Hey Reader,
We've spent the last few weeks talking about HARMONY, the framework I've been developing to help us ask and answer the question, "Does the business I'm building actually fit into the life I want to live?"
We've talked about Happiness. We've talked about Alignment.
Today I want to talk about something that can make some people a little uncomfortable.
I want to talk about money.
More specifically, I want to talk about the R in HARMONY: Revenue.
I think there's a strange thing that happens with most of us that start a business. We almost automatically assume the goal is to make more money.
How much revenue do you want? More.
What do you want to make next year? More than this year.
What's your 5-year revenue goal? A whole lot more.
I get it. I'm a business owner. I've been doing this for 20+ years. I am in no way going to tell you that revenue doesn't matter. It absolutely does matter.
We need to make money in order to stay in business. And we typically need to make money in order to live the life we want.
The thing is, we're taught and told that we need to make more money, and then more, and then even more still. In a lot of spaces, a business isn't even considered successful until it hits 7-figures.
But does your business need to make 7-figures?
Maybe.
For most, probably not.
Let's go back to the original question in HARMONY:
What do you actually want your business to do for your life?
Once we have that answer, we just need to attach some numbers to it.
Maybe you want your side hustle to pay for a family vacation every year. Great. How much does that actually cost?
Maybe you want to completely replace your current salary. Also great, how much is that?
(Note: When calculating how much to replace your salary, be sure to calculate in things like retirement savings and healthcare, as those typically change when you move to full-time with your business)
Or maybe you want to save an extra $200 each month, or want your spouse to have the choice to work fewer hours, or [enter any other thing you may want here].
The point is, everyone's answer requires a different amount of money.
Let's take the $200 extra savings every month. That's $2,400 a year, which is very different from the $80k a year you might need in order to leave your classroom.
Different goals require different numbers, which require different businesses that make different decisions at different times that lead to different impacts on your life.
This is why "more" is not a very useful number for revenue. And a goal of "growth" is not enough by itself.
Stuck on 7-Figures
I have a coaching client who has a great business. It's about 9 years old, will do around $300k this year, and has a really strong profit margin.
On top of that, her spouse also has a great job that provides them with health insurance and a nice salary. Their household does well. They save a lot more for retirement than their financial planner suggests, they take multiple vacations every year, they're in a couple golf leagues, and they very rarely worry about money.
But for some reason, she has been fixated on getting her revenue to $1 million a year since long before I started coaching her a few years ago.
When I ask what she wants her business to do for her, the answer is always the same: "I want to be able to buy everyone in my family tickets to [insert big-name music artist here]."
That's it. That's all the more she wants. That's the growth she needs. She wants to be able to do the things she wants to do, without stressing about the money.
Here's the thing...she did that this year. She and her spouse, and their 3 children all went to one of the most expensive tours of the year. And they didn't need to put it on a credit card or even stress about their normal spending for the month.
So she is essentially already there. But clearly, she wants a little more breathing room so she can make those decisions without even thinking about it.
$300k this year. That means to get to 7-figures, they would increase their revenue by $700,000.
Would that be great? Yea, probably. (Putting aside the time and energy it would take to see that much growth, and the likelihood of needing to hire and manage at least 2 additional contractors, which she does not enjoy)
Is that what they actually need? No.
Like, not even sort of, kind of, remotely close. I think those concert tickets all together were like $2,000. So in theory, if she made $10k more each year, she could do that 5 times.
I continuously remind her that if we can get revenue to $500,000 her family's life will be completely changed. That would be a $200k increase and likely $150k in extra income for her family. You can go to a few concerts for $150k.
This is someone who has what is, by all reasonable measures, a very successful business. Consistent revenue, reasonable (so therefore sustainable) yearly growth, and GREAT profit margins. But the world of online businesses, hustle culture, and the comparative nature of our society has convinced her that she needs someone else's numbers.
Your Enough Numbers
So, we've been working on that by calculating what I call their "Enough Numbers."
Your "Enough Numbers" are the revenue and profit numbers you need to hit in order to meet the goals for what your business does for your life.
There are a few "Enough" numbers you need to know for yourself.
- Enough to Survive: The amount your business needs to make in order to keep the business running. This is typically your Operating Expenses + The minimum amount of personal income you need in order to justify the time, energy, and sacrifice required to keep things going.
- Enough to Sustain: The amount your business needs to generate for you to run it sustainably, without constantly worrying about one bad month, one lost client, or one unexpected expense putting everything at risk.
- Enough for Harmony: The amount of revenue you need your business to make in order for it to do what you want it to for your life.
There are no right or wrong numbers here.
One person's business may be:
- Enough to Survive: $10,000
- Enough to be Sustain: $40,000
- Enough for Harmony: $75,000
Someone else's might be:
- Enough to Survive: $45,000
- Enough to be Sustain: $100,000
- Enough for Harmony: $500,000
Neither of those business's is "more successful" than the other, according to HARMONY. They're building different lives that require different things, so they look differently.
One quick note: I'm talking about both revenue and profit here, because they're obviously not the same thing. Ultimately, what matters in HARMONY is what the business actually produces for your life.
So start by figuring out what you need personally, then work backward to determine the profit and revenue your business needs in order to create it.
We'll talk more about understanding those numbers when we get to the N in HARMONY.
Your Next Steps
Ok, so this week I am actually going to ask you to create something. A spreadsheet, a Google Doc, whatever. But I do want you to actually get these documented somewhere.
I want you to figure our your three Enough Numbers.
Enough to Survive
What's the minimum your business needs to generate in order for it to make sense to continue?
Enough to Sustain
What would your business need to generate in order for you to run it consistently, pay yourself appropriately, deal with any ups and downs, and handle unexpected expenses, all while still having some breathing room?
Enough for Harmony
Go back to our initial question: What do I actually want this business to do for my life?
Put a number on that. What does your business need to generate in order to make that a reality?
Super-duper important note:
If we go back to the coaching client I mentioned earlier: Her problem is not that she is too ambitious. Ambition is good. Drive is good. And she has a TON of both. The problem is that $1 million is a bad goal...for her.
Maybe her Harmony number will eventually need to be $1 million. That’s fine. We’ll adjust to that if needed. But it should be because the math and the life she wants get her there, not because we've establish the arbitrary threshold of success to be 7-figures.
Do not start with someone else's revenue goal and figure out how to get there.
Start with the life you want, and work backward to the revenue required to support it.
I hope this helps.
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~ Jeff
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I appreciate you.
Jeff Gargas
COO / Co-Founder, Teach Better Team
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P.S. When you're ready, here's how I can help:
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