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Businesses take money to run. When you’re starting out, this can be difficult. Where do you get that initial capital?

I like to use what I call The Overlap Technique. It’s where you use your day job as a foundation to cover your bills while you hustle on the side.

There’s a lot more to it than that, but in this episode, I talk about my very first business and what I could have done better. Matt talks about how he worked with his competitors to land a big deal with his carpet cleaning business.

We both have different approaches to business and money. I have a strict no-debt mentality, Matt occasionally borrows to make calculated investments with quick turnarounds. You’ll hear about both of our approaches.

Matt shares the details behind the house flipping he does and I tell you how I rented my first apartment as a self-employed person without any credit.

In the latter half, the episode it gets really good: we bring in Cory, our video producer, who is just getting started with client work. He wants to buy expensive new camera gear to make films. We put him in the hot seat and Matt and I tell him exactly how he can do that by giving him step-by-step advice.

Highlights, Takeaways, Quick Wins:
  • Start with your day job as the foundation.
  • Get your bills covered by a day job so you're not temped to comprise out of Scarcity Mindset with your new business.
  • Borrowing money is a quick way to get cash, but it steals your focus and occupies your mind with payments. You have to ask yourself, is it worth it in the long run?
  • Systematizing your business as it grows gives you the option of completely removing yourself if you want to focus on a new business.
  • Whether you share it publicly or not, you should make a habit of documenting your progress so you can look back on it in the future.
  • With partnerships, there is always one partner slightly more invested than the other. That person should have the controlling 51% ownership. Never split ownership 50/50.
  • Contrary to popular belief, if you never borrow money you don’t need to worry about building credit.
  • Don’t depend on one source of income. Even when you have a successful business, diversify your sources of income.
  • You don’t need to reach everyone in the world. With the internet, even a small focus can yield big results.
  • You position yourself as an expert when you put your work out there and curate what you share.
  • Teach everything you know and give it away for free.
  • People will ask questions if they see you as an expert.
Show Notes

The Overlap Technique

  • 02:36 Sean: My preferred technique for funding a new business is what I call the Overlap Technique (Related: e137 The Overlap Technique). The Overlap Technique starts with your day job as the foundation. You want to make sure your day job can cover your bills, then you can work on the side to build up your business. First, you want to make sure that you practice your skill. I talk about something called deliberate practice, where you’re not just approaching building your skill haphazardly, but spending focused, deliberate time honing your skill. If you play one-on-one basketball with your friend, you’re going to improve gradually, but not as much as if you deliberately and intentionally practice your weak spots to improve. Then, start sharing your work. You can do self-initiated work and share case studies on your website. The point is to build a body of work.
  • 04:39 Matt: In the beginning, as you’re trying to build up your portfolio, would you charge full price or would you do it for free?
  • 04:49 Sean: You want to start by doing self initiated work so you can build a body of work. You shouldn’t be trying to go and get paying clients, they should be coming to you. The way that you attract those clients is by having a solid body of work that demonstrates your skills. One of the ways you can build that body of work is by doing pro-bono work. When you do pro-bono work for a client, you are offering the full value of your services for free. When you do this, you have the leverage to bring the client under your process. You want to document that process and build a case study to share on your website, so that when other potential clients come to your site, they can see examples of the work you’ve done. You don’t even have to put that it was a pro-bono project because the work will speak for itself.

Get your bills covered by a day job so that you can take on the right kind of client who will come under your process.

  • 06:28 The purpose of the Overlap Technique is to avoid Scarcity Mindset. As you start taking on paying clients, because your bills are already taken care of, you can save that money and eventually build enough capital to launch your own business without having to get money from someone else.
  • 07:37 Matt: When you’re overlapping and you’re starting to make money, one of the hardest things is to keep yourself from spending it. I love electronics and keep up with the new devices that are coming out, and if I’m not careful I can spend what I’ve saved. One of the things I’ve done to prevent this is to open up a bank account with a different bank and just put the extra money there where I can’t see it every day.
  • 08:44 Sean: There are multiple options for overlapping. You can either save up the money you make from client work and just quit your job cold turkey, or you can gradually ramp down the day job, going part time or taking fewer hours, and gradually ramp up the business. It depends on your time situation or comfort with risk.
  • 09:23 Matt: If you’re a single person you may be able to just quit your day job and jump into your business, but if you’re someone who has three kids and a spouse it might be too risky to do that and it would make more sense to take your time. You don’t want to put yourself in a situation where you’re in Scarcity Mindset.
  • 10:16 Sean: There are quicker ways to start a business and get money, but part of the problem is having to worry about money. Your mind can become occupied with thinking about who you’re borrowing money from, what the interest rate is, whether or not you’re caught up on your payments, etc. Borrowing money may seem like the quicker, easier route, and in the beginning it probably is, but you have to ask yourself, is it worth it in the long run?

When you borrow money, it’s taking your focus and attention away from what you should be focusing on.

  • 11:00 Matt: It’s going to be difficult to save up the capital you need to start a business if your business requires an up front investment of a couple hundred thousand or a million dollars. It’s better in the beginning to start with something that is low risk, profitable, and that you can overlap into.
  • 11:42 Sean: You can also overlap your businesses. Start with a baby business, and then level up. That doesn’t mean you have to abandon your baby business. You could hire people to keep that running as you move on to your new venture. Rather than increasing your expenses as your profit increases, you should save up the revenue so you can overlap into the next thing. I didn’t do it the right way with my first business.
  • 12:28 My first business was a computer repair business. It was just me and in the beginning I was charging $30 per hour which I eventually increased to $50 per hour. I kept pretty busy in this one community and I used that business to overlap so that I could learn design on my nights and weekends. I had been in a band and that was my creative outlet. Once I stepped down, I looked to design to fill that creative gap, and was even taking on web design clients every once in a while.
  • 14:01 Gradually the web design got busier and busier and I was also getting busier with the computer repair work. I realized that I really loved the design work, so I decided to start a partnership web firm and started contracting out the computer repair work. I was still doing the scheduling and invoicing for the computer repair business, but my contract employee was handling all of the other work. The problem is I didn’t systematize the computer repair business before jumping full time into the web firm. It wanted to grow, but it couldn’t because I hadn’t properly scaled it. I became paralyzed over the fear that the business would grow and I wouldn’t have enough employees, or my employees wouldn’t have enough work, so I sold it for a fraction of the annual revenue.
  • 15:56 Matt: Knowing what you know now, would you have done it differently?
  • 16:21 Sean: Yes. I would have systematized it so it could run completely on its own. You can’t just hire for some stuff and not for others. You’re going to keep yourself too busy that way. You need to be able to completely remove yourself so you can put all of your focus into the next business. With seanwes, I’m recognizing those places where I can systematize and I’m hiring people. It feels like a little bit of a leap right now, but when I decide to take that next step forward, there’s going to be a step beneath that foot. I’m doing it proactively instead of being scared.

Systematize your business as it grows, so you can eventually completely remove yourself and focus on the next business.

  • 18:01 We ran the web firm for about three years, and again, I was using that time to overlap working on hand lettering during my nights and weekends. As I did self initiated hand lettering work and started to build an audience, people started asking about getting my lettering on prints and t-shirts, and businesses started asking about custom lettering, so I took on some client work. Because the web firm was paying my bills, I was able to save this money and use it to make prints that I could sell. When we hit another slow season with the web firm and my partner told me that he was going to have to get a full time job, I was able to take my hand lettering business full time. I haven’t taken out any loans, I’ve just saved money as my side projects have grown and waited until the point when I could jump fully into the next thing.
  • 19:54 Matt: That’s how I did it in the beginning with my business. As my businesses grew, we had to take on investors and borrow, but there’s something really nice about being able to do it with your own money.
  • 20:37 Sean: The thing I worry about most for people is the mindset that borrowing money breeds. When you borrow, not only does it take the focus away from your business, but it also robs you of your creativity.

Building your own capital forces you to be creative with your time and money.

That creativity helps with every aspect of your business.

  • 21:14 Matt: The creativity is so important. When you don’t borrow money, you’ve got to be creative with your finances, and that creativity benefits you later on. I’ve seen too many people borrow money and worry so much about the money that they end up making bad business decisions and have a bad experience.
  • 22:42 Sean: You also don’t want to just learn dependency. The point of owning your own business is to be independent. I think about the person who has had everything handed to them. Can this person learn to not be dependent? Yes they can, but it’s very difficult because they are so used to having all of the resources they need. When you borrow, it’s hard to learn independence. It’s not impossible, but it’s an uphill battle.


  • 24:05 Sean: Matt, when we were talking about investments, you said that you wouldn’t recommend that always being the first step you take with a new business, but something you might bring on later after your business has grown. Can you expand upon that?
  • 24:25 Matt: I can use the carpet cleaning business as an example. My business is already established and we are looking into taking on some new commercial contracts. We currently have the resources and equipment to take on some, but not all of the contracts. In this instance, we can either work out a deal with our competitors, where they either lend us their equipment or do the job and we pay them a percentage, or we can borrow money from investors and do the jobs ourselves. We have the money to go buy some equipment, but it wouldn’t be the best quality, so I’m leaning more toward borrowing from investors so we can invest in quality equipment that will allow us to take on even more work in the coming years.
  • 27:01 Sean: So you see that as a more advanced strategy where you’re not using investment money to get your business off the ground, but you have a thriving business and you’re using the money to level up.
  • 27:21 Matt: Right. In order for the carpet business to level up, it needs additional resources. It could borrow money from one of the other business, but I want each of the businesses to stand on their own.
  • 27:45 Sean: My decision to not take on debt is a personal value and while I don’t pass judgement on someone else who uses debt, I personally try to look for creative ways to build my business so I can avoid taking on debt and stay true to that value. With your carpet cleaning business, you’re saying that you would avoid taking on debt in the beginning, but later on when the business is thriving, you feel it’s okay to take on investors so that you can level up. If I was in the same position, because of my values, I would use the Overlap Technique pull money from one of my other businesses rather than take out a loan.
  • 28:55 Matt: I’ve done that with my businesses before, but I’m also wanting to use my businesses as a case study. I don’t want people to look at the way I’m growing my businesses and to say “You can only do that because you’ve got all of these other businesses to pull money from.” If you want to grow your business, you don’t need to have other business to pull money from. Don’t make excuses. You can borrow money, but you also need to be smart about it. With the carpet cleaning business, we are putting these potential clients under contract before we borrow the money, that way if they pull out of the deal, we still get paid a percentage and can pay off the loan. Some people borrow money first and then try to get jobs, and it almost always doesn’t work out. That’s too ambitious. You want to be ambitious, but be smart about it.
  • 31:19 Sean: When it comes to the Lambo Goal, I’m assuming you’re not going to go buy a Lambo when you still owe money for one of your businesses. You plan to have everything paid off beforehand.
  • 31:52 Matt: Right. By the time I reach the Lambo Goal we won’t have any loans. We’re not really in a position now where we even need the loan, but I’m trying different ways to make the business grow so I can show other people. When I sit down with other business owners, I want to be able to tell them from experience how one method works versus another. As I try different methods, I keep track of the numbers and I account for what works and what doesn’t. Someone may be looking into financing and I can say “Yes, we tried that and while it did work, we came out with 30% less profit than if we had waited a few months and used our own money.” Everyone does it differently. My family is very much against borrowing money, whereas I use it as a tool to grow my business. Because of this approach, I’ve been able to level up much faster. There is no right or wrong way to do it.
  • 34:38 Sean: Part of what I love about this show is that we have differing perspectives and people get to benefit from that and choose for themselves what works for them.
  • 34:46 Matt: The strategy that I’m using goes along with my personality. Some people are a little more easy going and want to go the safe route, which is perfectly fine. You should roll with what you feel most comfortable with. The way I do business is the way I feel works best with my businesses and I want to offer it as one of the ways you can operate, but choose for yourself.

Whether you share it publicly or not, you should make a habit of documenting your progress so you can look back on it in the future.

  • 35:41 Sean: Something I really like about what you’re saying is how you take account of what works. I had been doing a ton of writing for my business stuff, but not really just for myself, so I recently started using a journaling program called Day One that reminds you every day to journal. My life and business is so fused together that my personal journal includes a lot of my business stuff, and it ends up being a great way to document my journey and talk about what works and what doesn’t work.
  • 37:23 Matt: When I’ve been in partnerships, I don’t always have the time to sit down and show my partner everything that I’ve done to make things work, so keeping an account of the methods I’ve used allows me to give my partners something to refer to for their 49% of the business. They can look through that and decide for themselves whether or not they want to use my methods, but at least it’s a tool that’s available to them. I also love that we have this podcast, because I don’t have time to write a book or sit down with everyone who would want to learn from my experience, but I can share my experience here and it can benefit a lot of people.
  • 39:38 Sean: A great example of how valuable podcasting can be is a little nugget you shared a few minutes ago about partnership split. You never want to split it 50-50. The person that had the original idea, that is putting up more of the investment, or just has more skin in the game, should have the controlling stake in the company. It should be at least a 51-49 split. You can split the money evenly if you want to, but the ownership should always favor the person who is most invested.
  • 40:17 Matt: You might ask “Why couldn’t you just all compromise?” Whether it’s friends or family, there’s always going to be somewhere you differ in opinion. You don’t want to get into a position where your business can’t move forward because there isn’t someone who has the power to make a final decision. It’s important to write down what each person’s role and authority is in the business and at least outline some expectations so you have something you can refer back to as needed.

Real Estate

  • 42:58 Matt: I have to give a disclosure here and say that I have many business and I’ve done real estate before, so the first thing you want to think about is having some kind of a back-up. Don’t just jump into real estate without having some kind of safety net. When we’re talking about real estate we are talking about “house flipping.” Buying, fixing up and selling a house for a profit. That said, one of the ways that you can begin investing in real estate is something called “hard money lenders.” This is a group that you take your real estate deal to and they’ll give you the rehab costs, which is the cost of the repairs, so you can invest in the deal.
  • 43:39 Most hard money lenders want you to cover the costs outside of the rehab cost because they want you to have some skin in the game and then they’ll charge an interest rate of somewhere between 14% and 18%. This can be a good option for someone who doesn’t have very good credit. You’ll come away from this kind of deal with a lower return, but it’s still better because you wouldn’t have been able to take out a loan on your own in the first place. Sean, what advice would you give someone who has bad credit but wants to get into real estate?
  • 48:08 Sean: First of all, I would say don’t worry if you have bad credit. If you’re not going to go into debt anymore you don’t need to have good credit. When I first met my attorney he was telling me about the different banks and lending institutions and I had to stop him and say “I’m not going to be borrowing any money.” And he said “Oh, that’s good. My nephew is like that. But if you ever get into a position where you need to borrow for something bigger…” and I had to stop him again and say, “No, seriously. I’m not going to be borrowing any money. Not for a car, not for a house.” He wasn’t really sure what to do with that, but at the same time, he couldn’t argue with my success. People will say, “Even if you don’t plan to borrow money, you should at least get a credit card or something so you can build good credit,” but:

If you never borrow money you don’t need to worry about building credit.

  • 50:22 Matt: Another approach is called “private money.” This is where you go to someone who is wealthy and they partner with you by investing the full amount of the real estate deal. This is a better way to go because their return is typically much lower, between 3% and 8% depending on how much trust you’ve developed with them, and you keep the rest of the profits without having to put any of your own money down. You can use this method to flip houses, or you can do what’s called a “buy and hold” where you buy it, fix it up, and then rent it out for a period of time. This way you can earn some residual income and the house can continue growing in value. At some point in the future, say you want to take an expensive trip or pay for a wedding, you can sell the house and use the profits.
  • 52:27 Now there’s a program in the state of Texas that allows low dollar investors to put their money into a pool for a real estate investment, kind of like a Kick Starter campaign. I’m putting together a campaign where I’m asking for $150,000 and low dollar investors can put their money in and get a return and it allows me to raise the money I need to do the deal. Don’t depend on one source of income.

Even when you have a successful business, diversify your sources of income.

  • 53:20 Bottom line, save your money. Don’t think of all of the money that comes in as money you can spend, but save it so you can reinvest it and grow your business. If real estate is something you’re interest in, go do some research. I’d like to share something here that I’m not affiliated with, but have gotten a lot of value from and it’s called It’s an online resource with a forum, live chat, and they also have a book, Investing in Real Estate with Low or No Money Down. It’s a great resource if you want to go more in depth on some of the stuff I’ve covered here.

A Case Study for the Overlap Technique

  • 55:37 Sean: We’re going to bring this full circle and talk a little more about the Overlap Technique and real life case study. Cory, our resident video guy, is a film-maker and needs funds to be able to make films, so we’re going to talk about how he can overlap into that.
  • 56:34 Matt: Cory already has the day job well established with seanwes, so the next step would be to take on client work. Cory, are you working with clients yet?
  • 56:47 Cory: Yes, I’m actually working on my first client project this weekend.
  • 57:06 Matt: You’ve got the day job covering your bills, so what are you going to do with the money you make from client work?
  • 57:13 Cory: I’ll probably invest in more equipment and use that equipment to do more client work, but also to do some short films.
  • 57:25 Matt: So you’ll be getting more experience and you’ll be able to invest in more equipment that you can not only use for client work, but can also use to make the films you really want to make. Another key ingredient in this plan is courses. Sean, why are courses so important?
  • 58:20 Sean: Cory is getting a lot of experience here working for seanwes, and he will also be gaining experience doing client work which he can use to teach other people. He could talk about setting up lighting, or the ins and outs of doing a daily video show. Eventually he can package up his knowledge and sell it as a course. Now he’d be making money not only with the day job, but also through client work and course revenue. He’s diversifying his income. If any one of those sources takes off and starts doing really well, he could potentially use that money to fund his film-making.
  • 59:32 Matt: By adding the course to his plan, not only has he saved money from the client work, but he’s built revenue from his courses, and maybe five years down the road, he has enough money to…quit the day job. Sorry Sean.
  • 1:00:21 Sean: That’s okay. The good news is, he can diversify and it may look like stepping down from his role here, but if he’s making enough from courses and still has time to make his films, he could stay involved here to whatever degree he wants to. He has that freedom.
  • 1:00:46 Matt: There are so many ways you could break it down and set up the scenario that works for you. Cory is in a really good position because he’s got the day job in place, so he has the freedom to build toward his ultimate goal of making films. That’s why it’s such a great idea to use the Overlap Technique.
  • 1:01:57 Cory: If I decide to do a course on all things video, then I want to do one on client video, then one about putting out daily or weekly video, do I put all of those together or do I do them separately?
  • 1:02:36 Sean: Go as specific as possible. For instance, I had the idea of putting out an email course. I could do an email marketing course for “whatever service provider you have” and “whatever business you have,” but it’s not going to be as effective because it’s diluted. So I got super specific and decided to come out with a course for people using MailChimp. And not only people using MailChimp, but people using MailChimp with Woocommerce. This is very specific but it’s going to reach a specific audience very well. You don’t need to reach everyone in the world. Your specific course may only appeal to a handful of people in your geographic area, but with the internet, you can find all of those specific people worldwide. Not only are you reaching them, but you’re reaching them well because your course meets their specific need. Imagine your course costs $99 to $299 and multiply that by hundreds or even thousands of people.
  • 1:04:11 Matt: What would you say to Cory about the different kinds of individual courses he could do?

You position yourself as an expert when you put your work out there and curate what you share.

  • 1:04:20 Sean: First of all, if you want to be able to sell courses, you’ve got to position yourself as an expert. Cory has to become “The Video Guy” to people. Cory has a head start because he works here at seanwes and my audience hears about him, but that’s not enough. If he wants to sell courses, he has to start putting out content around the topic of his course. You’ve got to teach everything you know and give it away for free. You might worry that if you give away your knowledge people won’t buy a course from you. They’ll buy it from you because you’re going to condense it, package it up, make it nice and polished, and present it to them so they don’t have to go digging around through your blog posts and videos to find the information they need.
  • 1:05:36 Matt: How should he evaluate which course to do first?
  • 1:05:48 Sean: We talked about the daily video show course as an example of something you could do, but not as a validated idea. In order to find what would be a good idea you’ve got to get feedback. People will only give you feedback when you’ve been sharing content. The first thing you should focus on is sharing content so that you can position yourself as an expert. People will ask questions if they see you as an expert. You may find through feedback that people aren’t asking about how to do a daily video show, but are asking about how to get client work. Whatever people are asking for is what you should give them, but they’re only going to ask you if they see you as an expert, and they’ll only see you as an expert if you’re putting out content.