Tallink SuperStar ferry from Tallinn to Helsinki is a restaurant with a nice sea view from windows that are like glass walls.

Did not notice how 2 weeks passed on a lighting speed. The period was so packed with events and work so it is really the first time I found a peaceful moment to write the next post to my blog. The good thing is that I am now trying to avoid working 16/7 and have some relaxation on the weekend so that the workload can be sustainable in the long run.

Landing to a ferry

Landing to a ferry going from Tallinn (Estonia) to Helsinki (Finland) on our trip to Savonlinna, Finland

First holiday this year

This is the first time I write my blog post from my phone, but it is the best solution for my situation. I am in my car now together with my familly on our way to Tallinn, Estonia. We are close to Latvian border on a Statoil gas station in Salacgriva. My son is sleeping on the back seat and my wife went to buy something to eat at the Statoil gas station.

Winter finally came!

Hi there! I was just thinking about the biggest news of the previous week and my first thought was about winter, snow, and all things related to it, like snowboarding, skying, skating and playing snowballs, because the winter finally came to Latvia in the end of the last week and this is wonderful! We had a delightful long walk with my wife and son yesterday sledding down the hill in the forest close to our home.

First week of 2012

Hello my dear readers! I know that there are not so many of you (actually about an hour ago I have got an email from WordPress saying that “Someone just subscribed to receive an email every time you publish a post”, so I have my first subscriber!), but nevertheless the number of readers is not my target (at least for the moment) So the first week of 2012 is over and I can say, it was very good for me in terms of my plans realization.

Brief results of this week:

1. Prizes won on 99designs.com and money earned from freelancing:  $2750. Actually this is funny thing about earning from overseas freelancing (with customers mainly from US, Canada or Australia). You got the money on paper, but physically it will be available only after 2 weeks as the PayPal/Swedbank (biggest bank in Latvia) combination seems to be one of the slowest on the Planet. So the cash-flow is always with 2 weeks delay and it means, you should work hard in January to receive some money in February. This needs some financial planning as well.
2. I have subscribed to Computer Arts magazine (http://www.computerarts.co.uk) for iPad and find it very useful for everybody working in graphic design.
3. Received first TechHub Riga invoice for 80EUR with information that the co-working space should be ready on 15th of January, so looks like soon I will have a solid place to work in addition to home and Birojnica.
4. I won a design contest for my first customer from Japan. A company named “Otsuka Pharmaceutical” (the name of the company sounds funny in Latvian ) will purchase 1300 (yep, one thousand three hundred!) iPads for their sales staff and these iPads will run the CRM/Intranet/News app that I have designed.

I think these were the main news for now. On Sunday I have also informed my mom about my decision to go in entrepreneurship direction with my own startup (I think she is not so familiar with iOS apps, and even “programs for mobile phones” did not sound clear enough for her…) and not to look for a job (with fucking “job security”). Her reaction was as I expected worried and not so happy about the news. I think this is one of the main reasons that holds found people from entering the business area – fear of being misunderstood by relatives, who believe in “job security” (that is almost an outdated myth) and believe that business is for the rich. Just imagine if you decide to go on your own you have already fear of failure and from your relatives you got additional worries and fears that just cultivate your fear. Thats stupid, but this is how it works in life. Fortunately I have my customers, friends and my wife, who are much more confident in me, so this gives me enough motivation to continue (positive cash-flow is the second motivator)

And the last thing about my goals for this year. As I already wrote here, I adore Tim Ferris ideas and his approach of being mobile and not tied to any office/local team/local customers/country etc. So my goal for this year is to build a steady cash-flow of $6000 per month and remain independent, so that my location should not influence the cash flow in any way. Why do I need it? Because I like to travel and I want see the World. My plan is to take my family and visit some countries that are far away from Europe and maybe live there for several months. If somebody is inspired by this idea (that originally belongs to Tim Ferris, not me), I would appreciate your comments here. It will be fantastic, if you could share your opinion/experience/practical information for this (travelling lifestyle) area.

Resources part 2: software

Here is the list of web apps and software that I use (som of them I plan to use) for my startup:

Designing and Portfolio Publishing:

• Adobe CS5 Web Premium (Photoshop, Illustrator, Dreamweaver for HTML).
• Dribbble (dribbble.com) – Designers community with many high level design professionals. Good for inspiration, feedback and discussions.
• Forrst (forrst.com) – One more designers community with more textual blogs and less images than on Dribbble.
• 99designs (99designs.com) – The best marketplace for design contests. Place to earn some money for a freelancer.
• Tumblr (tumblr.com) – Simple and easy image/blog publishing, much easier then WordPress, but lacks some features

CMS for the company website and the app promo sites:

• WordPress (wordpress.org) – I already use WordPress, It does everything I need it to do. WordPress is used for this blog as well

Mockups/Prototyping:

• Balsamiq (balsamiq.com) – Feature rich prototyping software. Has a version for Mac.

Analytics & Browser Testing:

• Google Analytics (google.com/analytics) – Does everything I need and more.
• Browser Stack – Browser Testing (browserstack.com) – Has taken the pain out of browser testing.

Email and Office Apps:

• Gmail (gmail.com)
• Google Documents (doc.google.com)
• Google Reader (google.com/reader)

Task Management:

• Producteev (producteev.com) – One of the best task management services, has an offline apps for Mac and iPhone, desktop and mobile optimized web apps.

CRM/Customer Database:

• Bento (filemaker.com/products/bento/)  has apps for Mac and iPad.

International Transactions:

• PayPal (paypal.com) – Reliable yet very slow, but the only international payment processing service, so not much choice here.

A beautiful video about Riga, my home city

Time goes fast in Riga!

Resources

When you have a goal that you decided to achieve, it is time to allocate the resources. First of all it is important to divide two sides of the activity necessary to start your own business:

1. A way to provide cash flow for daily needs (mortgage, food, transportation, office rent, etc.)
2. Time devoted to the startup itself and first product development

First point can be easily solved if you have a job (that I do not see as the best alternative), VC funding or some other source of income that requires (or better if it does not require) to spend your some time on. The idea of starting your own business together with the main job looks nice, because you have a feeling of security provided by a regular paycheck, however it is hard to realize, as your employer usually is not so happy about it, as well as your job can consume up to 100% of your time, so nothing is left for the business.One more question was whether to look for a new job after 1st december when I left Draugiem group. After some thinking on the topic I decided not to go for a regular job, at least now, when I still have some compensation from my previous employer and lots of spare time.

As I had been working as a we and UI designer some 7 years ago I have decided to use my skills for some freelance job doing iOS app design. I have tried to find some job on www.freelancer.com (crap), but I quickly realized that this portal is dominated by design agencies from asia with very low prices. So I decided to give a try to 99designs, that I am satisfied with after one month there.

The next challenge in the beginning of December 2011 was that I had to return my MSI notebook to the employer, so I was left without a computer. And for sure you need all the modern devices as well as a notebook to start a technology or software business, so I bought a 13 inch MacBook Pro.

The resources that I will use for my startup are the following:

• 13” MacBook Pro with OS X Lion
• iPad 2
• HTC Desire HD with Android (to be changed to iPhone 4S in 2012)

Transportation:

• Aprilia Mojito scooter (used for low cost trips from home to office). With 3l per 100km consumption and average 600 km per month mileage it makes transportation monthly cost about 30EUR. Free parking is one more advantage of driving a scooter compared to a car.

Places of work/offices:

• Birojnica – a co-working place in the center of Riga. At 15EUR per month you get a workplace (if there is a free table available), WiFi connection and a 30% discount for coffee and tea.
• TechHub Riga - one more co-working space for tech startups, much more industry oriented then Birojnica. Residents pay 80EUR per month for a your own workplace (that is received for the residents) and a ticket to all events organized by TechHub Riga.

What is good about online business is that you need only your own time, some very basic hardware and software as well as some skills and knowledge to start. If you compare online business with day trading for stocks for example, you do not need $100.000 capital to start. Later you need more people and skills to manage them and manage the process, but this is true for almost any business. This is why there are millions of software and technology startups and the industry now is very close to a free market situation without dominating monopolies etc. (and it will be even better with Microsoft becoming weaker).

Brief startup and blog description

I think it has been enough of preface and we can move to the main topic, that is clear from the name of this blog – “One Startup Story”. So let the story begin. The business I decided to start today is about making apps for iOS devices (iPhone and iPad) with all the necessary web and offline (Mac OS X) components, so this can be called “mobile apps with cross-platform support”. This will be a product oriented business, all apps created by the company will become its property (not an agency or service provider that designs apps for customers) with a concept of 3 step approach:

1. App design and development
2. Launch in Apple AppStore
3. App promotion online

The next question should be, “Ok, so what will be your first (or maybe only) app about?”. And can answer it in 2 parts. First, this will not be a business concentrated about one and only app or product. I believe in production, launch and promotion of multiple yet high quality apps using step-by-step approach until the holy Graal is found. Second, the name and idea of the first app will be covered later, as the design of the app is prepared.

What I really want to concentrate on, is the day-to day progress of the startup including all the aspects and details of the process from allocation of cash-flow, necessary to feed my family, to day-to-day challenges of every startup, like finding an office, community, team-mates, partners, employees, etc. I was inspired by a similar approach described in a book by Maxim Kotin (in russian) called I Botaniki Delajut Business (Even Dummies Make Business). Author of a startup described in the book was sharing his first steps in startup management in every detail and that was a very inspirational experience for the readers of his blog. I hope to find more blogs like this that could contain valuable knowledge for me as well.

One more thing that is very important for me is to make my business international, not tied to any country and be able to manage it remotely. After reading the 4 Hour Work Week by Tim Ferris I decided that the ideas described in this book are worth trying. I want to see the world and live where I want without being to much tied to any country, that is my goal and my startup will help me to achieve it.