To the media, $1 million is not much money for a business but for hard working entrepreneurs $1 million should be plenty. I have spent the past seven years searching for businesses that would grow to make millions upon millions of dollars but after trying out one thing after the other, I’ve realized that just making $1 million takes A TON of work. You may be thinking that I should have seen the obvious: $1 million is still hard to make. Aren’t all entrepreneurs starting businesses to get filthy rich though? $1 million shouldn’t even be that hard if the real goal is much more, right? Well, $1 million is plenty for any entrepreneur just getting started.
I’m not suggesting that if your goal is to make $1 billion, you are ridiculous but if you don’t have the skills necessary to make even $100,000, how on earth can you make billions? The answer is: you can’t. Despite that fact, every journalist that I read who discusses the finances of startups instantly dismiss those companies that don’t have what they consider a “breakthrough” business model. Read Techcrunch on any given day and you’ll instantly see writers dismissing Facebook’s payment platform, or another company’s new round of funding despite their fierce reality that the company will probably never make it.
While the companies may be making hundreds of millions a year, it’s still not enough for journalists and unfortunately for their investors. Yes, I have occasionally written that Facebook’s business model is not sufficient and that they need to do more to expand. Facebook is forced into that position with all their free services and all of their investments. Thankfully though, the average entrepreneur doesn’t need to worry about building a billion dollar business model.
So often we focus on the extremely successful but the vast majority of entrepreneurs will never even become profitable. After reading some of the articles that lambast larger companies for their poor business strategies, I figured I’d take the opportunity to discuss why the first million is much more important.
1. Understanding How To Make $100,000 Is Extremely Important
Yes, you read that right. Understanding how to make $100,000 (not $1 million) is extremely important. Most entrepreneurs never even get to this point. After a large investment of time and money, the business fails to get off the ground and they head back to work in order to pay off the massive debts they’ve amounted or regain the saving they’ve annihilated. If you can get through your first $100,000 there is a solid chance that you are well on your way to breaking the million dollar threshold.
2. 5 Percent Of Entrepreneurs Make It Past The First Year
I’m not sure if this is an actual statistics but almost ten years ago, one of my professors on economics told me that most entrepreneurs don’t even make it past their first year. He was essentially trying to talk me out of the first business that I started (which subsequently failed). He makes a good point though and this is clearly one of the reasons that $1 million should be plenty for any entrepreneur.
3. 5 Percent Of Those Make It Past The Second Year
So you are giving yourself a pat on the back for making it past the first year? Get ready for another long slog as you try to make it through your second year because the unexpected will happen. Just as you think you’re getting good at running a business, things will hit the fan (to put it lightly) and you’ll be wondering why you didn’t just keep your stable job in corporate America.
Every single entrepreneur experiences fear and I’m most definitely no exception. The worst is when your just about to go broke and you suddenly realize that cash flow management makes a hell of lot sense. Better late than never though!
4. Having A Self-Sustaining Business Is Good For Your Life
So you are beyond the first two years and now you are beginning to see through the fog. You haven’t necessarily made your first million but you’re probably feeling like a million dollars. That’s because every year that goes by you are overcoming the odds. If you can successfully set up businesses that generate positive cash flow then you are essentially building annuities from scratch. That’s why millionaires build businesses.
Those annuities will pay for you to travel the world, start new businesses, and yes, have a life outside of your first business! Regardless of whether or not the business is paying you out millions or thousands of dollars a year, the key is building the business, automating it, and turning it into a cash machine. If you want to learn how to automate I suggest checking out “The 4-Hour Workweek” by Tim Ferriss.
5. You Will Learn How To Do Everything In A Business
Even if you don’t have billions, multiple millions, or even hundreds of thousands, you are having the best educational experience possible. Starting a business is the quickest way to learn everything there is to know about business in general. Whether it’s hiring, firing, managing cash flows, accounting, the much despised taxes, branding, copywriting, marketing, or anything else, you will learn it all.
While your partners will be able to assist with the various tasks of the business, you will have learned just about everything there is to know about running a business.
6. Hundreds Of Millions Is A Big Gamble
You haven’t even made your first million and you’re already plotting out a path of destruction leading to that hundred million dollar check? You’ve got some serious balls my friend (and that goes for the women out there as well). It takes a true entrepreneur to dream big but you will sure as hell celebrate the first million that you bring in.
7. You Will Have Failed Hundreds Of Times
By the time you make it to your first million you will have made so many mistakes that you’ll have intelligently realized that the line of problems never ends. It’s just part of business and if you are ready for attack failure head on then you aren’t going to make it. I should also note at this point that it’s also sometimes just as good to call it quits. Sometimes a business isn’t meant to be and while you can keep taking on each failure aggressively, most businesses will never make it.
While we read about the large companies of the world everyday, it’s the small entrepreneurs that are out there making the world go round. After getting tired of having the luxury of lambasting big companies about their business strategy, I thought it would make sense to give a little thought to the little guy. Most likely because I’m one of them.
If you keep trying you’ll eventually make more than a million dollars, I’m sure of it. In the meantime, it’s sometimes good to consider a more reachable goal and celebrate each step along the way. I know that I have most definitely learned this lesson.