Episode 51: The Real Truth About Six Figures

A big part of having a thriving and sustainable coaching business has to do with revenue, but that’s just one piece of the puzzle. Today I’m sharing the side of six-figures that’s often left out and how you can choose metrics of success that make sense for you and your business.
Truth About Six Figures Ep 51 Blog

51: The Real Truth About Six Figures

It feels like you can't open Facebook, scroll through Instagram, or listen to a podcast without being bombarded with messages about how important it is to get to six figures in your business. As a new business owner, I got wrapped up in that messaging and saw firsthand how destructive it can be.

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Show Notes

It feels like you can't open Facebook, scroll through Instagram, or listen to a podcast without being bombarded with messages about how important it is to get to six figures in your business.

As a new business owner, I got wrapped up in that messaging and saw firsthand how destructive it can be. That's why today I’m sharing the reality of a six-figure coaching business and whether a six-figure business is the right goal for you.

We are the only ones responsible for deciding what matters to us and for creating our own metrics of success. I feel very strongly about this and I hope you’ll come to find me on Instagram (@CoachWithClarity). I know we can have some powerful conversations around it.

 

Topics covered

  • My working-from-home reality in 2021
  • The trap I fell into about hitting six figures in your business
  • Looking behind the six-figure messaging
  • The lesson I learned from my first high-ticket business investment
  • The important numbers we don’t hear about
  • Overhead advantages for coaches
  • Non-financial metrics of success
  • Finding your central motivation

Resources mentioned

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TRANSCRIPT

 

Well, hi there friend. Welcome to the Coach with Clarity podcast, my name is Lee Chaix McDonough, and thank you so much for joining me for this week's episode. So, full disclosure, like many of you, I am working from home and I also have two school-aged children who are home with me doing online school because of the current coronavirus pandemic. So they are doing their work, I am doing mine. Usually, that works out really well but full disclosure, if you hear anything in the background, it might be them. I may even have to pause while I'm recording this just to make sure that everything's okay. Every now and then one of them might need help with a math problem or with an English assignment and I'm just sharing this in full transparency because I know a lot of you are balancing work and family and maybe a side hustle, and health and relationships. And there's so much that we are juggling right now and we are all in this together. So I just wanted to be upfront with you right at the start that that is absolutely where I'm at in my business and in my life, and we're all in this together. So I am keeping my fingers crossed that I will be able to record today's podcast episode without too many interruptions but you know what? This is life in 2021, and maybe that's one of the silver linings to all of this is that we are each in a position now where we can extend each other, more grace, more compassion, more understanding because all of our lives have been turned upside down over the last 14 – 15 months now. We're still figuring out how to manage through it and I don't know about you, but I almost find it relieving when I'm listening to my podcast, or I'm seeing my local newscaster report from home and their child or their dog comes into frame. It just reminds me that we're all human and we're all doing the very best we can during very trying times. 

 

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So just sharing that with you because I think that helps us all feel more connected and a little less alone because, at the end of the day, that's what I want this podcast to do. I really want this podcast to unite us, to bring us together, to make us feel seen and understood as we support each other in our goals and in bringing our vision to life. And for most of us listening to this podcast that looks like a thriving sustainable coaching business. And of course, part of having a thriving sustainable coaching business means that you are bringing in revenue, that you are making money to support yourself and your needs and your business. And to that end, I want to talk about something that I see and hear all the time, certainly in the coaching space, but I think we're seeing it more generally in entrepreneurship as well, and that is the six-figure business. I can't open Facebook, or scroll through Instagram, or listen to my podcasts without being bombarded with messages about how important it is to get to six figures in your business and I think that that messaging can be really destructive if we're not mindful and careful about it. And that's why I want to talk today about the reality behind a six-figure business and what it means when people talk about hitting six figures and what it doesn't. And I also want to talk about whether a six-figure business is the right goal to be setting for yourself. So we're gonna get into it today, and you'll have to forgive me if it gets a little ranty at any point because I do feel pretty strongly about this. Both in terms of what I see my clients experiencing, what I'm seeing online and social media, and also what I went through when I was just getting my business off the ground.
 
I got it in my head that in order to be successful and certainly in order to be profitable, I had to hit six figures. I had to be making at least $100,000 a year in my business and also that once I hit that point, I would be profitable that that's how it worked. And some of you out there are probably already ahead of where I was when I started and you're already thinking, “Whoa, that's not necessarily true, six figures doesn't equal profitability”. Well, if you got there, you're smarter than I was when I started out because I had really built it up in my head that once I hit that magic six-figure mark in my business, everything was going to be okay. And part of the reason I believe that, actually most of the reason why I believe that, is because that's what I was being told. When I was first starting out I was listening to just about every podcast I could when it came to business growth and entrepreneurship. I was following a lot of industry experts and I should put air quotes around “industry experts” but the predominant message was, once you hit six figures, then you're a success. Once you hit $100,000 in your business, then you will have made it. And so when we hear statements like that, we need to stop and ask ourselves, “Who benefits when we believe this?”, okay? If I internalize the message that once I hit six figures, then I'll be a legit business, then I'll be a real business owner, who benefits from that message? Well, I'll tell you what, it sure as hell wasn't me. The first few years when I was in business for myself, and I was not hitting that magical six-figure amount, do you know who was benefiting from that message? The people who were trying to sell me programs and products and services designed to help me hit that six-figure business. And I'm going to be honest with you, in my first year, 18 months of business, I fell into that hardcore. I was so eager to prove how successful I could be as a coach, and honestly how successful I could be as a human being, and I bought into the idea that if I could just hit six figures in my business, then I would be okay. So when I saw someone advertising a no-fail, coaching program, or course, or mastermind, that would get me to six figures and beyond, my ears perked up. Now, some of them I simply did not have the financial resources to invest in, but I do remember paying for one course. And to me, it was pretty high ticket, it was $1,500, which is a lot of money regardless, but it is definitely a lot of money when you are a new coach, and you are not yet bringing in a heck of a lot of revenue. So to invest $1,500, in a course, that talked about creating high ticket packages, so that you could hit six figures in your first year of business. Yeah, they got me – with the glossy, pretty images on the website, and the well crafted, and let's be honest, the psychologically manipulative copywriting that was on that website, it got me. And so I decided, yes, I am going to invest $1,500 in this program if it can help me hit my first six figure year. And guess what, that program was a load of fluff, it was so incredibly disappointing. I didn't really learn anything from it and I was new to business ownership and yet none of it in there was really anything revolutionary. And it certainly didn't help me hit that first six-figure mark, I'm going to be quite honest with you. And looking back, I now view that $1,500 payment as tuition to the school of life. 
 
I learned a really good lesson about how to invest my money and what to look for before I choose to go into a program or a course, or coaching, or a mastermind. I think I needed that experience to remind me what was most important to me when making financial investments and so that's why now before I spend a dime, in my coaching business, I make sure I know who is behind the program, what they believe, what their values are, and what they're promising. And I want to see their track record, I want to hear directly from people who've worked with them who have had not just immediate good outcomes, but who have been able to sustain it over the long run. And I want to know that what they're selling me, what they're promising me, is in alignment with my personal and business values and that it's coming from a place of integrity and authenticity. And not this cultivated faux authenticity that sometimes we see on social media. No, I'm not interested in that anymore. I want to know that the program that they're providing is grounded in their personal experience making it happen. The training and education and experience that they've acquired, the people that they've served, and that they've been able to refine this process over time so that they know that they can follow through on the promises that they're making. I'm sharing that with you, then this is where I'm getting a little ranty, but I just think that there are so many opportunities out there where brand new, actually not just brand new, veteran coaches and entrepreneurs alike are getting sucked in by really shiny, big promises that fail to deliver. And this is where I think this six figures message really comes into play because a lot of times that is used to entice people to buy whatever it is that's on sale. And it really can be quite manipulative because, I don't know about you, but I think most business owners, we do get kind of anxious around money. We do need to make sure revenue is coming in, that's why it's a business. We have to be able to pay our bills, handle our overhead, pay our taxes, and yes, pay ourselves at the end of the day. And so along the way, this six-figure mark became like the ultimate destination, where if we all just kind of worked towards six figures, then we would be okay. Or that we're failing, if we don't come anywhere close to hitting that. And I just want to call bullshit on that, to be quite honest with you, because that's not how it works. And in the interest of honesty and transparency, I'm going to share with you how it's working in my business right now and we will use 2020 as an example. So in 2020, I generated over $160,000 in my business. So technically, I guess that makes me a six-figure business owner. Now, I'm very proud of the hard work that I did in 2020. I'm very proud of what I accomplished, including hitting that revenue goal but I am here to tell you that life is not all roses and unicorns, because I hit six figures in 2020. I also want to tell you that even though I generated $160,000 of revenue, that does not mean I took home $160,000. In fact, far from it. That's the other thing that really gets me about hitting this magic six-figure amount is that we're not talking about withholding money for taxes. We're not talking about the amount of our overhead, the contractors that we're paying, how much it costs us to run our businesses, all of that has to get deducted. And some people who are having these really high-end six, and even seven-figure businesses, their overhead is so exorbitant that they're barely bringing anything home, they're barely making a profit. So that's why whenever we hear people talking about six figures and seven figures, we need to be asking, “Okay, is that gross? Or is that net?”. And if it's gross, what is your overhead? What's that percentage look like? How much are you really bringing home? Right now, in my business, I am able to take home anywhere from 25 to 30% of gross revenue, I always set aside 15% of gross revenue for taxes, then I set aside anywhere from 2 to 5% that I save in a profit account, I set aside 2% for charitable giving. And the rest gets divided up between my team members like my amazing podcast editing team, and my social media manager, and my VA, and my customer support person, I couldn't do my business without them, and they deserve to be paid. And so that comes out of that gross revenue, as does my software costs, as does my marketing and advertising, all of the everyday expenses, those have to be accounted for as well and that's what I don't see getting directly addressed when people are talking about hitting six figures in your business. There is this assumption that hitting six figures means bringing six figures home, and that's not necessarily the case. Now the beautiful thing about being a coach is tha,t if we are careful, we can run a very streamlined business. And we can keep our overhead on the low side, which means we are able to generate more in profit and ultimately bring more home at the end of the day. But it will never be 100% of your gross receipts, that's just not how it works. So whenf you hear someone talking about a five-figure launch, or a six-figure year, or a seven-figure year, we need to remind ourselves that we are only seeing a very small piece of the overall picture. And so when we then turn around and try to compare what we're doing with what this other person's doing, it's often comparing apples to oranges. So let's remember that when people are talking about revenue, it's typically gross revenue, and it's not accounting for taxes, overhead team payments, and the like. 
 
So let me pause for a second because I also want to say, look, there's nothing wrong with having financial revenue goals in your business. In fact, I think you should have clear financial goals, and that big financial goal may look like six figures. And I support you in that, but let's make sure that that six-figure goal is your goal, and not some arbitrary goal that a podcaster or a marketing specialist has told you you should want. In fact, I think we need to be really clear about what our metrics are when measuring success in our business and revenue is one of them. And yes, it is an important one, but it is not the only one. And in fact, maybe we should be considering other metrics of success. For example, how much do you like your business? On a scale of one to ten, when one is “I hate my business and I wish I could quit, except I'm the boss”, and ten is, “I am in love with my business and I can't imagine doing anything else for the rest of my life”, where on that scale do you fall? Is your business lighting you up right now? Are you excited by the work that you're doing? Let's not lose sight of the fact that part of the reason we go into business for ourselves is because we want to create a work environment that is aligned with our values, and where we get to do work that we love, and that lights us up. And if your work is not lighting you up, I don't really care how much money you're bringing in. If you're miserable, then I'm going to want to talk to you about what we can do to bring some of that light back into your work. So I would say your satisfaction with your business and in your business is a key metric to follow. Another metric is the level of impact you are having and you get to define what that impact looks like. By the way, it might look like the impact you're having in your family, or in your local community, it may look like the impact that you're having in your given profession, or in an online space, maybe in the world. I mean, I'm not going to limit you here, but you get to decide what that looks like, and the type of impact you want to create, and then let's figure out how to measure that. How will you know that you are achieving the impact you most desire? That, my friend, is a metric I am very interested in measuring. And I would love to know from you what that looks like in your business as well. 
 
So we've talked about whether you even like your business, and whether your work is lighting you up, we've talked about impact, and then, of course, let's talk about this elusive work-life balance. Which, I'm going to be honest with you, it's not my favorite phrase, I've used it, I still use it, I even talk about it in my book, ACT on Your Business. The reason I tend to shy away from work-life balance is because some people view it as a one and done event. Like when I get work-life balance, everything will be fine, and as most of you know, that's not how finding balance works. It's not a one and done event. And in fact, the metaphor I often used to describe it is of a gymnast on a balance beam, and when that gymnast is moving, they are constantly making micro-movements in order to maintain their balance, even the smallest movement, just to ensure that they stay on that narrow beam. They rarely, if ever, stop, because it's going to take a series of small movements to stay on the beam. Well, I would say that's not just the case with physical balance, that is the case with work-life balance, too. We are going to have to make a series of adjustments at all times to make sure that we are staying on target, that we are staying on track. And some days, some weeks, those shifts are going to mean we're doing a little more work than life, and other times it's going to be a little more life than work and that's okay. But some key questions – are you able to leave work at work? Are you able to take time off and really invest your time and attention in non-work related matters? Are you present in the moment with the people that you care about and with yourself? Or do you find that your business is constantly taking over your thoughts and your discussions and your activities to the point where there's really no differentiation between who you are and what you do?
Are you creating golden handcuffs for yourself? So these are the kinds of questions that we need to be asking ourselves as entrepreneurs, along with some of the more data revenue-driven metrics, because all of this matters. And I would wager to say that a coach who is generating $75,000 a year with relatively low overhead, who loves the work that she does, and is making a significant impact in her field, and at the end of the day has time for her loved ones and her friends and her hobbies and her passions – I'm willing to bet that her business and her life is more sustainable than a coach who might be making two, three, four times as much as she is, but whose overhead is ridiculously high, who's not bringing home a significant percentage of that revenue, who feels like they constantly have to work in their business and on their business in order to get ahead and who never really feels fully present when they're not working. So when we take the whole picture of what's going on, revenue is just one part of that, and hitting six figures in revenue will not guarantee happiness or contentment because there's more to being content than your bottom line. 
 
So that leads me to my last thought on this, this idea of contentment. You know, why are we working so hard in our businesses? Why are we generating revenue? Ideally, it's not about the money, it's about what the money means, what the money can bring us. And we all have different motivations and values that are tied in with money. And they're not right or wrong or good or bad, but we do want to be aware of what's motivating our desire to earn, because that tells us a lot about what matters most to us, what our values are. And when I think about why I am motivated to own a business and work with clients, and yes, bring money home, at the end of the day, it comes down to serving other people and serving myself. So absolutely, I am in the service of my clients, and I am supporting them in becoming more powerful coaches and creating sustainable, thriving, and, yes, profitable coaching businesses, and it lights me up to be able to serve them. And then I also see it as a way that I can serve my family, that I can contribute to our household finances to save for my kid’s college. These are ways that I'm able to serve and contribute to my family, ad I am also in service to myself. Not only do I get an extraordinary amount of satisfaction from supporting my clients and helping my family, but I am also really proud of what I have created as a business owner, that I have taken something that was just the seed of a thought and grown it to a business that I'm really proud of. And I get to do that by helping others, which it just all comes full circle for me. So at the core of what I do, it really is about relationships, the relationships I build with my clients, the relationships I have with my family and friends and the people I care about, and the relationship I have with myself. And I'm able to enhance all of those through my business and, yes, through generating revenue and bringing home a paycheck. But it goes deeper than the money, it's about what the money represents. And for me, it represents being able to serve others, support others, take care of myself, take care of the people I love, and have a greater impact in my community and in society. And to me, that is the true measure of just how valuable my business is. And with that, let's get ready for this week's Clarity in Action Moment. 
 
So for this week's Clarity in Action Moment, I would like to invite you to reflect on a few questions and you may decide that you'd like to do some journaling around this or maybe some meditating around it. This could be a great springboard for discussion with your partner, whether romantic partner or business partner, or if you have colleagues or a mastermind, how you choose to work through these questions is up to you. But I'm going to encourage you to just take a few minutes and ask yourself the following questions. Number one, what is my motivator behind earning money? What is it that I believe money will give me? Maybe it's a sense of stability, maybe it's a way to take care of yourself or others around you, maybe it's about hitting status or being viewed in a certain light. And again, I'm not here to sit in judgment of what's right or wrong around what money means to you. It doesn't matter what I think. It matters what you think and what's motivating you, so let's be really clear on that. What are your motivators behind earning money? 
And once you're clear on that, once you're clear on the values underneath the money, then we can move into asking ourselves, how do I measure that? How will I know if I am successfully living out those values? And it may in part look like a revenue goal. You may know that once you've hit a certain figure in your business, then you will have generated enough money to say pay for your kid’s school tuition, or fully max out your retirement savings for the year, whatever it looks like for you, but let's link that financial goal to your values and not to some arbitrary figure that someone else has established for you. Let's find both quantitative and qualitative measures of success that you can track week after week, month after month, year after year. So that you know you are on the right track, that your business is doing well, and you are living in a way that fully aligns with what matters most to you. And please understand, it is absolutely acceptable and appropriate to have a financial goal as part of that and I'm even okay if that goal looks like six figures or seven figures. There's nothing wrong with wanting to earn six figures or seven figures, as long as we are the ones making meaning of it, that we are the ones deciding why that number matters to us. Not some marketer, not some podcaster, not some influencer on Instagram. We are responsible for creating our own benchmarks and our own metrics of success, and we don't have to justify them to anyone. So that's what I want you thinking about today, I want you thinking about what the motivators are for you when it comes to money, what is earning money really about for you, and then how can we measure those? How can we ensure that as you're building your business, and as you're setting revenue goals, you're doing so in a way that centers your values? 
Okay, my friends, I hope that didn't get too ranty for you this week. And actually, I would love to know your thoughts about this. I think we could have some really powerful conversations around money and I want to invite you to reach out to me. The best way to do so is over on Instagram, you can find me @CoachwithClarity. Please send me a DM, leave me a comment on one of my posts, let me know your thoughts. Let's engage in some really thoughtful conversation around this and let's redefine what it means to have a successful business and let's define it based on what matters most to you. Come let me know what matters most to you and your business over on Instagram @CoachwithClarity. I will be back next week with another episode and until then, my name is Lee Chaix McDonough, reminding you to get out there and show the world what it means to be a Coach with Clarity.
 
 

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