How to Generate $100K in Profit and Other Listener Questions
Hey, hey, bold leaders! Welcome to another episode of The Bold Leadership Revolution Podcast and I’m so happy and excited to be here with you today. I have another listener, Q and A. And these are truly my favorite episodes because they bring forth the essence of this podcast for me.
So my whole why for being here is to deliver high value, quality leadership, and business education to those who need it. And, I have this belief that this podcast is FOR you. So when I solicit for questions or I get sent questions to answer on the show, it makes me feel like the purpose of this show is coming front and center.
So, we are here to show you how to optimize your performance as a leader, without all buttoned up stuffiness of corporate leadership, and the drivel of the personal development industry. We promise in a world that swings wildly between serious business and we will be firmly planted in the middle. We give you the practical side of business strategy, the necessary skills to build your mental strength, and the woo-ish principles to effectively manage your most precious resource, your energy!
And today, we have three questions they were given to me over on the ‘Gram. If you are not on Instagram, you should be. If you're on Instagram and you're not following me, why the heck not? I'm @thetaraNewman and I love all things Instagram.
So, the first question we got was, how do I balance organization with feeling free and inspired?
It feels like a push-pull between being an adult and having fun. I love this question! I love this question because I believe it's a common misconception that being organized and structured cramps, creativity, and spontaneity.
I believe the exact opposite is true. When I structure my work, I have the space to be excited and creative and pulled. And I have the space to blow off steam and pause when I don't feel that pull. For example, April was a tough month for productivity over here. I hosted a retreat the first week so we could do, was slated for integration and decompression. Then both my kids got this horrible stomach virus, and then I got sick for about seven or eight days. Not ideal as this was a time I was scheduled to be creating podcast episodes.
However, because we knew what I was supposed to be doing, we knew how to cover for my absence. And this is a huge part of being able to step away from your business and having it run in your absence and without you. We had some episodes prepared, but we were going to need to do the best of an episode where we pulled something out of the archives. And, when I got back to work, I knew exactly what I needed to do and that happens to be the week that I'm recording this episode.
This is my first week back from being really sick from having this really weird month, of low productivity and I'm able to record almost 12 episodes of the podcast this week. Right, record! You know, whatever I need to do, for this podcast this week because I know what needs to be done. I know what needs to be front and center. I know what needs my attention. And this week, I've got my blinders on. Nothing is getting in my way of recording these episodes. Heck, I haven't even been on Instagram all that much, this week. I haven't even been doing my beloved stories, because I know where my work is. And this has allowed me to really take the time I needed to get better.
When I left corporate, I wanted time freedom. That was like time and schedule freedom. That was my thing I was so tired of what working the nine to five, under the fluorescent lates. And I wanted to do, what I wanted to do, when I wanted to do it; which left me swinging in the breeze and inconsistent in my work.
To be honest, having an idea weekly template and all my priorities blocked on my calendar has helped me do both. So when my mom wants to grab a spontaneous lunch, I know when we can do that. When something comes up unexpected with the kids, I know what I'll have to move and where I have to move it to. This creates so much ease and freedom. My schedule is never packed too tightly. There's always big open spaces where I can take some time off or do something fun, take a nap, sit and read a book, because life is important and it's not all about work. So, I think we can have a schedule and have fun. I think it's really holding that dichotomy and the attention of what that means for each of us.
Okay, second question. It would be cool to hear how you are so visible and accessible while also having boundaries?
And this is such a good question because I think this hits upon the struggle that many people have, primarily women. Because I hear this a lot more from women, of where they feel like they're overgiving. Maybe they've been friends zoned in their business relationships. Maybe a lot of people are reaching out and trying to pick their brains. I hear this in their language in a lot of different ways. This is a great question because I think many business owners tend to feel like they're over-giving and not receiving anything in return, or giving too much and not making sales.
So, I just did bullet lists. I remember when I was a blogger, I feel so great to these bulleted list posts. It feels like, oh my gosh, I want to write about something more deep. I want to pour my heart out, I want to be vulnerable and I want people to read these poetic prose. But at the end of the day, I’m such a, like, here's my list of things, here's my step-by-step. So, I just made a list.
HERE IS A LIST:
Number one, I'm accessible only in the places that feel good to me to be accessible. Instagram in this podcast are where it's at, and I don't really worry about being everywhere all the time, ever.
Number two, I'm very clear on what my value is, and while you may get value from me on Instagram, or in a DM, or from this podcast, it's a fraction of what it's like to pay me and work with me. You can pick my brain all you want, by submitting questions to this podcast. I'm grateful when you do because this helps me serve so many more people.
So you know, this is a boundary, a system and 100% works for the person who has the question. And it works for me, and it works for my community. So, the fact that I allow you, in this space, to pick my brain is a boundary. I'm not gonna be answering you one on one in my DM’s. I'm gonna say, this is a great question, thanks so much. I'm gonna answer it on the podcast, or I'm going to create a whole podcast episode around it, which then creates a system for me, cause I always know how to respond when people come in and wanna tread on my expertise. And I make it work for the person who has asked a question. I make it work for me, and I make it work for my community.
Number three, I believe that I can be visible and accessible and still have boundaries. This is a belief, right? I also have a belief that the right people will 1000% pay me for my value, whether it's in cash or in the form of podcast currency, by leaving a review for this podcast. So, hint, hint! If you have not yet left a review for this podcast, go review the podcast.
I believe that being visible and accessible serves all. I also believe that my boundaries serve all. So, here's the other thing. If you receive a DM from me at 9:00 PM on a Saturday, it's because I was excited to reply to you. And that was the time I decided I was going to be on Instagram. So when I'm on Instagram, I'm there with intention. I've decided that that's where I want to be. And I answer and respond to DM’s when I decide to respond. My visibility and accessibility are 100% within my control. And that autonomy is empowering for me.
So those were my bullets around. How I'm able to be so visible, accessible, and also have boundaries.
The last and third question. This person listened to the podcast episode with me and Racheal Cook and I believe that Racheal has been on this podcast more than once. I think they’re referring to the one we did around the truth about scaling. They said, love the podcast episode with you and Racheal, could you go into how to reach a $100K hump?
How to reach the $100K in profit? So I did not respond to this person and ask for more clarification. So, I want to point out that this question is, the person didn't say a $100,000 in revenue; they said a $100,000 in profit. And even somewhat more vague, are we talking about net profit or gross profit here?
So gross profit is revenue minus your cost of goods sold. And I honestly think this is where service providers get tripped up in their pricing. They think that their service is their time and that there's no cost of goods sold, especially if they're working out of their home, there's no overhead. However, you might give gifts or upgrades to your clients. You have admin support for products, projects, and services. So there is actually a cost of goods sold to your service. So, just this is like a little tidbit check-in.
Net profit is what's leftover after all the expenses are paid including payroll. So this is what's leftover after you pay yourself and anybody else on your team. In my larger clients with lots of employees and a product-based business, they're pumped to hit a 7% net profit. Like I have a client who has that same goal. So on a $1 million business, they're looking to clear $70,000 in net profit. After they pay everybody and after they pay all their expenses.
On service-based businesses, if you're mindful of your spending, which most business owners are not; you can shoot for a higher percentage. My CFO and I were bantering back and forth the other day about this. And I asked him what he's seeing and from his perspective with service-based businesses, and he said that he's seeing anywhere between 15 to 25% net profit. Making it easier to hit that $100,000 net profit amount.
Another resource on this is Michael Michalowicz, author of Profit First, he has a chart that breaks us out. In his chart says, if you're making between $500,000 and $1 million, you would be around 15% on his chart. So conservatively speaking, 10% of $1 million is $100,000. So you would need to be getting, if you're looking to net profit a $100,000, you would need to be at that $1 million marks. And you would need to have your expenses hemmed in pretty tightly.
More profit comes in a few ways. One, you need to make sure you're profitable at your current revenue number because adding more revenue won't always lead to more profitability if you have leaks and holes in your business. It just gives you more money to have going out the door. And in some cases, more revenue would require more capital, so you might be at a lesser profit percentage.
For example, my work with small business owners, that space between 1 million and 5 million is a really tough growth hurdle. And they see that their profits tend to dip there as they're scaling through those numbers. Assuming you're profitable at the revenue number you're at. Adding more revenue should result in adding more profit. For a while, until you need to make investments in infrastructure and team to get you over the next revenue hurdle.
If you're not as profitable as you want to be, take a good look at your expenses. I do this every week when I have my money date. I scroll through my banking and look where I spent money. I asked myself some good questions. Was it worth it? What’s the result I'm getting? What's the result I'm getting from this expense? How will this serve me in the long term?
Asking yourself some questions is helpful to help you be more discerning in how you spend your money. And this goes honestly for your personal spending and your business spending. We do this for our personal spending as well. We actually just did a whole deep dive on our expenses, from the last few months. And are making some shifts and changes because you need to be looking at these things in real-time, and not on like a six month or quarterly or an annual basis. It's too late to make any tweaks or catching ups and to check in with what your goals are.
So, if these topics that we talked about here today, are interesting to you and you wanna have more dialogue on them, I highly recommend you consider joining us in The BRAVE Society where we have some of the most unique conversations there are on the Internet. And in my opinion in the world, we have had several conversations specifically on this topic, on implementing Profit First and creating a system for your money. Because having a system for receiving money goes a long way in helping you receive even more money.
So, your takeaway from today would be to go and I would say check in with your expenses. I think that's a really good action to take from today's episode. You can always find me on Instagram @thetaranewman and let me know what your insight and action is from today's episode.
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