Ask HN: Do you have a daily cash stream?
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?
50 comments
[ 4.9 ms ] story [ 90.8 ms ] thread1) 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 :-)
Though increasingly bars are shifting towards contactless electronic payment, anyway.
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/
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.
Also I keep a large emergency fund and save/invest the majority of my earnings.
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.
Looking to build a blog, but not optimistic that it'll generate any real money
Learned a lot about Linux administration though, and UDP flood mitigation :)
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.
Even before pandemic few of them netted any real significant profit after all expenses, and those that did managed to pull it off largely because if highly, highly engaged owners constantly on-site day in and out.
There is a huge number of people who think they can invest $20K (or $200K) in one of these businesses and hire a GM and sit back and take profits. I can think of maybe one example of that I encountered in 5 years.
Is it technically possible? Sure. Is it even remotely likely? No way. Especially if you didn't cut your teeth "In The Industry" and know all the things you need to know about shrinkage, vendor fraud, the politics of liquor licenses, et al. Nightmare fuel.
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.
Technically you have a bimonthly cash stream.
Needing a daily cash stream suggests poor cashflow management on the part of OP’s friend.
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.
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
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.
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.
Again, with defined risk positions there is no way you can blow up an account. Options expiring worthless works for you if you're a net seller. Others have written extensively about strategies: https://earlyretirementnow.com/2019/03/27/passive-income-thr...
This is not something someone should do without the prior research. It's not for everyone. But compared to something like opening a small business (which I haven't done, but would consider very risky) at least in this "business" your risk can be defined.
I know several people who made out like bandits buying in Florida and Arizona in 2010 and only held for 3-4 years.
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.
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!
Worth noting that even in "normal" times, the banks and money lenders are benefitting due to the parasitic and immoral practice of lending money with usury (aka interest), which is one of the major cause of financial crises that have and keep on happening. It's baked into the system.
This is the difficult part.
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!
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?
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.
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.
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.