MBA2559 How To Make Six Figures in Your First Year of Business

0:06Hey everyone, welcome back to the$100 MBA show. I'm your host, Omar Zinhome. And in today's lesson, you're going to learn how to make six figures in profit in your first year of business. Yep, I said profit, not revenue. What you keep is what matters, okay? We want to hit a milestone that actually impacts your life. So hitting this milestone is not just about earning big bucks. It's about running a smart, effective, efficient business. In today's episode, I'm going to break down step by step so you can make this happen. Total transparency, I didn't make six figures my first year in my first business.

0:43It took me a few times to learn how to do this, and I want to share with you what really matters, what to focus on in that first year so you hit that six-figure mark in profit. But first, did you know that only about 33 % of small businesses hit six figures in revenue? Period. Not even their first year, let alone profit. This is only revenue, right? And I picked up the statistic from the Small Business Genius. They have a great article on a lot of statistics on small businesses. And what I learned and what the statistics show is that the difference is knowing where to focus your time and your energy.

1:15You only have a certain amount of time in the day. You only have a certain amount of energy left after you do everything you have to do for your life and work. So what do you actually use that time and energy towards? I'll show you in today's episode. We're going to build a profitable, efficient business. Let's jump right into it. I want to start by challenging you to ask yourself, why is this even important? Why are you trying to hit six figures in profit in the first year? Why is this something that we're even talking about? I'm going to give you my reasons, but you might have your own reasons.

1:46So write them down in your notebook or on your phone in a note taking app, right? My reasons why is because I wanted to make sure that I was able to pay myself so I could focus on my business full time. Making six figures in profits means I can pay myself a proper salary. I don't have to operate out of desperation. I don't have to operate out of pulling out of my savings or really scraping by just to make things happen to cover my bills. Paying yourself really allows you to start to think strategically and not out of desperation. OK, and we'll talk more about that in a moment. But that was it for me.

2:20I really felt like if I get six figures in revenue my first year, I'll be able to really fly with this business because I have my basic needs met. Right. I mean, imagine the confidence you'll feel knowing that you can meet your financial needs at home while reinvesting your business and making that kind of money for your business in that first year. Another reason why six figures of profit was important for me in that first year is that it allowed me to shift my thinking to be creative and not in this like survival mode. When your profit creates this cushion in your business, you can focus on being creative and being a long term thinker and not just trying to make money for the short term.

2:57Right. You're not trying to make decisions so you can get unstuck with a bill. Right. Chasing short term cash. This is not a good way to operate. You're making decisions that can affect your business in the long term. So instead of scrambling for the next client, you can invest in building a system, refining your product, launching a strategic marketing plan. You know, you're thinking bigger when you have that buffer. Again, like I mentioned, another reason was reducing of the pressure and not making short term decisions. Right. Right. So with six figures in profit, you're no longer attempting to make decisions just to keep the lights on.

3:29Right. You can take calculated risks. You can experiment. You can work on scaling your business without constantly feeling the weight of financial stress. It's a big milestone, in my opinion. I feel like once you hit that milestone, you can now comfortably start scaling your business. So how do we get there? Let's start with step one. Focus on high margin products or services. High margins ensure that most of your revenue becomes profit. right? That you're not losing so much money on every sale. When I say losing, I'm talking about like you have to give up cash to make that sale happen, right?

4:03You want as high margins as possible. This reduces the pressure to constantly chase sales and gives you more breathing room to grow strategically. For example, if you're selling digital products like courses, ebook, software, they have a low cost for replication, right? They have a low cost to create and deliver, making them an excellent high margin option. For example, I ran a software company for 10 years. We created the software once and continue to improve it, right? We iterate, improve the features, all that kind of stuff. But that same product gets sold over and over and over and over and over, even when I'm sleeping and I don't need to create a new product for every new customer.

4:43So as an action step to get you closer to what I'm talking about in terms of high margins, analyze your business idea, your product, look for ways to increase your margins, by minimizing cost or focusing on products that don't require significant overhead. This is why I'm a big fan of digital products, because the overhead is quite low. You're delivering the product virtually online, whether it's coaching or courses or a template or some sort of software or widget or something like that. And you're able to deliver that product with very low costs. Yes, it costs money to build it once, maybe like a software product, and it costs time to maintain it.

5:23But it's nowhere near as much as how much you can scale that product delivery. I can continue to sell that product over and over and over. And this is why the biggest companies in the world are software companies nowadays. Just in the most recent quarter, Apple made$24.6 billion in revenue on just the App Store. Right. So step two, leveraging scalable products. Scale is different from margins. Margins is how much money it costs me to deliver a product versus how much I charge. That means the difference, the profit I make in there is quite large every time I sell it. Right now, scale is all about how you leverage time.

6:04Time is your most limited resource to make six figures in profit. You need products that allow you to serve more people without more hours, right? Leverage products you can create once and sell over and over and over. When you write a book, you write it once and then you can distribute and sell that book over and over and over. You can scale this infinitely, right? You wrote the book once, but you could sell it a million times if you want to. Some books sell for two, three million times, right? They get published, whether ebook or audio book, or it's an actual physical book. The point here is, is that it's scalable.

6:37What's not scalable? You being a one-on-one consultant, every time you need to make money, you need to show up and spend your time. Time for money models won't scale, but products that have leverage will. This product, this podcast right now, I call it a product, but this podcast is a good example of that. I'm recording this once, but then it's going to be heard and distributed over and over and over and over. And I am able to leverage that time I spent one time. So an actual step here is to choose a scalable product to focus on this year, something that you can create once and sell over and over.

7:14Avoid spreading yourself too thin with multiple ideas. Just choose one thing, one idea, and that could be a book, that could be a course, that could be a software. Step three, this is probably the most challenging step for most people, and that is to charge more. Pricing, I found in my years of experience to be one of the most powerful tools in your business. Many entrepreneurs undervalue their work. They think that, oh, who's going to buy for this much? Who has this kind of money? But charging higher prices allows you to work with fewer customers and still achieve high profitability. By the way, fewer customers means fewer headaches, fewer costs, fewer liabilities, fewer worries, right?

7:56I'm going to give you a good example. Say, for example, you have an online course. Instead of charging$50 for a course, charge$500. Make it worth$500. Invest in the product and make it worth that much. You only need 200 customers to hit$100 ,000 in revenue versus you need 2 ,000 customers if you charge$50 instead of$500. With high margin products, you can make the most of every sale and it's going to make it easier for you to hit that milestone of$100 ,000 in profit. So look at your current products or services. Look at the pricing you have. Can you raise your prices by adding more value? What I like to do is a good exercise.

8:37What I recommend to my students is this. Say, for example, you have a course and that course is again, let's say it's$50 that course. How would you make this course if it was$500 or$1 ,000? What would you change? What would you add? How would you make it that valuable? Instead of worrying about, oh, no one's going to buy for that much, increase the price and improve the product. Go the other way around. Some people just think, oh, I just raised the price and that's it. No, change the product so it's worth$500. Be careful, though. Don't add value in ways that you can't scale. A lot of people say, okay, I will add a monthly call.

9:16Well, you can't really scale that because every time you do that, you have to spend your time. Stay away from that if you can. as much as possible. Now, I know that I just said that, but just keep in mind, yes, you're on that call and you can scale it no matter how many people are on your program because you're only there once and everybody's watching. But I'm always cautious of trading time for money because your time is required to fulfill that value. Understand what you're getting into before you do it. So increase the value of products so you can charge more and make more money. step number four spend the most time on products marketing and sales okay a lot of people are spending too much time in the first year of their business on things that don't move the needle okay in my opinion the three pillars of any successful business in the first year to be profitable as possible is having a great product right having effective marketing and a sales strategy that works, right?

10:13To ensure that that revenue translates into the profit, right? That you actually are making the sales you need. For example, when I was running Webinar Ninja, my software company, I spent the majority of my early days, I would probably say the majority of my first three years, improving the product, making sure I refine my communication when it comes to the marketing and who I'm speaking to and how I'm crafting that message and making sales constantly. I was running sales webinars every week, right? I was trying to get as many customers as I can so that I can learn from those customers, improve the product through feedback, improve my messaging through marketing, and then make more sales and then repeating that cycle.

10:51It was a flywheel. And this is so important because a lot of us are kind of focused all over the place. Oh, maybe I need an HR department. Maybe I need to improve my recruitment. Yes, maybe you do. And those things are true, but you can't do everything at once, especially in your first year. You could definitely start worrying about some of the nitty gritty part of systems and business and all that kind of stuff to make sure that you have an efficient system after your first year when you're making that kind of revenue where you have that buffer. But when you can't come up for air, when you don't have enough oxygen, meaning cash to survive the next year, then this is all null and void.

11:28It's all kind of moot point. Like it doesn't matter. Okay. All you need to worry about right now is to worry about your product, your marketing and your sales. Focus on those three things till you get to that million dollars in profit mark. So to be fair, I would say dedicate at least 80 % of your time on those three areas. Improve your product on customer feedback, learn from your customers, refine your messaging and practice selling confidently. My way of selling was through webinars. So you might do one-on-one calls. You might be doing sales through emails. You might be doing sales in person at events.

12:00That's up to your discretion, up to your choice of selling the way you like to sell. But the point here is that you need to spend 80 % of your time on those three areas to make sure you're getting where you need to go in the first year. Step five, our final step, start with a clear goal and track your progress. Like Peter Drucker says, what gets measured gets managed, right? You can't hit six figures in profit if you don't know what it looks like, right? You don't break it down to smaller targets, smaller goals, right? Like monthly and weekly sales goals. Track how much revenue translates into profit.

12:37Figure out if I want to make$100 ,000 in profit this year, what does that mean each month? How much profit do I need each month? How many sales does that mean in terms of getting that kind of profit? Break it down so you can make it super clear to yourself when you wake up in the morning, I need to do X today to get X amount of sales so I can get X amount of profit. So as an action step. Set your annual goal. This next year coming up, what are you going to go for? Is it just baseline? Let's go for$100 ,000 in profit. Okay. What does that look like? What's your profit margins right now? How many make per sale?

13:11How many sales do you need to do that? Break it down to 12 months. Do the math for yourself. It's going to take you five minutes. It's going to give you clarity. And when you have clarity, it's easy for you to act. You're clear on what you have to do, right? Your mission is laid out for you. All you got to do is just step into that mission and make it happen. I do this to this day where we have a spreadsheet called our precision scorecard for our team. We track it with the whole team for every month. We revisit this thing and we go through all our metrics and our KPIs and make sure that we're on track for our goals.

13:42We set our goals for every month and we try to see if we can hit them, exceed them, see what we need to do to get there. And everybody has their action items and we go off for the month and work on it, right? Now, that's just for the whole team. Me and Nicole, us as founders, we actually go even granular by the week. So we know each week what we have to do to hit those goals, whether it's download numbers for our podcast, what do we have to do to grow the podcast, whether it's growing our YouTube channel, whether it's sales for our program, whatever it is. The point here is that it's clear what we need to do, what the goal is, what we need to do to get to the goal, even to the daily tasks we have to do every single week.

14:19So to wrap up, making six figures in profit in your first year is not just about working harder, right? You're going to work hard, but it's about working smarter. It's about understanding what you need to focus on, right? High margins, scalable products, charge what you're worth, increase your prices, right? And spend your time on the areas that truly drive profitability, right? Like we talked about. Start with a clear goal. Have your goal of what you need to do. This is the number we're going to hit. What do you got to do to get there? Work backwards. It's very, very simple. You just got to sit down and make it happen with a paper and pen.

14:52And you will feel a liberation when you do this. You're like, okay, it's clear what I have to do. I know what's ahead of me, right? I know what I need to do today, tomorrow, the next week, the next month. And then when I fall behind, I know that I'm not hitting my goal. I need to change things. I need to improve things. I may need a new strategy. And maybe you need to look at different areas of marketing. You know, it gives you clarity and it's so empowering. If you found this episode empowering, share with a friend, Share with a buddy that you think would help you be kind of your accountability buddy as you're going through this process of hitting six figures in profit in your first year or the next year, right?

15:26And don't forget to subscribe, right? If you haven't subscribed to our channel on YouTube, go ahead and do that right now or on any podcast app, Spotify, Apple, Overcast, CastBox, or on every single one. Hit subscribe so you get our next episode automatically. Thanks for tuning into the$100 MBA show. Don't forget, success is about what you keep, right? not just about what you earn. I'm Omar Zanom and I'll see you in the next episode.