Many small business owners have a desire and goal to build a business that generates 6 figures or more, but few rarely do. According to the statistics, more than 89% of non employer entities make less than 6 figures each year. This amount is pretty alarming considering that 65% of these businesses are generating less than $25k. If so few small businesses are generating 6 figures in revenue, what does that mean for profits?
Well, that simply means that there’s not much if any revenue left over to flow to the bottom line. The truth is, as a small business owner, your focus and goal should be to generate profits however many business owners focus exclusively on revenue alone. If your business is going to be the vehicle for creating the lifestyle you desire, your focus must be on profits and cash flow.
Why? Because profits are the dollars that you get to keep after all your business expenses have been paid. And that includes paying yourself. There’s a huge misconception that getting more clients and selling more products will generate more revenue. Here’s why that’s not always true. Business owners often think that they have to discount their services to generate more business and make more money. Discounting your services doesn’t equal more revenue it usually means you’re going to make less if you’re not focused on the bottom line.
Let me give you an example.
If you have a service that you charge $1,000 for and you discount it to $500 and your expenses are $600, your profits will be in the red which means you’re not making money. It’s important to understand what you need to generate in revenue to ensure that your business is profitable. Remember it’s not always about more clients and customers, sometimes you simply need to manage what already exists.
If you’re serious about generating 6 figures and more in your business and keeping your profits in the black, then join me for my upcoming complimentary hangout, happening Thursday, Sept 4th at 6pm CST / 7pm EST. Space is limited. Get all the details here.