[Note: This is an excerpt from my book "Creative Freedom: A comprehensive guide to personal and financial freedom as a creative entrepreneur". If you'd like to be the first to get updates and excerpts, make sure you're on my mailing list, so you don't miss a beat!]
Suppose you saw this "advertisement" on social media. You'd no doubt roll your eyes, scratch your head, and maybe even wonder aloud "Who do they think they are? Beyonce is like The Highlander... there can be only one!"
The Highlander franchise might belie that notion, but I digress.
Regardless, you'd likely consider this ad complete nonsense and skip right on past - no matter how badly you'd like to be the next Queen Bey.
And yet, how many times have you been lured by other similar, yet equally absurd promises?
Depending on the circles in which you travel, you may have mixed emotions about the phrase "earn six-figures a year." After all, earning six or seven figures is the holy grail of many online business coaches and so-called internet marketing gurus.
The phrase "earn six-figures" is often followed by such deceptive codswallop as "in your sleep" or "in your pajamas" or "part time from anywhere".
These inflated promises are often found co-mingling with sentences like "all you need is a laptop and a dream."
Puh-lease.
While it's true that some people have done those things, the reality is that very few people can replicate their success - and when they do, success doesn't happen overnight. There's no "blueprint" or "formula" that's going to give you those kinds of results overnight.
I regularly write about the fact that those kinds of results take time. Jeff Walker, developer of Product Launch Formula, said he got fewer than 10 buyers the first time he launched. He had to launch more than once before he hit seven figures. Beyonce only became Beyonce after years of focused effort, a few heartaches, and more focused effort.
The same is true about building your own Noble Empire. You have to keep showing up consistently, iterating, focusing on what works and discarding the rest. That's how you build a reputation and make a good living doing what you love.
But too many creatives settle for subsistence-level income in their so-called business. It's time to stop the madness. (Tweet this)
That's why I am a firm believer that every creative entrepreneur needs (yes, I said needs) to build a six-figure company. I call it the Six-Figure Imperative.
At its core, The Six-Figure Imperative is both a mathematical equation and psychological illustration (Fusion creatives, rejoice!). In most casts, a healthy company needs to make at least six figures in order to pay the owner a living wage and still be able to cover the business expenses. Sure, there are places in the world where you can live on less (or might need more), but that's a fair baseline for most creatives, and I don't know many people aiming to live closer to the poverty level - which, in the US, is just over $20,400 for a family of 3 (higher in Alaska & Hawaii).
All you Chaotics out there, breathe a minute and let's explore these numbers. If you want to pay yourself $50,000 per year (before taxes), your company needs to bring in at least $100,000. That's based on the Profit First approach that I use with all my clients. Developed by Mike Michalowicz, the Profit First approach recommends that owner's pay be half of the company income.
So, $50,000 x 2 = $100,000 business revenue
Special notes: Once your business revenue is over $250,000, your owner pay percentage will shrink, and your profit sharing percentage will grow. If you want your take home pay to be $50,000, you'll need to add your taxes on top of that number before you multiply. I'm no tax pro, so you'll have to do that math on your own, but this gives you a baseline idea of how it works.
Now, all you Linears can sit back for a minute while we cover the psychological illustration. Most creatives see the six figure mark in one of two ways:
The Six Figure Imperative works to break that psychological block by showing you that six figures is not only reasonable, it's important to the long-term health of any full-fledged business.
When I say "six figures" I mean it as a baseline. I hope you're able to make as much money as you desire with your Noble Empire. Eight figures? Go for it. Ten? Why not? More? That's okay by me, too. But for most of us, the low-end of six figures is a useful rule of thumb.
But there's a big gap between $100,000 and a million. Where should your personal baseline be?
If you're living in a major metropolitan area, where rent is obscene, the low end of six figures might not even cover your mortgage. I saw an apartment listed in Nashville for $8,000 per month. And a girl's gotta eat, right? So your six-figure baseline might be closer to $250,000. That puts you owner pay at $125,000 per year. $96k for rent and $31k for all your other living expenses.
Only you can discern what will really work for you. Maybe you have no kids, or maybe you have seven. Maybe you have no debt, or maybe you've got thousands of dollars in student loans that still need to be paid off. Once you determine your living wage, you'll be able to determine the baseline income goal for your personal Six-Figure Imperative (and also helps you make the six-figure distinction).
There's one last clarification I need to make. The Six-Figure Imperative applies to full-fledged businesses. If you're a creative entrepreneur with a "side hustle" or a hobby that happens to earn some income, this may not apply to you. Creative Freedom is focused on helping creative entrepreneurs build a full-fledged business that's healthy, profitable, and sustainable. The Six Figure Imperative is meant for any Noble Empire that's designed to pay you a living wage and stand on its own. That means you don't need to prop it up by pumping your own money into it all the time, and you're not running it down to zero to keep your personal bills paid. You don't need a job to keep it afloat because it swims on its own.
That doesn't mean that your hobby can't make six figures. It doesn't mean you have to quit your day job to do what you love. There are many stories of creatives that have a day job that pays the bills so that they can create on their own terms. Jim Henson started life that way. But at some point, he decided that being a creative entrepreneur was his path, and he built a company that paid him well - and was able to feed and clothe an army of employees to boot. You dream may not be as grand as Henson's was, but The Six-Figure Imperative can help set you on the path for healthy growth, whatever size your company may be.
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Whenever I'm working with a new client, invariably we come to the topic of income. How much are you making? How much do you want to make? How much do you want to KEEP? All three questions are important, and are valuable for different reasons. At some point, the topic of "making six figures" comes up (or seven, or more).
This is where it gets fun and tricky. For some creatives, it feels like a dream number. Like it's an unobtainable "nice to have" that would be cool if it were possible. They envision lazy days on an exotic beach somewhere, sipping cool drinks by a warm sea, while people pay top dollar for their creative genius. Their flights of fancy are short-lived however, when they look at their current financial situation. They're just having a hard time believing that kind of lifestyle is possible for them. For others, perhaps, but not them... at least not now.
For some creative entrepreneurs, it's a clear goal. Maybe they've already hit it once or twice (or come very close) and they're ready to make it a regular thing. They're tired of being teased, and are ready to build something solid.
For others, they've already hit six figures, but they're not enjoying the income they're making because they're not as profitable as they thought they'd be (see my definition of profitable for a deeper explanation of how I use the word.). They're tired of trying to manage everything themselves. They know they need support, and they want to efficiently and effectively get the right people on the bus, as Jim Collins would say. They don't have time to play around, even though they have a LOT of fun doing what they love.
For some people making six figures is a necessity. It may sound hard to believe if you've never been in their shoes, but if you're living in a major city, like New York or San Francisco, rent alone can be a hefty five-figure sum for even a teeny-tiny place. If you've got a family, it's even more. While it's true that many people can have a six figure lifestyle without ever making six figures in a single year, it's also judgmental and probably not practical to uproot yourself and live someplace less expensive (particularly if you've got family or a spouse that are tied to your locality). If you've made choices that find you in this situation, no amount of criticism will help you earn the six figures you seek.
Note: you can add as many zeroes to the number as you'd like. The problem is still the same: you've got to have a clear understanding of your expectations. I call this the 6-figure distinction. Until you're clear on what "six figures" means to you - what it looks like, how it feels, how YOU experience it - you'll continue to hit walls in your business growth.
This week's episode of Creative Freedom sheds light on the 6-Figure Distinction, and helps you get clarity for your own life and business.
We didn't have time to really expound upon this in the video. As an entrepreneur who started with nothing, it's important to emphasize that my network of awesome friends and colleagues came because I've been able to be a resource to them. I didn't just make friends so I could use them for my own gains. Which means there's also a limit to how big your effective network can be. You can't help everyone all the time. So at some point, you DO need cash.
Jim Rohn famously said that you're the average of the 5 people you spend the most time with. But the more people in your circle, the more watered down your average is. These are the people talking about you, referring you, connecting you to their people. How do you want to be known? Who do you want to be known as? Your answers will dictate the size of your network. You have to judiciously balance the number of people you're serving in your network with the number of people helping you. If you swing too far out of balance in either direction, resentment ensues. Been there. Done that.
People are a resource, not a tool. Choose wisely. (tweet this)
You can have an incredible life and a business you enjoy without ever making six figures in a single year. You can also make millions and be miserable. I've seen it happen with clients and colleagues. I've lived it myself. Your distinctions and perceptions will ultimately color your experience of your life and Great Work.
What is your vision of a six (or more) figure lifestyle? What goals are you setting for yourself in your Great Work? Share your successes and ideas in the comments and be part of our Rising Tide.
As I hear clients, colleagues, and friends sharing their goals for 2015, there's a chorus being repeated over and over:
"This year is the year I FINALLY break __ figures!"
I've heard it so many times that it makes me dizzy and sad to think about the number of folks who continue to miss the mark on this particular goal each year. When I ask why they haven't hit their goal yet, I hear lots of "reasons" - but ultimately, those reasons all mask the truth of why they really haven't hit their big income goal - whatever it is.
First a warning: "Big income goal" is relative. Like dream shame, the fact that you have a goal means it's big. For you, it might be 10 figures, or 6, or 5, or being able to finally quit the day job. The number doesn't matter. The principles are the same regardless of the number of zeroes at the end of the figure.
Why is it that most entrepreneurs that dream of making "mucho dinero" don't hit their big income goal? Here are a few reasons I've encountered (both on my own journey, as well as with my clients): (more…)