Everyone wants a six-figure business
The six-figure business is, for many entrepreneurs, the benchmark of success. When you hit six figures, there’s some unwritten assumption that you’ve somehow “made it”.
You see people bragging about it in sales copy, all over Facebook groups, and on Instagram. They’ve got a fancy shmancy “six-figure” business, and of course, they can show you how to have one too (for a fee).
But the numbers can lie
Making “six figures” is an awesome feeling, but it isn’t always all it’s cracked up to be. Getting there is a ton of work, and it takes time. Successful businesses aren’t born overnight. They take years of expertise, practice, failing, hard work, and failing more.
On top of that, the numbers in published income reports (bloggers often publish these) often tell a story that people just don’t talk about. Even if the figures aren’t completely made up (which they often are), you’re usually not even seeing the correct numbers.
Here’s what they don’t tell you
Not every six-figure business is profitable. It’s true – six-figure businesses (and even multi-million dollar businesses) can fail, too. No one is immune.
When you read a published income report, keep in mind that you’re often seeing the gross sales being reported, not the profit. So, for example, SuzyQ may boast about having $100,000 in sales, but she also has $150,000 in expenses – so she’s in the hole for $50,000. She’s losing money like crazy, but can still claim to have a “six-figure business”. Crazy, right? It’s all in the details.
Here’s a better idea
Focus on profit. That’s the important number. Your profit is calculated by subtracting your expenses from your revenue. So, for example, if you make $50,000 but have only $10,000 in expenses, you’ve got $40,000 in profit (which is way more than Six-Figure SuzyQ!).
Focus on profit, not sales. Set up a solid bookkeeping system and keep it up to date. Know your numbers. Know when you’re having a good month, and when you’re having a slower month. Know how your numbers compare from year to year. Track your expenses and see where there are leaks.
This will help you know when your business is healthy, when you can hire help, when you can buy new equipment, and even when you can take a paycheck. You’ll be able to better measure ROI and understand where and how to spend your money. Keeping good books will also make tax time so much easier. Seriously.
Keep the right goal in mind
When you have consistent, increasing sales and reasonable expenses and you’re tracking your numbers religiously, then you can strut your stuff when you hit six figures – of profit.