Let’s talk about money – specifically "6 figure businesses"
We are surrounded by claims of 6 and 7 figure businesses and “internet marketing launches.” There are tons of programs offering to teach you how to do this (but only if you BUY RIGHT NOW!!!.)
As someone who has had 3 “six figure businesses” – each one very different from the last – I have some light to shed on the subject.
Straight from my real life files – here’s a brief overview of my experience with 3 different business models.
1. Retail Video Rental Store
This was my very first business. If you’re old enough to remember video stores in the mid to late 80s, mine was pretty typical of the time (before the big Blockbusters and such came along.)
I had a retail outlet in a strip mall (conveniently located between a liquor store and grocery store), an inventory of about 2,000 movies and a membership list of about the same.
The store did about $120,000 – $150,000 in revenue per year.
Out of that, I had to pay for rent, new movies, my staff of 5-7 part time teenage workers, utilities, insurance, printing, and my loan to purchase the business. I paid myself a grand total of about $10,000 per year – which at the time was slightly more than minimum wage. In addition to doing all the “business owner stuff” – I also put in 40+ hours per week behind the counter.
It was a great learning experience and not a bad job for my 21 year old self.
2. Real Estate Agency
My husband at the time (early 90s) owned a small, independent real estate company. I worked with him as his partner and office manager.
At any given time we had between 3 and 10 realtors working with us. We took either a cut of their commissions or they paid a “desk fee” each month to work for us – depending on the agreement we had. We covered rent, insurance, phones, utilities, some advertising. We supplied an office computer. (Yes! One! We shared it.)
We provided administration and marketing support (me) and mentoring (my husband.) In addition to running the business, my husband was also an active Realtor.
Our business brought in somewhere in the neighbourhood of half a million each year, with the majority of it paid out in overhead and commissions to our Realtors.
In a good year, my husband and I would take home (split between us) about $80,000 – and all of that from his commissions. Having Realtors working for us generally covered our overhead. In hindsight, we would have taken home more money if we worked for someone else and focused our combined efforts on listing and selling homes.
This was me on my own (early 2000s.) I freelanced as a web developer, Microsoft Certified Trainer and instructional designer for technical courses. I took on large projects where I was booked for months at a time. I never worked with more than 3 clients at one time and often only worked for one.
Some days, from the outside looking in, I appeared to have a regular job: I put on a suit, drove to a building and taught class from 8:30 until 4:30.
Other times, I sat in my home office in sweats and a t-shirt for weeks on end, rarely even leaving the house.
The combination of having skills that were in high demand and larger businesses as clients meant that I billed about $100,000 per year.
My expenses were trivial. No marketing. No advertising. No staff. What I billed out basically amounted to my salary – and I got a few extra tax write-offs because I had a home business.
In terms of “revenue” this was the lowest of the 3 businesses. In terms of “salary” it was far and away the best.
All of these businesses were 6 figure businesses, but only one gave me a 6 figure salary
Here’s what you need to know about 6 figure blueprints for internet marketing launches or windfalls from “selling from the stage.”
While this all sounds sexy, the part they leave out is the expenses. Things like fancy websites, photography, advertising, affiliate commissions, and sophisticated email marketing platforms. (Not to mention the “investment” in the program that teaches you how to do this.)
They may be taking IN 6 figures, but how much is going out? (I’ve heard stories about the OUT amount being higher than the IN amount. You still get bragging rights about your “6 figure launch” – but no actual income.)
To be clear: there’s nothing wrong with pursuing this sort of model if that’s what you want to do.
Just keep in mind that if you’re paying for the machine, your job primarily becomes sales and you’ll need to make multiples of that 6 figure revenue in order to take home 6 figures yourself.
Going BIG and building an empire is NOT the only option
The business I have now looks very much like the freelancing business. The primary difference is that I now work with more clients for smaller amounts of money. I need to spend time in sales and marketing activities – but my overhead is still low. I’m not quite at the 6 figure level, but expect to arrive shortly. If not this year, then next.
I’ve accomplished that with a small list, a relatively low profile, a LOCAL market and virtually no social media. No cold calling. No pushy sales techniques. No affiliate partners. I’m also a lazy pants who rarely works more than 25 hours per week.
My dad had a plumbing and heating contracting business.. most years he made the most when he had fewer employees, and did more of the
actual work himself. Then he discovered contracts that were more difficult to manage, school refurbish contracts.
Many contractors did not know how difficult glass pipe or lead pipe would be to handle, (this for Science labs). So he could bid with higher margines
and figure out the work, train his workers. A lot also depends on personel.. .We hired a new person around Christmas last year… highly motivated, a real worker. business is better this year.. I predict we’ll make more this year than we did, as a business than the last 3 years. Also, her good attitude, (she’s fun), is infectious. Some things I couldn’t accomplish on my own. The right people also make the difference.
I’ve thought about having more stores.. don’t think we’d make more money until we had a least 3 or 4.. but have to pay more management people… It’s good the way it is.
I don’t take home 6 figures, I do take home a good living.
Thanks so much for commenting! My dad was in construction and has a similar story – made way more money when he started slowing down towards retiring – fewer jobs, fewer employees, less stress – and more profit. “Scaling up” isn’t always worth it for all the reasons you gave. And yes…the right people can really help (and the wrong people can really hinder.) Yay for staying small and making a good living!!