#MillionDollarMonday
Q. What is Million Dollar Monday?
The idea is to inspire entrepreneurs, especially those who are solo operations, to ask themselves what small steps they can take each week to march closer to their goals, by envisioning the upcoming progress and implementing new actions.
I recently came across “Million-Dollar One-Person Business” by Elaine Pofeld (Random House 2018). I read it twice in 4 weeks and was inspired by the premise. So, as 2020 begins, instead of the usual resolution, I want to challenge myself and any other like minded entrepreneurs, to take action toward building a million dollar business.
Q. Why are you talking about the Million Dollar target?
Popular consciousness equates a million dollar as both a benchmark of success, but also a source of inspiration and motivation. One just has to look at the book titles out there: for example the most recent two I read were titled “Million Dollar Web Presence” (Barr & Weiss, 2012), and “Million Dollar Woman” (Pimsleur 2015).
Statistics show that 36,000+ entrepreneurs in US built million dollar businesses in 2017, so it is definitely achievable.
Q. How a Million Dollar revenue will be achieved?
The first analysis is on the revenue side. If you have an idea of each customer/client’s revenue contribution, then divide this number into one million and you have a high-level view of the number of customers/client you will need to reach the one-million revenue target.
For example, if your typical revenue range is $1000 to $5000 per returning customer per year, then you need 200 to 1000 of such customer to reach $1 million revenue a year. Most small businesses should be able to turn over a million dollars if they want to do so, have an action plan and timeline in place, and willingness to change courses on any aspect of their business.
Q. What do you see as the pitfalls, or some you have already experienced?
Not every dollar of business nor every customer is the same. When it is early in your entrepreneurial endeavor, you need every dollar coming in to generate cash flow to fund the operation. At some point, however, you probably need to cut off the one-dollar revenue that takes you one dollar or more to get, either in actual cost or in the form of time or energy.
Some of you would probably scream “I haven’t replaced this one dollar yet! I can’t afford to!” But not letting this not-as-good one-dollar go is costing you the time and energy of getting a better one-dollar. Also, a million-dollar turnover is not a million dollars in your pocket, so we need to take a deep dive into your profitability – is your growth profit-focused? This is directly related to the point above, how much cost does it take to generate that one-dollar, one-thousand-dollar, or a-hundred-thousand- dollar revenue?
The point here is an oxygen-mask analogy, you can’t serve others if you are out of breath yourself! If you are not profitable, you don’t have the financial well-being to be in this for the long term, and you will go out of business.
Q. What are the things that need to be in place?
The reality of small businesses, especially those with just the owner/employee, is that the owner is doing everything themselves, whether those tasks are his/her specialty or not. The catch-22 is that cutting costs (i.e. by doing everything yourself) is competing with generating revenue in the same minute.
It would cost me three times as much time (and therefore revenue) to do website/social media design and maintenance, so it is actually profitable for me to outsource that task to a great web designer (which is how you are reading this!). She is actually saving me money by releasing me to do revenue-generating work such as giving advice to clients who need them.
My most recent client makes the same choice of outsourcing accounting and tax compliance to me, a contractor/service provider specializing in those tasks, while he focuses on building specialty gardens for his growing client list. He gets paid by the gardens he builds, not by the accounting and tax work he does! On top of it, he has new ideas on how to grow his business without being physically present, as I shared what I have seen that works for other clients/industries.
Q. What is the next step?
I want myself and my clients to continue on to reach the first million dollar in profit, and the first million dollar in net worth. I will continue to share my own experiences- and what I have seen working for others - in the weekly posts to come.
Follow BayCPAPlus on Linkedin, Instagram and Facebook for your weekly Millionaire Monday challenge!
Next up - Tax Strategies to help you get there.