This is going to be a good and much needed conversation today. So often I see business owners with money questions or they assume something about me and I think they don't really get this yet or fully understand. I will tell you that a lot of business owners are severely under-educated about money and we just have to talk about it. Trust me…I'm not judging you because everything I'm going to say I'm positive I have thought the same things and I probably knew less about money than you do! As your teacher I want to spread some light on this topic and share a few things that I've learned because I know someone will get value out of this.
I am NOT a money expert and I will not tell you where you should be spending or saving, it's really to help you open up your eyes and fill you in with what is really going on because these days it seems like everyone is talking about making 6-7 figures or being a millionaire. All of these phrases and terms make you question how much money these people are actually making. So I really want to fill you in on my version, what I think, what I see and what's happening in my business.
First, let's just very quickly discuss gross revenue and net revenue because this is going to come up a lot in this conversation and I want to make sure we are all on the same page. Back in the day I had no idea what gross revenue was. Here's what I do to remind myself what it is. The difference between gross and net is that we are very focused on gross. When we say things like 10 million dollars or I gross 7-figures a year, it's basically everything combined but the net catches the good stuff. The net revenue is what I really care about while gross revenue is the number that is thrown around a lot.
For example, my dance studios gross 7-figures. What does that mean? It means we are selling one million dollars or more a year on our products, services or programs. It does not mean I have one million dollars in the bank or that I'm paying myself a specific number you think I am. All that gives me credibility for is that I'm selling my product over one million dollars every single year. Don't get me wrong…I still think that's very impressive to be able to sell one million dollars of something it shows you've got a great product. But that's really ALL that that number tells us. This is where I want people to really understand why net revenue is so important
The big question that nobody ever asks me is how much do I keep and what I actually pay myself? Why does nobody care about what's happening behind the scenes? I feel like I have gotten lost in those big fancy numbers. It used to be a goal to reach 6-figures and then when I hit that and then it was multiple 6-figures and then I heard 7-figures and tried to do that. I just keep chasing these big, fancy numbers but it doesn't even mean that I've given myself a pay raise or profiting more every year. For a long time I was chasing the wrong numbers. Once I hit 7-figures it wasn't like life got magically better. In fact, sometimes there can be even more problems that come your way.
If you're thinking I'm not making enough money right now to even be thinking about this, I'm going to tell you you're wrong because what happens is those bad habits that I had when I was making 6-figures, I was still doing that when I was making 7-figures. I didn't know any better and it's really hard to break bad habits. I think no matter what stage you're in you need to be hearing this because you might be able to save yourself from a mistake or you might go, wow, I'm doing this wrong and I need to fix this.
I will tell you, to show you behind the scenes, that I know people that make 7-figures a year that look very successful from the outside but here's a couple of things. I know someone who is spending more than 7-figures. Let's say their bringing in 1.2 million. I know they might have spent 1.3 million and they actually paid to do business that year. That's the kind of stuff that can be happening that I need you to be aware of because you do not want to be building a business like that. I know another 7-figure business owner who is paying themselves less than minimum wage. It's such a crazy low salary that when I saw this I immediately said you have got to change this. There is no reason a million dollar business is only paying themselves this much money. So, there are so many times that I see these horrible money habits, and we all have our own things we're working through, including me, but I see things as I'm coaching people or my friends that think this is normal and I really want you to know that is doesn't have to be your normal.
I've also seen people who are making good money but they're working 70-80 hours a week and they just look exhausted. I know people that have gone in the hospital because of how hard they're working. These are things that nobody is asking me. Nobody is asking how much are you working? What are you making per hour? They only ask what I brought in last year and every time I hear it I cringe inside because it's a number we shouldn't care about. We've grown so much that we've started to get refund requests for our programs and when people email me they will say, I really need the money, Stacy has enough money just send me over the refund. Again…this is an assumption that I make enough money. All I can think is these people don't know anything about money or running a business. These clueless decisions or questions make me think they have a lot of learning to do if they are going to grow their own business.
For the longest time I had on my vision board to be a 7-figure business and when I hit that goal, nothing changed and I want you to understand that those numbers don't go away. We will always want to go to the next level that we are willing to do whatever it takes in a negative way that actually doesn't help us be happy. I had to stop and evaluate the season in my life and what I was sacrificing. I just wanted great balance and a business I love. Sometimes we are so focused on making great numbers that if we could just focus on bringing great customer service and bringing a great product that money is hands down going to come our way.
Now, I want to talk about the things you SHOULD care about and what you should be asking coaches and mentors. First, how much are you bringing in? I don't even know that this is something that really matters because I think I've seen a lot of different people that have two million dollar businesses making one million dollars a year and they can be drastically different. That doesn't show us too much besides they have a great product that people want to buy. Here's my first thing that I'll ask someone…how much are you actually working? When are you clocking in and when are you clocking out? I want to know what does it take because if you're trying to teach me how to build into this next level but I realize that you're working all the way till midnight, I'm out. You might be interested in that and that's great! You do you and I'm going to do me. My biggest thing is I want to know what it actually looks like, what it takes to run the kind of business that I'm looking for. There's no reason to make minimum wage in your business when you can make $12.00 at Target…right?!
The next thing I'm going to look at is lifestyle and I don't mean what they are buying and the material things. I have heard some crazy things where online you see these people with amazing accessories and I've heard people say they rented the jet for the photo shoot they just rent them for the day. This is the kind of stuff you're seeing and think it's possible when some of this stuff is SO made up, it's not even real. So many times things online are exaggerated. I know you can figure it out and be a good judge of character when it comes to what you are looking for. Start thinking what their lifestyle looks like and more of are they enjoying their life? Another thing that you might not ask somebody but something you would want to know is what does their bank account look like? what does their retirement account look like? how much profit are they making at the end of the year? How much taxes are they paying?
When you start to realize good things about your money situation, you will stop thinking negative things toward money. I don't normally get this detailed with numbers but I think this is powerful. In this business, Foot Traffic, I re-branded from She's Building Her Empire. We knew we were going to start making this change early 2019 and we didn't change it until May. There was a lot going on behind the scenes and I realized very quickly we've got some products that don't make sense anymore and funnels running that are leading to certain sales emails that just doesn't make sense anymore. We had to shut some things off which was a little scary to turn off Facebook ads and stop certain funnels and programs. I had to be ok with slowing down just temporarily to speed back up. Even though we slowed down on the outside, behind the scenes we were building all new funnels, products and figuring out our signature Foot Traffic Formula.
What happened was one of those months are revenue was $17,000 down from that same month last year. That was scary…when my CPA told me that I was like oh my goodness, are we going to be OK? He said, well the crazy thing is you're actually up $5,000 in profit this month from last year. In 2018 we brought in $17,000 more than 2019 which is never good to hear but we knew why it was happening with the re-brand. My CPA said you kept $5,000 more than last year and this also made me realize we are so focused on certain numbers we freak ourselves out. But once I saw the profit was up we started to look at what worked and started to get smarter with our spending. Sometimes we think we have to be doing something because everyone else is doing and saying you have to do it a certain way but if you aren't assessing your situation in your business you truly have no idea.
I really want you to see how much these fake numbers are hurting our mindset because we think we have to do everything or worry about what other people will think. When it comes to money there can be these judgments that you feel coming from other people and I read this quote online that stuck with me, “Nobody more successful is ever going to judge you.” When I get weird comments said to me I realize in the moment they can be super hurtful but they don't know any better. A lot of times this is fear based and jealousy. When somebody else has success it does not take away from your success. When you have a coach or mentor that is truly more successful than you they are going to have open arms to help you. If not, something is off and they wouldn't feel that way if they weren't more successful. If you're getting negative reactions about money, I wouldn't be talking to those people.
All of this affects how you're thinking, the way you're acting in your business. I want you to answer these questions to make sure you feel in alignment with where you're heading the rest of the year.
How many hours do I want to work? What do you want your days to look like?
What do I actually need to pay myself to afford my lifestyle? What do you actually want to make? What would be your dream paycheck?
Once you answer these questions you can start to see what you should add or cut out of your business to reach those goals. A lot of us are picking crazy big numbers and working so hard to reach those numbers when we really just want the number we can keep. We have done so much this year in our business and we are maximizing every financial aspect in our businesses. We are making sure we are running a lean, smart and profitable business. I want you to feel the same! I don't want you to worry about money but focus on your profitability and bringing good service to people while getting paid what you should be.