The Financial Mindset Every Freelancer Needs ft. Michael Brennan (s1 E8)
Money is the thing freelancers think about more than almost anything else—often about needing more of it. But what happens when you suddenly have more income than you know what to do with?
In this episode, Liam talks with his own financial advisor, Michael Brennan of Brennan Capital Management, about the side of freelance finances less often discussed: what to do when the feast actually comes.
They get into the misconception that financial advisors are only for the wealthy, why debt shrinks your ability to experiment and pivot, how to think about a personal research and development budget for your business, and why a diversified freelance business is often less risky than a W2 job.
Michael also makes the case that financial planning isn't about locking your money away until you're 65 — it's about reverse-engineering from what you actually want your life to look like.
Want to get your freelance finances in order? Brennan Capital Management works with freelancers and small business owners across the country. Find Michael on LinkedIn or at BrennanCapitalManagement.com.
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Episode Transcript
Liam: There have been three times in my freelance business when I've earned more than twenty thousand dollars in a single month. The first time was in March of twenty twenty-three, then again in October of twenty twenty-four, and most recently in December of twenty twenty-five.
And if you told me when I was a baby freelancer back in twenty nineteen that there would be multiple months where I was making more than twenty thousand dollars in a single month, I would have slapped your face. I just would not have believed it.
But it really did happen, and something else happened too. For the first time in my career, I had more money than I knew what to do with. I was tempted, of course, to buy myself a bunch of things that I've put off purchasing in my life. I've still never owned a car. But I decided to pause because I knew that there were other people out there who had similar income streams at similar rates, And their money seemed to be doing a lot more than my money was doing. I grew up in a pretty middle-class family. My father is a pastor, and my mother was a social worker. So I was always pretty money conscious as a kid, and I definitely grew up with a lot of anxiety around money that I think I picked up from my parents And I'm also just an anxious person, so money was something that was very easy for me to get anxious about.
In the last episode of this podcast, we talked about the feast and famine cycle. And of course, when freelancers think about the feast and famine cycle, we usually think about the famine part because that's the part that's scary.
And for most freelancers, it is more common than the feast part. But today, I want to flip the script a little bit and talk about feasting as a freelancer. What do you do when you suddenly have more income than you know what to do with, like I did those three months over the past few years?
And what do you do if your income stays at those high levels and you suddenly have more capital than you're used to having? Right around the time that I had that second big bump in my business back in October of twenty twenty-four, I received an email out of the blue from someone named Michael Brennan, who was a financial advisor.
And it felt serendipitous to me, but what I really liked about Michael was that he had clearly looked me up, looked at my LinkedIn profile, looked at my website, and he knew I was a freelancer, and he specifically wanted to work with freelancers and small business owners.
And I thought that was really unique. And in fact, at that moment, I realized that I had this kind of strange mental block on the idea of financial advisors. Some part of me believed, even though consciously I knew this wasn't the case, that financial advisors were only for people who were making a certain amount of money that I was never going to make.
But I knew that if I were to play my cards I could use the boon in my business to fund myself later if a famine cycle showed up, and I could use that money to invest in my retirement, which is obviously something that we don't get as freelancers.
We don't have an employer contributing to a four zero one K. But I really didn't know where to start. I'm a writer. I am not here to do financial planning. I'm not even really very good at simple addition. So when Michael reached out to me, I knew it was a good idea to at least talk to him and see what he had to say.
In the time that I've been working with Michael Brennan, I have completely paid off all of my student debt. I've saved enough money to go on a sabbatical for three months to write my memoir, and I have more in my retirement accounts than I've ever had before. In fact, I have a retirement account, period.
That was not the case before I met Michael. I just feel a lot less anxiety, especially right now. As you've learned on this podcast, I'm going through a freelance pivot myself. It really helps to have this financial security that I've built up for myself by working with a financial advisor.
When I first worked with Michael, I was afraid that he was going to be so expensive that it would be totally worthless because any extra money I would earn or save by working with him would be negated by his fee. But that obviously turned out to not be the case because almost three years later, we're still working together, And Michael agreed to be the podcast guest today.
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Mike Brennan, welcome to the Freelance Success Podcast. Thank you for joining me.
Michael: For having me. Appreciate it.
Liam: Yeah, my pleasure. I wanted to have you on here actually. I was thinking about people to have on the podcast for the first season and was thinking about what freelancers think about more than anything else.
because that's what I want to talk about. And money came to mind almost immediately. I think most freelancers, especially right now, think about money probably more than they should. because it's often very shaky and unpredictable. And so I personally have my own trauma and experiences with money and I was thinking, who do I go to when I'm like struggling with money?
And the answer is, you're my financial advisor. And I thought, why not bring you on and just see what we can chat about. Because one thing I always say is when I walk away from our meetings, I feel a little bit like it's financial therapy. Like I just feel lighter and easier because I get very worked up about money.
So before I go any further though, I want you to introduce yourself in your own words. Who are you and what do you do?
Michael: Sure. So Mike Brennan, founder of Brennan Capital Management. I've been in finance for over 20 years now. Launched my own firm about four years or so ago, and I'm mainly working with business owners all across the country.
So business owners, you can think about that. People that have a portion of equity compensation, but mostly it's freelancers or people that have started their business and are trying to manage a family while struggling. The challenges of. Trying to grow a business. So it's like having two families, and I've been in that seat going from a W2 job and starting my own business to having to grow my revenues and manage a business.
And I have two little girls and a wife. Family dynamics come very much into play when you're starting a business. So that's definitely a focus of mine. Working with that client base is, there's the numerical side of things, but there's also the very real, I would say, personal situation. And I think, what you had said is, being more of a financial therapist, money is deeply personal and it's definitely not something that I find can be put just into spreadsheets to define an outcome.
It's very much about goals and expectations, and I think that's, one of the critical leverage do I see with people's success. It's, do they have a realistic expectation of where they want to go and you know what their outcomes they're looking to solve for are. And that's why I love doing what I do, because it's really interesting.
I have clients in multiple industries and I get to hear all the different stories, both the positive and the negative, and I think. What's interesting, and I think I didn't really find this until I started working with, small business owners, is that really failure is the key component to success.
Almost everyone I work with has in some way or another, struggled in one capacity or another, whether it's failing their first idea, completely pivoting their business. For me, it's really interesting to hear how folks may start in one sector or vertical and then completely pivot to something that they didn't initially think.
I always think about it as little mini experiments along the way versus, versus just a five year goal track, because I find that, what you define your job as day one or your business as day one could be very different. Even six months from your initial founding. So that's my experience when I say
Liam: The entire industry could change overnight as we, which
Michael: we're seeing Yeah.
Liam: All experience. Yeah. There's a few things I want to poke at that you were just talking about there, but the first thing that comes to mind is that first you say you work with a lot of freelancers, a lot of small business owners and people who are failing or have failures in their past, Lord knows I do.
And I think it's, it is the only way to succeed, right? Because if you're not trying anything I think one of the misconceptions people have about a financial advisor, and I certainly did, is that it's like for the wealthy and only for the wealthy, and that it's for people who are already successful financially.
Michael: Yeah.
Liam: And it took me a long time to get over that idea. Is that something you encounter a lot?
Michael: I'd say that is a common misconception because in actuality the greater the investing time horizon, the greater the likelihood of success just by the fewer, just by the pure fact of compounding, right?
So when I think about, my two little kids, a five and a half year old, and an 18 month old, their lifetime of investing and from a success standpoint would probably be a far better outcome than someone that just started in their fifties or 60. Mainly because if you think about all the different economic cycles you go through, just staying invested is one of the key definitions of success.
And I think it's really that perseverance and longevity that really drives outcomes and success. So I think, the sooner you get started, the better. So actually working with somebody early, or even just, DIYing your own finances, the sooner you start the better. Just because you have the power of compounding, which is quite a force when you start to see returns, returns multiply on your invested capital.
Liam: Yeah. I'm one of those people who really wishes I had gotten that advice about 15 years ago, but it already makes a huge difference. Like you said. I think I was actually looking before we started talking about this, and I was looking back when we started talking, so it was May of 2023 when you sent me an email.
And actually I also want to talk about your cold email approach because it worked, obviously. And you got me as a client. But that was two years ago, and I remember when I was talking to you, I still had a lot of student debt. I got out of that and then I built up a nice nest egg, and then I spent that nest egg while doing a sabbatical.
I got into some financial trouble. I got out of some financial trouble all while, like the stress levels were just so much lower because I had somebody in my corner who knew it. Like I could come to and say, this is what's changing and this is what's, what's coming in and what's going away.
And I think it's interesting thinking about how much freelancers have to do that kind of shifting and changing. Yeah. Is it something, do you think that's unique to freelancers in a way of how much they have to be agile with their finances in that way?
Michael: I think also a lot of it comes down to what your position is when you decide to branch out on your own, whether it's doing it on the side while port, pairing that with the W2 job and then ultimately flipping the switch to go out and start your own business.
I've I've generally found that, when you have debt it not only adds just an element of leverage, which can multiply your growth potential, but it does add a level of stress where, you know, that monthly payment needs to be paid every month regardless of the business cycle. Debt can be a very powerful lever to, to grow a business, but it can also be a very powerful detractor to the ultimate success because, assets are temporary to the extent that asset prices can fluctuate, but debt is permanent.
Unless you're paying that debt down, what you're doing is you're effectively reducing your runway and your ability to be successful because I think it's a lot of those trial and errors. That and that time horizon that really can help define your overall successful approach. If you have debt you really, of course, quantify relative to the size of that debt, you really do shrink your ability to experiment and pivot and try different things because that recurring payment is going to come consistently.
I think it's a balance. And of course it's all about your, expenses and the lifestyle that you need to support. So I find really understanding your, personal or family burn rate what you're just spending on a monthly basis to support your lifestyle is really critical to determining the longevity that you have to experiment and to try new things.
So I think debt can potentially make you less nimble and maybe more focused on chasing things that are short term because they derive income versus investing in long-term opportunities that maybe don't pay off immediately, but could pay dividends in years or even decades to come.
Liam: Yeah, I I totally get that because that's exactly what happened with me, right?
I lived with debt for so long and didn't even realize the amount of stress it was causing me until it was gone, and then it happened again, I picked up more debt and the same thing happened again. And it just is every extra penny first. You can't, first of all, you can't celebrate anything because every extra penny is just going into the hole, the money hole.
Michael: Yeah.
Liam: And just like you said, you can't experiment and, I think this is one of the things freelancers need to get into their heads early on is like a good portion of the revenue, quote unquote revenue that you make has to be used on crazy experiments that may or may not work. I'm wondering, have you done experiments with your own business in that?
Michael: Yeah. Yeah. I experiment all the time. In fact, that's one of the things that. So fun about having your own businesses. I can be nimble and dynamic and try different things. Even something as small as, building out a CRM and trying different software and see what works and, really understanding the dynamics of your business.
Maybe trying, for me, for example, trying to find a new client profile to work with, right? So I try to quantify individual client types and then I look into the market and see how many of those, customer profiles exist. And if I come up with one strategy or one solution for one person, can that apply to 10 people or a hundred people?
For me, I've experimented with diff different forms of outreach, through email, through phone calls, through LinkedIn, through, networking events. And then I can track the data. And I just, I think for me. One of the things that I struggled with early on was, really just understanding something that wasn't working and then moving on quickly, because I almost had this kind of feeling just like when you pick up a book, you almost feel like, oh, I need to finish it.
I sometimes felt I need to, keep going and see if it works. And it's really a balance between that, perseverance, but also reading the data and understanding is this actually working and the things that are working. I found leaning into those has led to very successful outcomes.
And then the things that aren't working, pulling back. So I try to allocate my time and resources to successful outcomes and continuously experimenting with new things, if not just for the fun of trying something new. And it makes the days more exciting for me personally. That's how I've approached it.
Liam: How do you overcome this sunken cost fallacy, right? Because I totally, I hear you of when Im working on something and I really want it to work and it doesn't work, I go into this like weird. Grief cycle of but it has to work. I put so much time and effort into it and I'll limp along with it.
How do you were you just born that way? Like of being able to just be like I'll let it go? Or do you, what do you do to get over that?
Michael: I don't know. It's funny. I do a lot of spear phishing just in the summertime. More, more less so now that I have two, two kids. But before, I used to go out a lot and a lot of time when I'd come home with no fishing, my wife would always joke with me.
She's like, why do you keep doing that? You're never successful. And I'm always like yeah, but there's just a fish around the corner, i'm going to find the next one. For me, I'm always going out with the mindset that it's going to be a successful outcome. That's why I'm doing everything.
But then ultimately I realize and just referring to spearfishing that maybe I'm not in the right spot, maybe I'm not out at the right tide. Maybe the climate isn't correct. I think for me, I. Expect I'm going to be successful in everything that I do. But that's just because I try to focus on things having a positive mindset.
But I just look at the data and try to assess in a pure, non-emotional way, Hey, if I'm reaching out to a certain client base, are they responding to me? Am I getting clients that way? Am I delivering effective outcomes? And if I'm not, then I find maybe I want to try a version of that. But oftentimes I will find that I might start with one idea, and maybe within that idea I'll find a sub idea that then I'll go out and pursue.
So to give you an example, maybe I want to pursue small business owners, and I find that I have a lot of success with small business owners that service other small business owners, which actually happens to be a pretty core heuristic of my client base. I only found that out by having conversations with people and experimenting and asking what their challenges are, because I would've never figured that out had I not tried.
So maybe my initial. View was, I'm just going to work with all small business owners across the country. And then it got whittled down to maybe there's a niche within that vertical of small business owners that serve other small business owners. And that has actually been identified through experimentation.
Rather than crafting these like lofty, five year plans, I just try to think about little levers that I can move and each day just try to move it forward and just do the same task over and over, but in different slightly variant ways. And then see which one works the best and then lean into that.
So that to me is, I found to be the most fun.
Liam: What does it look like when you lean into that?
Michael: I, so I'll track the data. So simply put, if I'm goal of maybe just using calls as an example, if I'm going to call 50 people, maybe I'll increase that to 75 people. Or if I'm going to send 75 emails or a hundred emails, or send that volume on LinkedIn messages, I'll then look at what the response rates are and if those response rates are trending up, or even if the percentage rate is staying the same as I increase my volume and I'm having good conversations, then I'll just increment my volume more and more.
So I think it comes down to seeing the success and then understanding early with within a reasonable, set experimentation timeline of what works, so for any new sort of like new business campaign, I find like you have to give it at least a month or two months really to understand the dynamics of a, individual customer profile to really get the responses in and to gather enough data.
But, I find for me, like the same way. Think about building investment portfolios and the way that we don't over concentrate in a certain asset class. I do the same thing when I'm trying to think about business development strategies or, trying to grow a business, right? If you over concentrate that's good and you do want to lean into that, but you also want to have other edge cases where you can then start to grow revenue for your business in other ways that are potentially uncorrelated.
Because a lot can happen very quickly in businesses. If you have, one of the key risks I see for a lot of founders is customer concentration, right? Where, it's essentially it's an interesting balance, right? Because sometimes when you're starting a business, you will have a customer concentration just as a function of you go from zero to one, you now have one client, they represent all your revenue.
That's great. A few years in though. And if you only have that one customer, that's a real risk point because if that customer goes away, so two does your business. I think it's trying to manage that balance around, diversification of revenue streams, diversification of client base to, to really make your business resilient.
And I think that's the idea. And at least for me, when I think about growing my business, I'm not thinking about the revenue generation tomorrow. I'm thinking of what's it's going to be like in a few years. And I think applying that mindset and methodology has definitely helped me get through some, challenging times.
I deal with failure all day, every day. That's the nature of starting a business. People decide you think they're going to work with you and then they decide to go with somebody else. And I think every business owner deals with rejection every day, and it's. Can you learn from it and then just I don't want to say brush it under the rug, but just realize that it's just an ordinary course of business.
So that's why I like these little experiments because it's, the monotony can be real. And I do think there's a important element of, continuing to do the same things that work, but there's also balancing it. I think, what's the company that maybe it was. Maybe it was Google where they had mentioned that you get, 80% of your time is spent on the core business, but then another 10 or 20% of your time can be spent on anything else.
But that 10 to 20% of your time has also been shown to really drive the value of that 80%. So I try to think about that and sometimes work on edge cases that are. Almost seemingly completely unrelated and then ultimately can determine a good outcome if that's something that people like to do.
Liam: Again, there's like several things I want to say there, but just on that last point, I was just talking to somebody about this, about there's so many different things you can do with your business. When you, especially when you're marketing it by yourself, there's like millions of things you could do, right?
Yeah. You could start a podcast like I'm doing right now, right? You could write blogs, whatever it may be, send cold emails. And I think one of the things when people are like, I don't know where to start and what to try, I often say what actually sounds the most fun to you? Yeah. Because I find that passion is such a huge driver for these projects.
Like I wanted to try to start a podcast. I've always been curious about trying to start a podcast. So I'm here doing it because I'm actually interested. I think a lot of people spend. Time, humming and hawing over what am I going to do for my business. And actually it's allow your heart to drive you sometimes in the right direction.
Yeah. But you can only do that if you have the wiggle room in the breathing room to
Michael: Right.
Liam: Spend. The other point I wanted to just echo a little bit is this idea of diversification of revenue streams. I hear a lot of people say to me when I tell them I'm a freelancer, they're like, oh my God, I could never do that.
It's so risky. And I'm like, I don't know. What's risky to me is like getting laid off and losing a percent of your income. Yes. And having to, go on unemployment. Whereas with me, I could never, because I'm at a point now where I have diversified my income streams, I can never lose really more than a third of my income.
Even if they, knock on wood, that doesn't happen. And I think a lot of people don't think of that. And if you play your cards you can use that to your advantage to get some of that experimentation space.
Michael: Yes. Definitely. And it's one of the funny things just even about, financing a home.
One thing I see, which is fascinating to me is, if you have a W2 job, it's pretty easy to qualify for a mortgage. If you are self-employed, you need a lot more data. And I would make a strong case that somebody that's self-employed that has shown successful success in their business probably has less risk than somebody with a W2 job because, like you had just mentioned you essentially have one customer, which is your employer.
And if one day un unbeknownst to you, or maybe not even having anything to do with you, the business determines that they want to reduce head count and you lose your job, that could be a huge risk to your family. C coincidentally, one of the reasons why, you know, whenever we're thinking about setting up an emergency fund.
One of the reasons why, at least my interpretation of the three to six month rule of why you want to have that in savings is that's roughly the amount of time it could take to find a new job, right? You lose a job, you lose all of your income. You have a diversified client base, you lose a client.
Your income is still humming along. So I think from a risk management standpoint, if you've identified something that you like to do and you have a track record of being able to generate revenue in that manner, and you have a diversified client base, I think if you compare that to somebody that maybe has a single source of income, there's less risk there, right?
At least, when I think about it, just in terms of the diversification element of where your income is coming from. And then, some folks that I work with have multiple revenue streams. Maybe they have real estate investments on the side, maybe they have other investments in other businesses.
I think the other challenge, which you had mentioned, which I. I talk to just a lot of friends that own businesses and just, clients as well as, how do you focus your time, right? Do you, because it is easy to sometimes focus on, like the shiny object syndrome.
Like you, you try to chase too many things and then you lose focus of what your core business is. For me, and I think it's a struggle all the time, is how do I want to spend my day, right? There's a million different permutations of what I could do in any day. So I try to just think about, spending enough time to make sure that I can grow my business and things are going according to what I deem as a, successful outcome.
But then also enjoying myself and, trying to understand, what else can I do on the business side to help drive its growth, even if it's not immediate, immediately identifiable. As, oh, this is where I'm going to drive X revenue from. Like I've tried other things. Like I started offering business 4 0 1 Ks, and you know what?
That really didn't go anywhere. I thought maybe initially that would be a great outcome for, small business owners, but turns out it didn't end up panning out to my expectations, and I just don't really do that anymore. So I think for me, it's finding out, rather quickly, Hey, is this a good vertical?
I didn't know until I experimented, I tried it. I'm like, nah, not really for me, not my focus, not something I really enjoy. There's a solution, there's a really built out solution for that, and I don't need to participate in it directly. I think there's, I have a lot of personal examples that I can go into of where I failed and
Liam: hasn't Yeah.
Michael: Out,
Liam: but it's still an investment in finding out that, that didn't like you know how, yeah. And you probably learned why in, in certain ways, certain aspects of that audience didn't work for that reason. And then you can apply that to new audiences that you're se seeking out.
Michael: And there are advisors that I know that have built incredible businesses, just focused on that, which is what gave me the insight of oh, maybe I should focus on this. But I found for me personally, that wasn't what I liked. I really liked the interaction of, one-on-one focused on somebody's personal finances, hearing the story of their business versus, I'd say more the, institutional nature of, designing a 401k plan for a business.
It's, a little less personal. It's more focused on just, the understanding, the regulations, the requirements. I, and we can have, go on a tangent on that, but just, I think for me personally, I realized that it wasn't an area that I wanted to focus and financial services, you could really go out there in terms of everything that you can offer in terms of yeah,
Liam: of course.
Michael: So I, again, I think focus on. As a any person when you're running a business, it's just seeing what you like and then trying to find, different things around that core competency that maybe compliment the business, but then are also just personally enjoyable.
For you.
Liam: This all really ties into something I wanted to ask about and talk about, which, when this goes live to air, we're going to be doing a, we do like these quarterly events and where we all work on something together.
And the first one we're doing this year is called The Pivot. And because there's just so many freelancers I'm talking to right now who are trying to pivot their business, I'm trying to pivot my business. And I thought it would be good to get everyone together and go through what are the things that you need to be doing if you really want to be serious about pivoting.
Pivoting is a giant experiment, right? Yes. Or maybe it's like a hundred experiments in one giant category.
Looking ahead and we're looking, imagine you were talking to a freelancer who is on the verge of a pivot in 2026.
What kind of New Year's resolutions should they be making?
Or what kind of questions should they be asking themselves right now in order to make that transition period feel less financially frightening?
Michael: Yeah, so I guess it really depends on the nature of what that pivot means. When, do you mean essentially taking one business focused on, X service and then doing a completely different service?
Or would it be, slightly related because if it's. If it's, related but maybe not exactly that service offering, then I think you can increment into it by small experimentation. So rather than, building out all of the outcomes, I think even just getting started with a smaller client in that space while still servicing the existing business.
So this way you can really identify is this pivot. Going to work and will this, on a small scale work, then expanding it outward. So I think a lot of it depends like you had mentioned earlier on the dynamics of the individual, right? Do they have a lot of student debt they have to service?
Do they have a huge mortgage debt? Do they have a lot of cash that they can afford? The experimentation, that's where I think, you'd really want to focus. And it is a very a deeply personal question because every person's individual financial situation could be different. If that's the only revenue you have to support your whole family and going from, a big number to zero can be very frightening.
And maybe that isn't the best way, just from a pure, risk management standpoint to approach it and who, who even knows if any sort of pivot could be successful. I will say, I think New Year's resolutions. As a whole tend to not be the most successful. And I think this is evidenced just by data with, gym membership signups.
It's frequent commented on where, gyms see a huge influx of people I'm gonna, lose X amount of weight, they sign up for the gym, and then by the end of January, early February, the numbers to dwindle down to the historical average, right? I think, but rather than doing it, just even committing to small little experiments each day that are very attainable and more, personal outcome based versus, outcomes that you can't control.
For example, I will call five people in this new segment each day to experiment, right? Because you can control that outcome. And I think if they're really small and really manageable, I think the likelihood of. Not necessarily being successful, but identifying what works and what doesn't will happen much quicker.
Because I think you can get, analysis paralysis where you start trying to overanalyze everything, putting it into, chat GPT and seeing, give me all these different outcomes. And then before you know it, you're convincing yourself not to do it versus just trying it and understanding that it might not work, but at least you've experimented and maybe something new came to light from that small little experiment that might take your business in an entirely different direction.
I think it's very much about, and I really, I hesitate to speak in just generalities because everything is so deeply specific to the individual. But I think more, more broadly speaking, the sooner you get started in anything. The better it will likely be just from the pure power of, progress compounds just the same way investment returns compounds.
So the sooner you figure out that it's not going to work, you can check that off and move on to the next one. And I just think that, doing things now is usually better than waiting because otherwise you're just going to be one year older when you ultimately do it
Liam: right or miss the opportunity.
Michael: Or miss the opportunity. Yeah. Which, that fear of missing out that's a very real thing. And unfortunately it can lead people to make some, rather rash decisions on the investing side of things or, things that peak valuations and that's when, some investors start to move into positions and all.
Unfortunately that can lead to a really bad outcome, which we all saw with some of the meme, stock mania that, that occurred. So I think, it's real, it's really about. What you as a business owner are looking to explore and what that pivot means to you personally and to your business.
And do you have the runway? If you've got enough personal liquidity and capital to really be dynamic with your experimentation, then I think you can accelerate that process, right? Because you can take that risk. So I think the more you know, personal liquidity you have, the more runway you have the, I'd say less risky.
Such an endeavor would be if you're
Liam: right,
Michael: O operating on the margin, servicing debt, and like barely breaking even that's where I think you start to see challenges. And if you look at. What was like the the F is saying like, when the tide goes out, you get to see everyone who's swimming naked, right?
I think that's like a warm boat or something. Ultimately, when people are levered and markets are going upwards, and by markets I don't just mean financial. The general economy, it looks like everyone's doing good, but when business slows, when economies start to shrink and contract, you really start to see the businesses and the individuals that have really applied too much risk to their approach and they end up getting washed out.
People with great ideas and businesses with great ideas can ultimately fail not as a function of the individual's desire, but really as a function of the capital structure because if you can I think COVID is a great example of, what happened where, if you're able to weather a storm that was, really unpredictable.
I don't really know anybody in the six months leading up to COVID that had thought this is going to shut the world down. It was pretty much business as usual, and it was more, I'd say on a fringe case. You'd be reading about stories about this disease that is manifesting.
But, I think ultimately, it, your business could have been shut down during that time, even if it was a great idea and if prior to that it was humming along very nicely. So I think there's a lot of externalities that can come into play that aren't readily forecastable, but if you've got the wherewithal to weather a business downturn, either because you've got enough capital or because you've got, no, no liabilities and, you manage your expenses tightly.
I think that's a main. Driver that I've seen in between folks that you know, are able to, weather through a really d difficult economic time and make that pivot in the same capacity.
Liam: I just wrote a post about this on the community about earthquake proofing your business and thinking about how, you know there are going to be earthquakes in afin in a business, a small business.
It just happens. COVID is a great example, but also just like that client that you counted on for five years suddenly drops you, right? How flexible and sturdy have you made your freelance business? And a big part of that is, having processes and having backup plans and having follow up plans, but also having that, I'm starting to think of it as like laboratory money, right?
Like money where you can just play around. And I love what we've talked about here with this mindset of when you have that money, when you have that money, if you can think about it as I'm paying to find out whether this is going to work or not, then it doesn't become so painful if it doesn't work because you've got the result you're going after, right?
Obviously in the dream world it works, but it's not going to work every time.
Michael: And think about, research and development in big businesses, it doesn't always lead to successful outcomes. Think about the billions of dollars pharmaceutical companies expend on clinical trials, on testing new drugs, and then, ultimately do have, they find a drug that's very successful and that pays for all of the failures.
I think I've never really, framed it out in this way, but I think yeah, quantifying a, research and development budget, maybe personally could help somebody who's merely struggling with, how do I get started? Maybe it's allocating a portion of your cash to experiment in this new venture.
And, if you do it on a budget-based process, you've essentially fixed your loss to the extent that you're not quantifying the time component to it. But if there's a dollar requirement, maybe in media spend or in new tools that you need to get, or new education, then at least you can, project forward, your costs associated with it, and then I think it becomes a little less scary. If you say I'm going to spend, $10,000 or a hundred thousand dollars on this venture that, scale to my revenue doesn't really move the needle a ton, then I think maybe it removes some of the fear aspect of it, and you can at least quantify the real cost from a dollar cents.
And if you find that it doesn't work. Then you at least have a metric that is not subjective. It's more just, numerically based, that you just turn it off and then you stop and try something different. So that could be a nice approach and framework for it as well.
Liam: I love that idea. I love the idea of having a research and development department in your own freelance business.
Why not? Yeah,
Michael: why not? Yeah, and it could be just something as simple as doing some mental accounting or even, I find some people really like segment segmenting their money in different bank accounts. Maybe if I know, pe some people follow that profit first methodology where, you know, you segment your money in different accounts based on your spending needs.
And from a budgetary standpoint, that might be a good approach as well because the money is then sitting there and you can see it. And if you know some people that are very visual and really enjoy that classification of account structure, you can spend down directly from that account.
And you've already pre-funded your liability. Your, your expense from that r and d standpoint. So you don't have to worry about going into debt or what are my revenues going to look like if I do this? You pre-fund it. So there is a little bit of planning that you can undertake that can maybe make the, research aspect a little less scary and more quantitatively defined.
Liam: Yeah. And part of it is too about budgeting your own time. So it's not necessarily that you have to put money into it, but you do have to give yourself the time. And again, that comes down to having wiggle room to take some time off. Yeah. You can use your research and development fund to do an offsite, go buy yourself. A couple nights in a hotel, lock yourself away, do some business planning, do some thinking. That kind of thing is also an investment. And I think too, I love what we talked about, the idea of investment. Obviously we talk a lot about literally investing your money.
But so many of these experiments also, maybe I have had this experience myself. You try it, you think that didn't really work, and then six months later or a year later you find out it actually did work. It just had a much longer turnaround time than you
Michael: thought. Yeah.
Liam: Or you just never know.
That email that you send that post that you make, it could be the one that turns into a client. You literally never know. It's very rarely in my experience, can you say this action directly brought that much money in. Once you're like running ads or something like that, you can maybe tell, but some of marketing is just experimenting and waiting to find out whether that worked.
Michael: Yeah. And I, I think the way that I've always thought about it is you, if you approach each conversation with an optimistic outlook, right? I have a lot of conversations with folks that, ultimately we might not engage from a client standpoint, but before I get on a call with anybody, my thought process is I'm going to try to work with this person as a client.
And I think every conversation, if I approach that versus, the talking a little bit about more like the financial therapy side of things. More, more of like the negative thought of, oh, this person isn't qualified, or, oh, I see, they have a business, it's in an industry that I don't know.
There, there are a lot of times that I've got on a. Call with somebody that even if it hasn't necessarily led to an immediate relationship, maybe it's broadened my horizons to think about something that I didn't initially think about. So I also think it's having that, open mindset to not really knowing what the outcome is going to be and being okay with that.
I for one, anytime somebody wants to speak with me, either through booking a call on my Calendly. I take pretty much every call because I will say this, especially as, freelancers and business owners, it's pretty frictionless when it comes to a Zoom call, right?
Liam: You
Michael: know I remember having to get on planes and, spending a whole day just to have one or two meetings, and now, what's the cost of having a, a 30 minute zoom call with somebody that you know, in, in some way, shape, or form you may find to be a very educational experience?
Because I really do believe that if you know you're going to talk to somebody that's, within your reasonable target environment, right? I think there could be good, a good learning experience there. And it's really, at least for me, what is most exciting is not really knowing the outcome of how things are going to transpire.
And it's like approaching each. Conversation or each experiment with that, enjoyment of the unknown and that's at least what my thinking is when I have these conversations with people and I fail all the time. That's like my, that's the nature of our business. It's in, in wealth management and financial planning, you are, you're definitely talking to more people than you're working with as long-term clients.
But that's the nature of the business and I think that's probably the nature of most businesses. Yeah. I think it's. That, a business owner is signing a hundred percent of their first conversations, or if you are, you got a great business. That's fantastic.
Liam: Right.
Yeah. Unless you like run a grocery store, I don't think, yeah. Or I think and then, and if you, I first I'd love it. You say getting comfortable with the unknown is hard. I think for a lot of people enjoying it is even a crazier idea, but it's, that's, it's huge. You ca I am, I'm fond of saying you catch more flies with honey,
Michael: yeah.
Liam: With vinegar, it's the more people you sit down and talk with and just the more people who know your name and what you do. You never know who's got a rich aunt. You never know.
Michael: It's totally true. And, I really do believe in, network effects. And I've seen it happen just in my business and I've seen it happen with my clients, where you never know where the next opportunity will present itself.
This is, Liam, when you mentioned to me, being a guest on your podcast, like I had never been on a podcast before and it was something that I thought about and, all along the lines of not really knowing where this is going to go. I was like, yeah, let's do it. What's.
What's the downside to me, right? We get to have a good conversation. I try something new and if nothing pans out from it, hey, I was a guest on a podcast. If, maybe there's some framework we're now, I'm like, oh wow, I really enjoyed that. Let me go be a guest on more podcast. Lemme start my own podcast.
So again, I think it's, if you really wanted to build an analytical framework to this, it's okay, this is my time value, it costs this, sometimes it doesn't need to be overanalyzed. It's just trying something that's a little bit outside your comfort zone and experimenting.
And if it doesn't work, then you know. Don't do it again. Yeah. If at the end of this I'm like, I, this was terrible, I'm never doing it again. At least I can, sit to myself and say, all right, I tried it. At least I tried it.
Liam: Yeah.
Michael: I've, I just personally, I've, I've been to a few networking events and I'm, that's not like my favorite environment to, to be in, just in terms of going to cocktail receptions and just meeting random people in general.
That's just not my favorite thing to do, but I'm like, lemme just keep trying. And I've ended up making some really good connections there. So my initial apprehension actually turned out to be something that I now enjoy. So that wasn't my first thought of like, how I'm going to grow out and meet people.
And I just stepped out and tried to do it. And now I try to incorporate it into my business just to meet new people and think about new things. And, as long as it's, not completely inconvenient, I'll try to do anything because you just never know where business can come from.
That's, to me, I think the. Biggest thing.
Liam: Yeah. Oh, a hundred percent. I'm going down to a con. I went to a conference last year as a writer. Yeah, it was a writing conference and I thought I'm going to go and I'm going to learn from other writers. And then while I was there, I realized I run a fiction editing business.
And I was in a room with about 10,000 other writers and I thought. Oh, I think I'll come back here next year and buy a booth and sit here and market to these people, and that's what I'm going to be doing in March. And it's I never would've thought of that if I hadn't just thought I'm going to go to this conference and put myself out there, even though it was scary to do that.
Michael: Yeah. Yeah. It, and that's that that almost it's almost like a visceral feeling as well. You can almost feel that initial, when someone suggests an idea, you can almost feel that initial apprehension of I don't know. And that, that sometimes could be a good indicator of maybe you should try it.
Or that's at least for me I'm like, okay, if my initial apprehension is not grounded in historical, experience or understanding that and my historical experience might be wrong and it might be different. because who I was when I was 20 is very different now that I'm 42.
I have a different perspective, different mindset. So maybe it's also questioning your historical, perceptions and seeing Yeah, Liam: exactly. I was going to say that. Why ask yourself, why do I, why am I apprehensive about this? And I would guess that the vast majority of the time the answer is because I'm afraid it won't work.
Michael: And afraid of failure. Yeah. I think every, a lot of people are afraid of failure. Every, it's just a natural human condition, I think to fear failure. And it's really harnessing that. And I think a lot of it just comes from repetitions, believe it. Or like the more you fail, the easier it is.
I would definitely say that, the more comfort you can find in that discomfort, the more natural it becomes. I know when I first started in, finance especially in a role and responsibility of generating business, those first couple of lost deals to me were, deeply personal and, what did I do wrong?
How about this? And now it's really more of a understanding around, thinking about it in a productive context. It's, there's some things you can't control, right? Just you don't really know everyone's expectations or what their individual goals and agenda are beyond what people are telling you.
It's also like sometimes you just learn from yourself. Maybe you didn't think about the structure of the conversation, right? So if you can even turn your failure into. Experiment and understanding, why didn't this work? Was I talking to the right person? And then, using that as a catalyst for understanding how to have your next conversation may be a little bit better.
The more reps you do in anything, I think the more comfortable you get the more you learn about not only whatever product or service that you're marketing, but how it's being received by people. And is it being received in the right way? Is your pricing too high, too low? And, I think there's no experience like direct experience.
You can I love to read, I read a lot, but there's still nothing like just actually going out and doing something. You can read all the self-help books or business books in the world and until you actually go out and apply any of those methodologies or processes, you're not really going to know whether or not it, it works.
So that's, so that I think about, trying different things.
Liam: Speaking of trying and going out and doing things you're going to Costa Rica in a week?
Michael: Yeah.
Liam: And are you going to be spearfishing there?
Michael: Good question. We were trying to figure out what our plan was going to be. My wife and I, this is our, first time we're going away, we actually have the in-laws coming to watch the kids, which is awesome.
Liam: Oh yeah.
Michael: Wow. That that'll be really fun. We'll probably do some surfing, do a little diving, just kind of hang out on the beach and. Just relax for a week. Never been to Costa Rica before. And, I think that was for us, we were just like, let's just go take a fun trip just as parents, because, we also have lives sometimes it can get very easy to get lost in the kids and, you're a parent now.
But we both are individuals and, we want to go have fun together as a couple. And I think that's one of the reasons why, we do a lot with our children. And by the way, that's also a great thing of having a business. I get to see my daughter off to school every morning and, she's in kindergarten and, I love that.
I really enjoy the fact that I get to see my family and, get to spend time with them. And, we have that as, freelancers and business owners, we really do get to control our schedule and it is like a value-based decision. And it's also, the positive and the negative.
because a lot of times, I love working on my business and it's trying to balance. Do I spend that time with, with my wife, with my kids on my business. So it's, and it's an internal struggle that sometimes I have because, I might want to spend more time working on the business.
And then, my daughter wants to come into my office and I'm trying to balance while I'm on a call, honey, I can't come out. And it's, I have a lot of friends that, we all, wherever a lot of people work from home now, or
Liam: Yeah.
Michael: They go into offices and, it's really it's, again I think it's really about, balancing that.
So yeah we will hopefully have a really nice time there. Just.
Liam: It's funny, I I ask people a lot we talk about origin stories a lot and the freelance success, like, how did you come into it? And I find there's three pipelines into freelancing. One is the one I took, I hate my job so much, I'm going to try doing it myself.
And then there are people who get laid off right or unexpectedly lose their job. And then there's like the parenting pipeline of people who are like I took maternity leave or I really wanted to spend more time with my kids, and then I just got really good at it and now I want to make it a full-time thing.
So I think a lot of parents will appreciate hearing that. Yeah. Maybe we have to do a whole part too. I'm probably not the person to talk about parenting. I'm out here managing my own.
Michael: The, the stress of, being a parent, running a business it's very real.
And it's a challenge. And also like the support of a spouse or a significant other in some capacity is critical. I know I would not be where I am in my business if not for my wife, because parenting is a joint responsibility, and. You know her, she has a full-time W2 job in healthcare, she's a nurse anesthetist. For us having that, steady salary while I was trying to grow the business definitely helped from a family planning standpoint. And definitely helps having a spouse that's supportive. And I will say that, quantifying the time demands are also real.
I've clients on the west coast being in, the east coast, different time zones, so I'll sometimes have calls at night. There, there is a competing dynamic. And I will say, having that understanding with your significant other is definitely critical. We spend a lot of time trying to, make sure we can each accomplish our goals, even if it's on a daily basis.
She wants to go to the gym I'll go pick up the, the girls from school or daycare and, it's really about managing that because. I, at least for me, do this apart from just, loving what I do and the clients I work with, but wanting to, spend more time with my family and being able to, live a lifestyle that I like and it is, very deeply personal.
Other folks might have different goals and expectations, right? So I probably would have a very different business if I were 25 years old and starting it, than
Having a family, it changes the dynamics, I have to make decisions that factor in. And coincidentally, I used to travel a lot and used to be, in a different city every week.
And now I can sign off at, whatever time and. Go spend time with my kids and my family. So there, there are a lot of positives to that stress. But I, I will say, having that like clear expectation has definitely helped. because there are plenty of challenging times that I just, you know, I've been through and we've been through where, it's hard and it's sometimes for me, I know it's hard to quantify that stress factor.
You can't put a, you can't put a number on necessarily, and you can't really explain it directly. So I think having that supportive partner who understands what you're going through, even in a, in a way that's not easily described, definitely has is helpful.
It really is.
And I know that's, not the most, I'd say like clear thing to articulate in the sense of like how to describe that stress. But I will say that I, I would definitely not. Be where I am if I didn't have that buy-in when it comes to raising two kids. And especially our first daughter, which was born in COVID, so that was a whole nother Oh
Liam: wow.
Michael: Yeah. I'm sure all the parents, if you know anyone's listening. Yeah. They're the, you never know what your kids get sick, exactly.
Liam: So unpredictable. Yeah. Yeah. I know. I have my, I feel like my life's unpredictable and I don't have any kids.
Michael: Yeah.
Liam: And I hear people that, but that's one of the beautiful things about, we were talking about making your business sturdy and flexible.
That's a huge part of it. Another thing too is, we just, the thi I, we I do, we have to go soon, but you were talking about, I remember when we first started talking, the first thing that we talked about was goals. And you asked me what my goals were, and I think I went into this thinking like.You were going to be this kind of person who says, okay, we got to put this all this money in retirement and lock it away until you're 65. And which we did do some of that. Some of my money did go there. My goal was I really want to write this book. That's actually what I'm trying to do. And then we so much of what we talked about was felt like reverse engineering.
Okay, you want to write the book. What needs to happen to do that? I need some time off. I need like a sabbatical. Okay, what do you, how much money do you need to do a sabbatical? And your goal could be, I want to spend, more weekends with my kids. It could be, I want to take a trip to Costa Rica and go spear fishing.
It could be, whatever. It doesn't have to be, but that's, to me, what the value of our relationship has been is you listen to my goals and even as they shift and change, and then you're really realistic with me about how do we get to that goal? because that's what you want to achieve.
Michael: Yeah.
Yeah. And I think that's the key to it all. It's, there, there's no just pot of money that's necessarily the goal of everyone, right? It's really, understanding the lifestyle decisions that you want, because it is a trade off. There's, there are plenty of, successful business owners that, have built incredible businesses that maybe their initial goal was to spend more time with their family.
And you can have it all, right? It doesn't necessarily need to be just one or the other. So I think whenever designing, a financial plan for, yourself or, for any, anybody else, it's really thinking about, in the near term. What is it that you really want to accomplish, and can you afford to accomplish that in a reasonable way?
And if the answer's yes, then you know the cost, while it may seem like a cost upfront is really an investment. Because again, thinking about that little experiment, you're trying something that may materially enhance your life into the future, even though it may seem like a short term detraction in your revenues, like when had mentioned the sabbatical, Liam, right?
You take a reduction in revenue, but if you think about everything in the long term, and that's how I think, for me, I always try to think about my business in the long term. And I think that's what I've seen across the board of successful business owners is, that. Driving factor of yeah, okay, I'll take three to six months where I'm going to see a real reduction in my revenue, but I have the runway to do that.
And while it may feel short term that you're losing in the long term, it may actually far pay off in a far greater way than that initial lost revenue that you couldn't get. So that's where I think, the whole like, and even I hesitate to use the term financial planning or even the term planning in general, it's really like you can't just model every scenario out.
There's too many different permutations. So I think it's just trying to think about, what your personal objectives are and just a few reasonable assumptions around, like things that are quantifiable, like you know what your mortgage payment is, you know what your family expenses are, and if you take some time off.
Can you support those? And do you have an adequate enough cushion that you're not going to lose sleep at night? Because I think you never, just as a fundamental investment principle, I don't think you ever want to chase returns at the expense of feeling stress because, and losing sleep, because then you really stifle your creativity.
I think that's the
Liam: interesting,
Michael: You don't want to put yourself in a stressed state where then you can't be as nimble and, the psychological aspects of that are really detrimental to your ability to grow as a person. Yeah, I think a lot of people just investors have lost potential opportunity by trying to chase just additional return at the expense of being able to sleep well at night.
So I, I think you can't, and even though there's not a monetary, I mean you can quantify that just in terms of a return standpoint, but you can't really quantify the value of, lost sleep. Because there's no numerical population there. But you can feel it.
Liam: But it will, yeah, it will damage your business and everything else in your life, especially when you get to be our age in your forties and difficult And any parent who's listening probably will identify with that as well.
And it just makes me think about how. If you're, if you want to exercise and move your body, you have to stretch, you have to be flexible. And if you try to move, when you don't have that flexibility, you're going to hurt yourself. Yeah. And the same thing can be applied to business.
Michael: Exactly.
Liam: We could go on and on, I think, but this was a great chat.
Michael: No, I enjoyed it.
Liam: Yeah, this was great.
Michael: I agree.
Liam: Me too. If people want to talk to you more about what you do and maybe get some of the kind of help you've offered to me, where's the best place for them to find out more about you?
Michael: Sure. LinkedIn, or my website, BrennanCapitalManagement.com. Reach out anytime. Feel free to schedule a call. I have a calendared link on there if anyone wants to chat. I'm always happy to have a general conversation about anyone's business and see if there's any way I can be helpful.
Liam: Awesome. All right. Mike, thanks so much for joining me. And I'll be talking to you very soon, I'm sure.
Michael: Oh yeah, definitely. Really appreciate it. Thanks a lot.
Liam: Thanks for listening to the latest episode of the Freelance Success podcast. And this was our penultimate episode too. But the next one, our last one, is one of my favorites, so be sure to stay tuned. If you enjoyed listening to this episode, please go ahead and give us a review. It would help other freelancers find season one.
And if you or someone you know would like to be a guest on season two, make sure you reach out. You can find me and also sign up for a free month of the Freelance Success experience at joinfreelancesuccess.com. I hope to see you in the community, and until the next episode, happy freelancing..
