5 Things No One Tells You About Running a Million-Dollar Business
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It’s every entrepreneur’s dream to reach seven figures in business, but as my own experience has taught me, hitting the million-dollar mark doesn’t mean it's all been smooth sailing.
Before my language app crossed seven figures, I believed a lot of what I’d read or heard from other entrepreneurs who’d “made it.” I was certain I would be flying in a private jet, buying new cars every other week and never having to work hard again. But once my business hit that big “success” milestone, I realized that not everything is as it seems. I’m not kicking back, taking sales calls from a lounge chair on the beach or snapping photos in front of my brand new Lamborghini. None of that is reality.
Certainly, with a lot of hard work and a good support system, it is possible to reach a million dollars in your business, but you need to be aware that those success stories don’t always show exactly what it takes to get to seven-figures -- or what happens after you make it there.
Here are five things no one tells you about running a million-dollar business:
1. You can make a million dollars and still be broke.
Unfortunately, there’s this little thing called cash flow that most aspiring entrepreneurs don’t think about until it’s too late. Cash flow actually represents all of the money flowing into and out of your business. This means that any expenses you have -- like taxes, office supplies and invoices for vendors or team members -- count against your profits. In fact, 82 percent of small businesses that fail do so because of cash-flow problems.
Even Twitter, which has been around since 2006, has had these profit issues. Despite having 336 million monthly active users, the company took 12 years, until 2018, to achieve a profitable status for the first time This is not unusual -- most businesses don’t make a profit in their early ears of operation.
In my own first year, I barely made a profit and paid myself a salary of only $11,000. My business had reached six figures but I still didn’t make enough to fully cover my living expenses. I didn’t realize when I started my business how much money I would have to put back into it because I’d believed what I’d seen from others boasting about their wins.
I’ve often seen entrepreneurs who post only their gross income without acknowledging expenses like travel costs, office rent and team salaries. So when you see an entrepreneur who says his or her business has reached "seven figures," remember that that might not mean the amount of money in the bank. It’s more than likely "total revenue."
One way to ensure you don’t go broke on your way to seven figures is to use a cash-flow statement to track revenue going in and out of your business. This will help you and your team anticipate issues and plan accordingly.
2. You have more responsibility, not less.
For most of us driven entrepreneurs, the day-to-day hustle is part of daily life: We wake up and before we can even say, “I’ll have a grande quad nonfat no-whip mocha,” we’re already checking off a thousand things to get done -- and usually doing them all ourselves. We wait for the day when we finally make big money so we can stop working so hard.
The truth is, however, that making more money usually means more responsibilities. This is why it’s important to step up as a leader in your business. Effective leadership qualities -- like good communication and honesty -- can make the difference between continued growth or failure.
Sara Blakely, founder and CEO of Spanx, started her business with just $5,000 of her own money. Part of what made her successful was embracing failure as a part of her company culture. She still schedules what she calls "oops meetings" for employees, who are urged to admit mistakes and find the lesson or humor in them. She believes that creating a company culture where employees aren't terrified to make mistakes or experience failure helps them be more productive and innovative.
As you build your own company, focus on working smarter, not harder. To do this, step back and delegate. Play on the strengths of your team members to make things run smoothly. Then you can focus on your larger responsibilities of running the business and helping it grow while your team handles the behind-the-scenes details.
3. You need to be smart about whom you hire.
It’s easy to hire friends and family when you start out, because, well, those people are most likely free or at least cheap labor. But when your business starts making money and you have clients who rely on you, your cousin who dropped out of high school may not be the best person to handle your finances.
The late motivational speaker Jim Rohn is often quoted as saying, “You’re the average of the five people you spend the most time with.” In business, you’re the average of those in your support system.
If you don’t have people you can trust, who know how to do their jobs well, you’ll end up having to let some of them go. But if you hire the right team from the start, you’ll be less likely to have to go on a firing spree for family and friends you hired.
Whether you hire an H.R. consultant or do the interviewing and hiring yourself, you’ll want to look for certain qualities, like a strong sense of accountability. There is also a well-known strategy successful entrepreneurs use: “Try before you buy.” Give employees a trial period before you bring them on full time. This will eliminate any risks that they won’t be able to handle the workload or will have issues meshing with your current team.
4. You realize "imposter syndrome" is a real thing.
When I found out I was a finalist for the 2018 Stevie Awards, I panicked. Not because my team and I didn’t earn it, but because the dreaded imposter syndrome started creeping in -- the belief that somehow others had worked harder than I had or had spent more time building their business.
All this had me questioning who am I to be nominated for these awards? I’ve overcame many obstacles as an entrepreneur, including being diagnosed with adult ADHD, but it’s hard not to feel like a fraud, no matter what you accomplish.
Imposter syndrome is a real thing that even high-profile leaders and celebrities experience. Scientific American has defined Imposter Syndrome as “a pervasive feeling of self-doubt, insecurity, or fraudulence despite often overwhelming evidence to the contrary.” The syndrome doesn’t discriminate against rich or poor people, celebrities or regular joes working 9 to 5. Everyone can feel like an imposter at any time, and it’s often hard to escape that frame of mind.
Educator and TED Ed speaker Elizabeth Cox said in her TED Talk that in order to combat imposter syndrome, we should talk about it. For me, I know that when those doubts creep in, I try to use them as a catalyst to grow. It’s fuel for me to keep pushing forward and showing up as a leader, and I attribute most of my success to this push.
5. You focus on nurturing relationships instead of day-to-day grunt work.
When you first start out as an entrepreneur, your time and energy are focused on consuming information. You talk to people, go to networking events, reach out to mentors and gobble up the best business books to help you on your path. But at some point, you have to take a step back and focus on developing better relationships and connections in your business.
My first year of business, I spent too much time trying to be at every program, going to every conference and meeting everyone in my industry. I ended up spreading myself -- and my finances -- too thin. I realized that by trying to meet and greet anyone and everyone, I couldn't dedicate enough time to truly cultivating the relationships that would make my business stronger.
Successful CEOs spend less time out and about and more time nurturing their business relationships, from meeting with team members to connecting with clients. And I do mean nurture. You want to respect your relationships by being fully present when you’re speaking with those people. This is also why it’s important to have a great team behind you. You can’t be checking your phone or answering social media comments when you’re in important meetings.
After all, attention is the new currency in the business world -- and you often get back tenfold what you spend --even after you've arrived at that hard-earned seven figures.