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Ask HN: Do you have a daily cash stream?

41 points by wprapido 6y ago

I'm a web and software developer. Contracting and been running on and off various online businesses, with varying degrees of success. Just like everyone else, I had periods of feast and periods of famine. A few days ago I was talking with a friend of mine who among other businesses in Ireland and Croatia runs a bar in Zagreb, Croatia. His reasoning behind running a bar is that the bar serves as a daily cash stream. Something definitely we all need and something that helps a great deal. Anyway, do you have a side hustle like that, and what is it?

dmje 6y ago
Web guy here (more PM than developer). The two things I've done to keep the (unavoidable) feast/famine cycle at bay are: 1) keep two work bank accounts, one for daily use, one savings, and syphon off more than needed from daily > savings when invoices are paid. Example: client pays us £5k. We know we need to put aside corporation tax (we're UK based) of 20% on profit, but instead we put aside 25%. After a while of doing this you end up with a nice chunk of cash in the savings pot for any really famine-y times. 2) Retainers and ongoing "low effort" rolling work. We've got a bunch of clients on board who pay us for hosting, maintenance, the odd fix - they pay annually so it's a good "known" source of income without varience. I mean, obviously sometimes they churn and decide they don't need us any more, but for the most part it's solid. This second source is also good because we offer it whenever we do new work - so typically a project will pay for the project but then also for the ongoing retainer as well. The second thing is important to note for developer type people I think - namely, people pay for things that you (as developer) wouldn't necessarily pay for. I'm surprised at the high percentage of clients who sign up to maintenance agreements (it's north of 95%), purely because they want someone onboard who will hold their hand / look after stuff that they don't understand. So I guess I'm saying - do a side hustle, totally - but maybe start by looking closer to home. Existing clients are really, really easy to sell to, easier than a new project and probably easier than working in a bar, too :-)
- wprapido 6y ago
  Nicely put. Retainers are indeed a great revenue stream. Yet, I was thinking more in terms of daily cash stream generated by regular quick cash transactions. That's why I mentioned by buddy running a bar as his side hustle.
  - rsynnott 6y ago
    Do you mean _literal_ cash? Why do you want that? It's extra work and cost to deal with, generally. Though increasingly bars are shifting towards contactless electronic payment, anyway.
    - ethbro 6y ago
      I hear car washes are a good option. If I understand what we're really talking about here...
- dceddia 6y ago
  Your point #1 sounds similar to the method outlined in Profit First[0]. Theirs is a bit more complex and has more accounts (Income, Profit, Owner's Pay, Tax, and Operating Expenses), but the theory sounds the same. It's been a big help for my own business, especially for knowing that I always have enough for taxes. Money comes in to Income and it gets split up percentage-wise into the other accounts. I pay myself every couple weeks out of Owner's Pay, pay taxes out of the Tax account, pay my credit card out of OpEx, and cover shortfalls and/or pay myself quarterly from the Profit account. 0: https://profitfirstbook.com/ https://profitfirstbook.com/
tunesmith 6y ago
This is also something you can kind of simulate through software, right? I haven't used it myself, but it seems along the lines of what software like YNAB is - setting future targets for budget categories, and then funding them as chunks of money come in, such that for any particular day per time period, you can see if you are ahead of or behind schedule. Zooming out, there's a lot of tech theory on buffers and streams that apply. A "JIT" stream is something that doesn't need a buffer if it's perfect and reliable and consistent enough. The YNAB approach is more about using that buffer.
quangv 6y ago
I recommend “The Money Book for freelancers”
emit_time 6y ago
I have a daily cash stream. I call it a job. Also I keep a large emergency fund and save/invest the majority of my earnings.
chillacy 6y ago
Around 10 years ago I wrote a mac app and put it on the mac app store, no amount of marketing spend seemed to drive sales up significantly to be break-even, but conversely even with no marketing, it makes on average $10 a day (less the apple cut and taxes). That doesn't seem like much but if I had 10 niche apps which did the same then I'd have a pretty nice income floor.
- Topgamer7 6y ago
  ~$3000 a year doesn't seem like nothing. Especially if you don't put much work into it on an ongoing basis.
Havoc 6y ago
Whether it's daily or monthly ultimately doesn't matter for anyone that has a shred of budgeting ability. Looking to build a blog, but not optimistic that it'll generate any real money
Topgamer7 6y ago
I run a game server hosting company that loses me about $300 a month.
rsynnott 6y ago
> His reasoning behind running a bar is that the bar serves as a daily cash stream Of course the downside is that if things go wrong it acts as a daily cash sink, instead. Most businesses, especially retail/catering businesses, fail. Don't get into that unless you know what you're doing. I have a daily cash stream; it's called a job.
- JoeAltmaier 6y ago
  Pretty negative? Having a job and being the boss are certainly different, granted. But working at your own business is also a job.
  - rsynnott 6y ago
    Eh, your milage may vary. I see thinking of a bar as a _source_ of money as unreasonably positive, especially right now. Even at the best of times, a lot of them run in the red.
    - jhatemyjob 6y ago
      What makes you an expert on this subject
      - rsynnott 6y ago
        I'm not an expert on the subject. I'm very cautious of characterising any real world business, particularly something like a bar, as a sideline source of money, though. It's hard work, and may fail for reasons beyond your control (even bars that were doing well in March are generally not doing well now, say...)
- bovermyer 6y ago
  This is true. I've worked as a bartender, and I am all too familiar with the emotional rollercoaster that is bar finances.
- pikklemonster 6y ago
deleted 6y ago
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boldlybold 6y ago
If you enjoy investing and can spend some time learning about trading options, it can provide a nice income stream in a taxable account. Somewhere around 0.5-1.0% income a month is possible and reasonable without taking on extreme risk. Income from options on indices or futures is subject to 60/40 long/short term capital gains tax and really helps keep the tax costs down.
- nknealk 6y ago
  I’d recommend staying away from options. That said, the only riskless options/futures trade is called a “cash and carry” which essentially earns you the risk-free rate and isn’t much better than buying a treasury note. Also with interest rates so low, you’re more likely to get like 0.5% per year rather than per month
  - boldlybold 6y ago
    It's not for everyone, but only if you want to learn and take matters into your own hands as opposed to simple buy and hold investing. People may recommend not opening a bar for passive income, but it looks like at least someone in here is doing it well. Of course there's no free lunch or ways to make any considerable profit without risk. But compared to holding long stock, you can take defined risk positions that are more/less risky.
- atomicnumber3 6y ago
  This is irresponsible advice. Options are potentially the most complicated common financial instrument and modeling their risks is extremely difficult. Moreover, unlike equities, nearly every single options trader is an institution (versus just ~most equities trades being institutions). You are a tuna in a shark tank. There are so many ways to blow up your account with options even if you think you’re not doing anything too risky. Volatility crush, long tail risk, complicated positions (butterflies and condors etc) that can be complicated to enter and unwind. Etc etc the list is so long. Brokerages can try to paper over some of these issues but the playing field here is inherently a highly leveraged minefield. ~80% of all options expire worthless. Retail investors should not trade options, it is not something to do lightly, and is is certainly not something to do for pocket money.
voisin 6y ago
A more reliable side hustle than a bar would be to own some residential real estate and rent it out to respectful people. There’s a lot less work involved than running an operating business, and if the property cash flows (rent exceeds costs), you have a little bit of cash every month. There are also tax advantages via mortgage interest and other expense deductibility, and some “forced savings” as the mortgage pays down. The flip side is that real estate has been absurdly overpriced in most markets for the last decade (thanks Fed!) but the still-unfolding economic consequences of Covid19 may lead to an excellent entry point.
- btgeekboy 6y ago
  COVID has also brought huge percentages of people out of work, and a coming eviction crisis. I considered getting into the landlord game last year, and I’m quite thankful now that I sidestepped that nonsense.
  - voisin 6y ago
    Last year was a new peak for housing exuberance. I agree with your decision not to buy then. For those willing and able to hold for a while, buying when the eviction crisis hits its apex is probably going to yield some once in a decade buying opportunities. I know several people who made out like bandits buying in Florida and Arizona in 2010 and only held for 3-4 years.
- notJim 6y ago
  > the still-unfolding economic consequences of Covid19 may lead to an excellent entry point This kind of thing is what puts me off real estate investing. The idea that I would be a beneficiary of an enormous crisis leaves a bad taste in my mouth. I'm not stupid, I know that someone is going to make that profit, but it doesn't have to be me. Similarly, the idea of putting myself in the position of one day needing to deprive someone of their housing if they're unable to pay is something I'd strongly prefer to avoid.
  - voisin 6y ago
    There’s other ways to look at it. If someone is forced to sell, they likely took on too much leverage in the first place or didn’t save enough for a rainy day. Those decisions aren’t your fault, and by buying when prices are low, you are in effect giving them the liquidity they need which is a good thing. Also, you never have to deprive someone of their housing if they are unable to pay. You can work out payment plans and all sorts of compromises to get through tough times and tenants will generally appreciate that flexibility. The point remains - real estate is more stable for side income than a bar!
quickthrower2 6y ago
If it were me I’d focus on how to charge more money and how to get it sooner. Negotiation, marketing, contracts etc. And as others have mentioned: budgeting. You shouldn’t need a side hustle to buy your milk and pasta. A side hustle is more like a bet or lottery ticket. Good luck!
nawgz 6y ago
What is the purpose of a "daily cash stream" to you? To me, it just sounds like a savings account. I have money in the bank because I have good financial management. Why would I need to augment that with a risky side hustle?
graeme 6y ago
Daily is not really the frequency at which you should need cash. I have an online business which generates a lot of passive revenue. But I have no idea if it makes cash every day. Pretty sure there are many days with zero sales. But it reliably generates revenue. That’s the important bit. Needing daily cash is actually likely a sign of poor personal cashflow management. You ought to aim to have a buffer such that you could survive with zero cash for a while. Now, a recurring revenue stream: it’s great! Highly recommended. But daily is not a good requirement. And something like a bar has downsides: * takes personal labour to make money * High operating costs * requires presence in a location * currently, subject to pandemic restrictions Now bars can be a great business! But for a software developer looking to develop a revenue stream, your best bet is....software. Basically zero cost to start. A bar would be a thing to do if you enjoyed it.
notJim 6y ago
The way your friend describes it is almost like money laundering or something. I hardly use cash at all, why is a daily cash stream "something we all need and something that helps a great deal"? I find that phrase kind of bizarrely vague. Like I think most people, I have a job which pays me every 2 weeks. What this enables me to do is take some small amount of that money each day to cover my expenses. I suppose if you wanted to conceptualize it as a daily cash stream, you could simply divide the lump payment by (roughly) 14, but I'm not sure why you would do that. Some days I spend a lot of money (when making a major purchase, for example), and some days I spend none at all.
madhadron 6y ago
> Just like everyone else, I had periods of feast and periods of famine. The answer is to have a buffer. Think of it like a queue. You are pulling things off the queue at some rate with some variation, and stuff is arriving at the far end of the queue with hopefully a slightly higher rate but with much higher variation. In order to always have queue you can pull from, you need a buffer in the queue big enough to handle the input variations. Which is a way of saying, having however many months of living expenses in the bank (six to twelve months, usually). Spend money you have already earned at or below the rate that you are currently earning it. Is having another income stream that makes regular money worth it? It depends. We can assume that it makes less money than your irregular income or otherwise deprives you of some benefit or need, otherwise you would ditch your irregular income and do just that. In that case it's purely about how much reducing the volatility of your income stream is worth.
Kosirich 6y ago
Not to steer the conversation, but perhaps what you are interested in, considering the friend story, is if people have wealth (invested or created) that provides them with some steady cash flow on a daily or monthly period while not requiring full time (or near full time) commitment. (in my case is an apartment that I don't get much rent out of, but is a very safe way to keep wealth)
- cvhashim 6y ago
  Passive income

mod 6y ago
I'm a bar owner. I see some truths and some falsehoods both in your statement, for sure. My business partners at the time and I started our bar for under 30k. It was an existing bar, but a terrible one--day drunks, no regular customers had a job, and the two taps were Busch and Busch. But it had a big unused area we wanted to get up and running, which we did quickly. But to be clear, we were rank novices. I was 26 and had never had a sip of alcohol. My family had zero entrepreneurs. I did not have a runway, I was all-in. We worked our asses off, working behind our own bar for 100% of the shifts. Not only did we not have a GM, we didn't even have bartenders! Kept our own books, did our own taxes. Ran our own pool tournaments. Everything. For over a year, I think, before we finally hired one bartender a couple of nights per week. I've since bought out my partners, and I make a good living at the bar, but still no GM. I have a "manager" I trust who mostly deals with scheduling the staff and ordering product. She's a bartender who spends about 8 hours per week on managerial duties. I still do the books & taxes, and make all the higher-level decisions. On a given night, if I'm not there, the bartender is the boss. Cooks and security guys answer to them. Our state issues liquor licenses to basically everyone, very cheap. There's not a limited supply like other places. We think we made it through perseverance. The first few years were not good money. We're 10.5 years in now, and I've had other positions in that time, including being a remote web developer for five years. I don't think I'd recommend it for most people, but I do think you can will your way through the rough times into a profitable business. Staying power is worth something in this industry. Also, if anyone ever reads this, here's my best lessons distilled down. At least it's what makes my place work well. 1) Hire honest people. It's very easy to steal at a bar, so an honest person who can't make a drink is a much better hire than a dishonest bottle-flipping whiz kid. You can train (almost) anyone. 1a) Don't be afraid to let go of someone you need to. There's always a fear you'll piss off your regulars; it's highly unlikely and worth it regardless. 2) Stay open as late as possible, and never close early. People have to know, beyond a doubt, that you will be open if they drive to wherever you are. 3) Have a flat top and a fryer, and base a whole menu on that. Make good food, it's not difficult. 4) Own your own machines. Pool tables, juke boxes, etc. They pay for themselves very quickly. If you can have cherry machines and pay cash (probably a gray area at best), definitely do that. We can't, but maybe you can. 5) We went cash only about a year ago. Our sales continued increasing until covid, and by placing an ATM with no fee, nobody is disgruntled. Saves me countless thousands per year in credit card percentage fees, although I have to manage keeping the ATM stocked. 6) Ban people who are a problem, and ban them permanently. A guy who starts a fight once will always start a fight again. Cultivate a respectful environment where nobody (including single women) feels harassed or awkward or whatever. I personally think that's a decent recipe for a can't-lose bar, as long as your lease payment is small enough. For reference, ours is $1610/mo for a 6,000 sqft building. Business can't lose, but your personal life and finances could if you aren't making any tips behind your own bar. Definitely worth thinking about.