I’ve got a bone to pick with the digital coaching industry. I’ve been seeing a ton of coaches and other online leaders pushing a specific revenue goal as though it’s the one and only factor that makes or breaks an entrepreneur’s success. ...
I’ve got a bone to pick with the digital coaching industry. I’ve been seeing a ton of coaches and other online leaders pushing a specific revenue goal as though it’s the one and only factor that makes or breaks an entrepreneur’s success.
Teaching people to focus on only one number in their businesses - revenue - is dangerously misleading, and I’m going to share why.
In today’s post, I’m expanding on last week’s podcast about a midyear business check-in to give you two additional numbers, along with revenue, that are essential for determining the true health and sustainability of your business.
Read on to see how my technique of working backwards with my clients helps them to truly create the entrepreneurial wealth and abundance they’re seeking.
Why revenue isn’t the only number that matters
There's something that's going around in the digital world that’s killing me. I decided to speak on it, because it’s really been pissing me off (and it’s not easy to piss me off!).
For a while now, I’ve been seeing tons of coaches, course providers, and other leaders in the “make more money” space basically bragging about how much money they make online. They share a figure, and then encourage their followers to also make a 6 or 7 figure revenue number their main goal. To them, this number is the ultimate symbol of entrepreneurial success.
Now, my problem isn’t rooted in comparison or any form of envy. My issue is their complete focus on the revenue number alone. Here’s why revenue is only telling part of the story.
Let’s say, for example, you want to hit 6 figures in revenue in your business. If you bring in $100k in revenue, does all of that go directly in your pocket? Of course not. In any business, you’re going to have expenses.
If you have $95k in expenses, how much does that leave you in profit for the year? You got it - only $5k. And let’s be real - no one (especially in this current economy) can live off of $5k per year.
So now you’ve got your second important number you must track in your business: PROFIT.
Shifting your focus onto profit, rather than revenue
The question you need to ask yourself is, are you allowing these coaches, strategists, and consultants (whoever they are) that are preaching to you about a 6 or 7 figure revenue goal influence your way of thinking? Are you stuck in a mindset of revenue, revenue, revenue?
Don’t beat yourself up. This is understandable and something I have experienced in both my own business and in my clients’. The key is to recognize this thought pattern and mindfully shift your focus from revenue onto profit.
It is far more powerful to be able to say you’ve brought in $100k in profit rather than $100k in revenue. Profit is what you’re making after expenses.
If you’re checking in to your business’ progress midyear and your profit is only 5-10% of what you’re bringing in in revenue, your expenses are too high. I've seen many entrepreneurs feel like the only way to gain more success in their business is to hire a big team. Only once they do, they realize all of their money is going to payroll. Many entrepreneurs come to me and admit they haven’t even been paying themselves. While it’s great to support others, you’ve got to support yourself, first and foremost.
What’s your income?
The first important number to focus on in your business is revenue, which you need in order to have the second, profit. The third number is income.
As an entrepreneur, you get to create your own income. So it’s time to ask yourself - what's the income you want to create? And then, how much profit does that mean your business needs to create in order to achieve that income number? Then, how much revenue do you have to generate in order to make that profit number happen? I like this technique of working backwards with my clients, as it puts everything into perspective.
Now, you may be wondering, what's the difference between profit and income? The truth is, to some businesses, to some business owners, their profit IS their income. You get to make this determination for your business. What do you want your income to be as if you were in a 9 to 5 job? And what do you want the profit of the business overall to be? Do you want extra money created in the business above your income, so that you can reinvest it into the business, or maybe reinvest it into another business? It's whatever you decide, because as an entrepreneur, you get to decide and design what these numbers look like.
If you feel like you're stuck at a specific revenue number, it may be good to start changing your focus to the profit number. Seeing your business goals through the lens of profit gives you more power to make changes because the revenue number is only going to get you so far.
What you want to consider as you continue to build your business is, what is the percentage of profit that you want to create? Or, what is the income that you want to create? Or maybe both? And what is it going to take to get there?
Stop accepting half of the story
The next time you see other coaches or leaders online explaining things like, “Here’s how I got to 6 figures in revenue…” remind yourself that you’re only seeing half of the story. Realize it’s misleading to only focus on revenue, and shift your goals in a way that suits your own profit and income aspirations. There’s more than one important number in your business. Remember - it’s a combination of revenue, profit, and income that truly matters.
If this is something that you want to work with a coach on, who actually focuses on the two more important numbers of the three, I'd be happy to chat with you about what that could look like. Hit me up on Instagram @jengitomer and tell me what your focus is on. Which one of the three numbers have you been shaping your business around thus far, and if you're going to change it, let me know.