Here's How I Made $249k in 2022
Happy Tuesday! I’m doing a week of posts to recap 2022 and kick-off 2023 with some writing momentum. Today I’m sharing all my financials for the year, packed with fun charts and graphs.
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My 2022 Financials
For several years I’ve been sharing my financials in public.
I want people not only to know what it looks like when you are on a path like this, but I also want people to know what it looks like at the beginning and over time.
I don’t know how long I’ll keep sharing these but for now, I sense it’s still quite helpful for people to see different ways one person can make money. One of my pet peeves is that people online post “top-line” numbers like “made $100k from a course launch!”
These are often revenue numbers that don’t tell you much. They don’t tell you if the person has a full-time employee on their team or if that person spends $50,000 on freelancers.
I’ll walk you through some of my data from 2022, talk you through some of the ways bets I made several years ago are now paying off, and talk about how it feels to be seeing such a major spike in income without much day-to-day change in my behavior.
Top-Line Numbers: Generated $249k in 2022
This was a huge spike, a 2.5x increase from last year, and about $70k higher than I earned in my highest-paid year as a full-time employee. I won’t pretend I took this in stride like a zen monk.
I felt pretty good about all of this. In some ways, it felt like I finally had “proof” that I’m not crazy and making bets, no matter how long they take to pay off, is worth it given the tailwinds of the internet.
The best thing about it was that I didn’t have to turn on “worker mode” to the degree that I imagined I might have to one day. I mostly made money from things I like working on and designed around my approach to work which enables me to take most days off.
This number, of course, is not what I actually make because I need to spend money to make money.
I felt like I had spent a crazy amount of money this year so was surprised that when I looked at the average gross margin per year, it seems I have been spending 20-30% of my end-of-year income every year.
So $186,154 is the real number I earned and this doesn’t include taxes (more on that at the bottom).
Diversity of Streams
This wasn’t easy of course. Jack Butcher has this awesome graphic that highlights how crazy it can be in the modern world to do things that don’t have an income.
My own version of this chart looks like this with the red line being a three-month moving average of income and the grey bars representing the number of income streams (could be as little as $5).
My personal philosophy around this is that an income floor is far more valuable than a full-time job with a salary because it gives me time freedom. Time and space gives me energy and with that energy, I can be more imaginative and creative in how I approach my life. None of this would have made sense before I quit my job but now it is so clear.
Here is a rough metric that I use to track this year over year. I did a bit more corporate work but relative to working full-time, I had to “be places” far far less.
Until this year, however, I didn’t have proof that optimizing for a diversity of income streams would ever be worthwhile. For the first couple of years I made money consulting and then the last few years it’s been mostly my online course, Think Like A Strategy Consultant.
Here’s what 2022 looked like broken down by different categories. The biggest shifts were the book income, which was new, and also training income from my newly packaged StrategyU offering.
And looking at income as a percent of annual income:
Income Lags Energy & Creation
The thing that’s missing from these charts is what I was working on. A few things worth pointing out:
I launched my podcast in 2017, renamed it three times, and did more than 100 episodes before getting my first sponsorship income in 2022
I started writing about work at the same time. I started taking my newsletter more seriously in 2018 and wrote for multiple years before getting any real reach with my ideas. When I decided to write a book, I had ~2000 newsletter subscribers and had made less than $3k from writing. When I launched I did have ~5k subscribers but only had pre-sold ~150 books
In 2020 I started experimenting with doing virtual trainings and workshops. They weren’t very good but I sensed if I kept tinkering I might find something I could offer to companies. Combining ideas from the creator economy, my own learnings from students in my course, and noticing what resonated with clients, I finally had something I was confident to “sell” in 2022 (I talked about this opportunity in my 2021 annual review but didn’t have much evidence it would work)
Video from virtual training In 2021 my income was mostly from my online course but all my energy was focused on writing the book and learning Chinese. I had a lot of opportunities I turned down or ignored because I knew that writing the book was something I really cared about. I didn’t spend any time writing the book in 2021 and made nearly $50,000 from it.
My general pricing approach, especially for corporate stuff, is “price high or free” but I usually start lower and raise prices as I become more confident about the offer.
“Price high or free” enables me to focus on any paid work in a way that I can guarantee I can deliver high-quality work while not creating a job for myself. This is vital on a path like mine because you always need to be generating ideas for not only work but how you approach life.
Pricing high also means less work. Many indie types feel like they should take any work that comes their way. But for me, I’ve realized turning down money for more time can not only be good for the soul, but it can also be good for the wallet if I can be patient enough.
Consulting As A Last Resort
In the first couple of years, my work was more the type of “strategy consulting” I did in my previous firms. Help people define a problem and then develop plans with them and help them take action.
In the past few years, most of my interaction with companies has been anchored around my course offering and my training offerings.
I did, however, do one project with my friend Andrew Barry. He had a massive project with a large corporation and needed some help.
I was able to execute the project and do good work but remembered that I just don’t love doing complex projects with large organizations.
As you can see from the chart below, “consulting” is sort of something I lean on if I am feeling like I need to
I do like staying in the mix with what is really happening in the broader business world but now that my training business gives me a lens via work I enjoy, I hope to only do one larger-scale project every couple of years.
But How Much Do You Actually Make?
The money I make is actually quite confusing. A lot of what you are seeing above is accounting income.
Some of the income I “earned” in 2021 was paid at the beginning of 2022. Similarly, the amount of money I “earned” in 2022 was probably about $15,000 higher because of a massive surge of book sales in December.
However, Amazon only pays me two months later, so I already know some money that will come into my bank account in January and February.
What really matters to me is cash flow. As a solopreneur, if you run your business like a VC-backed one, you’ll end up ruining your life and in bankruptcy court. I prefer being profitable.
At the top I showed you gross profit but what’s left after self-employment taxes?
The answer is about $11,800 a month. Here’s the breakdown.
And this is only including the 15.3% self-employment tax that I need to pay on all business income (taxed on the $186lk not the $249k).
I still have to pay federal taxes, so for another couple of months, I still don’t know what I made in 2023.
This doesn’t bother me as I’m not defining myself on any sort of income target. I just make sure I have enough of a buffer in cash to ride out lower incomes for a long time.
Transitioning To S-Corp
I recently hired an accountant that is helping me transition to an S-Corp. This means I’ll be taxed as a corporation and pay myself from that company. This should save me a bunch on taxes but also should give me some more opportunities to do different things with the business. I’m still figuring it out but plan to share what I learn in 2023.
Spending Much Faster
In 2022, I realized that optimizing costs and resistance to purchasing things was a major blocker.
I’ve come up with a new rule: If there is something that is involved in helping me create and share ideas, I should buy it ASAP.
I remember toiling at the store in 2019, opting for a cheaper webcam because I was scared to spend money. I’ve realized now that spending more can help me get more excited about things because it helps me do better work.
Most of my quicker spending this past year was on contract labor, electronics, and software. Here are some highlights
Software Stack
Palladio (awesome tool for convertkit from Brennan Dunb): $300
Riverside.FM (podcast recording): $180
Convertkit (email): $1265
Teachable (course hosting): $1,008
Quickbooks (accounting): $312
Adobe (Video Editing): $256
Anytime Mailbox (virtual mailbox):
Transistor (Podcast Hosting): $416
Skystra (Web Hosting): $285
NameCheap (Domains): $184
Zoom (Video Calls): $160 (pro tip - cancel your plan and they’ll lower your price)
Freedom: $80 for a lifetime membership (already one of my favorite purchases)
Contractors
Here are a few of the good and bad things of note worth reflecting on:
Wins:
I hired a podcast editor out of Poland who is awesome. He’s even starting to take on a bit more work and I bumped his pay up.
Lesson: invest in specific talent for specific needs can be amazing
Hired my DJ to help produce my audiobook ($130 per two-hour session)
Hired a YouTube Coach to help me learn how to do videos well: $1,500
Hired an Amazon ads consultant and have had success there
Fails
I paid a company called online course agency to help me restructure my ads for Think Like A Strategy Consultant. The experience was terrible. The guy had a playbook that he didn’t seem to deviate from and he’d get angry at me when I tried to push back. It sort of crashed my business for a couple of months until my friend Mike Newton helped me get on track. I wasted about $7,500 working with him over a couple of months and probably lost some revenue too.
Questions?
Feel free to ask questions in the comments and I’m happy to answer!
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