The Difference Between 7-, 8- and 9-Figure Businesses | Ep. #551

In episode #551, Eric and Neil lay out what makes a 7-figure business, 8-figure business, and 9-figure business. Tune in to hear great tips about how to gradually scale up your company.

Time-Stamped Show Notes:  

  • [00:27] Today’s Topic: The Difference Between 7-, 8- and 9-Figure Businesses
  • [00:46] 7-figure businesses want a return on investment.
  • [01:00] You want a 5:1 return, on average.
  • [01:15] 8-figure businesses want to break even on their ad spend.
  • [01:53] 9-figure businesses are willing to lose money at first.
  • [02:13] They know the worth of a return customer down the road.
  • [02:30] To compete, you need to outspend and have a funnel that converts very well.
  • [03:00] “He who spends the most to acquire a customer, wins.”
  • [03:58] Russell Brunson may lose money on the initial sale, because of his skill at setting up funnels he will recoup that money in the end.
  • [04:30] It’s hard to build a big business, unless you are willing to lose money up front.
  • [04:45] You have to have the stomach for losing money.
  • [05:00] The Microsofts and the HubSpots probably lost money their entire first year in business.
  • [05:25] To build a successful 7-figure business, you have to hit product market fit.
  • [05:41] 8-figure businesses capitalize on past successes and drop what isn’t working.
  • [06:15] 95% of the time, it’s a process problem. 5% of the time it’s a people problem.
  • [06:54] When you’re looking to go from 7, 8 or 9 figures, you need to look to your teams to start scaling up.
  • [07:30] You have to know what you want and go for it!
  • [07:34] That’s all for today!
  • [07:36] Go to for a special edition of Crazy Egg, the heat mapping tool.

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The post The Difference Between 7-, 8- and 9-Figure Businesses | Ep. #551 appeared first on Marketing School Podcast.

Full Transcript of The Episode

Speaker 1: Get ready for your daily dose of marketing strategies and tactics from entrepreneurs with the guile and experience to help you find success in any marketing capacity. You're listening to Marketing School with your instructors, Neil Patel and Eric Siu.

Eric Siu: Welcome to another episode of Marketing School. I'm Eric Siu.

Neil Patel: And I'm Neil Patel.

Eric Siu: Today we are going to talk about the difference between seven, eight, and nine-figure business. We're going to talk about it from two perspectives, from marketing and also from entrepreneurship as well. I'll kick it off by talking a little bit about seven figures, the expectation for marketing, and I'll let Neil cap it off with eight and nine figures. Then we'll jump into more of a discussion.
With seven-figure kind of business, when you're marketing one, you want a return on your money, right? You want a return on ad spend, return on investment. Now, when you think about a eCommerce company, usually when they come to us, they're looking for four-to-one or five-to-one kind of ROADS, or return on ad spend, right? You put a dollar in, you get this certain amount back, right? That's what it looks like at seven figures or so, but going beyond that, eight to nine figures, the methodology changes a little bit, and I'll let Neil speak to that.

Neil Patel: Yeah, so for eight figures, and to give you idea, Eric pretty much got it right on the head in which seven-figure businesses, typically, with their ad spend, want to be profitable and highly profitable right away, and if it's not day one, it's within 30 days because you got to pay off credit cards, right? But typically they want to be profitable right away.
Eight-figure businesses typically want to break even on their ad spend, and they'll recuperate it, hopefully, on the back end once they come up with more offers, or deals, or upsells, or downsells. A lot of these guys, even when they do upsells and downsells right then and there, they still just want to break even keeping everything into account.
Nine-figure businesses, and I learned this from a company called Agora. They're one of the biggest publishing companies out there, a multi-billion-dollar company. They supposedly do over a half a billion a year in revenue just in the United States. What they said, with nine-figure businesses, they're willing to lose money in the first 30 days, sometimes in even the first six months, because they know what a customer's worth two, three years down the road, and they'll just keep burning money and be like, "Look, we just want the customer. We'll continually sell to him each and every single month."
This all affects, not just your business, but also your marketing, right? Because, in business, it's cash flow, but marketing-wise, it's how quickly are you willing to ramp up? If you really want to compete with the big boys and be the biggest player out there, you got to outspend. To outspend, you need to have a funnel that converts extremely well, not just on your core offer and your upsells and downsells, or even if you're using trip bars, but how are you going to keep creating more products and services? What are you going to sell them five months from now, six months from now? How can you capitalize off of them? If you don't have the right mindset, it's going to be really hard to compete with the other players who are in the eight or nine-figure ranges because they're willing to lose money on marketing.

Eric Siu: Yeah. We got this from a mutual friend, Ryan [Dice 00:03:03]. He who spends the most to acquire a customer wins, right? Think about that again. He who spends the most to acquire a customer wins, right? Think about you have to know your number at the ends of the ... You have to be really rigorous in updating your numbers consistently, so that's really important, right? Neil and I have talked about Russell Brunson a couple times. With his business, Click Funnels, I believe just recently it was doing 39 million a year, but I believe it's actually over 60 million a year now. Is that true? Neil, do you know?

Neil Patel: I don't know his numbers, but they say he's on track for 100 million bucks, so I don't know what his ... That's his run rate, supposedly.

Eric Siu: His book, DotCom Secrets, it teaches you about funnels and having a back end and then where he ... Neil and I talked about his MP3 giveaway where he has episodes of his podcast and that he's willing to actually ... I think he actually makes money on the front end of that funnel, but he has other kind of book funnels, things like that, where he'll drive Facebook traffic to or Google traffic, whatever, right, and he'll lose money on the initial sale, but in the back end, because he has $25,000 Mastermind, he has Click Funnels, all this other stuff, he's able to recoup that cost. He's maybe willing to lose money in the first couple months or so, but he knows, in the long run, if he's going to spend, let's say, 500 bucks to acquire a customer, he's going to make $4,000, right? All day long, he's going to do it because he's patient, he's got the cash reserves for it, and he's able to grow for the long term.

Neil Patel: Yeah. You got to be super long-run. It's hard to build a big business unless you're willing to lose money in the short run. Here's the thing. If you don't have the stomach for it, that's fine. Stay at a seven-figure company. Live a lifestyle. Be happy or consider selling it and move on, right? But it's like if you want to build something big, you have to have the stomach for losing money, not just in the short-run, but even for the next six months or one year.
These publicly-traded companies that you're seeing that are the Microsofts of the world, the HubSpots of the world, some of these guys are losing money for the first year, and they're not just losing a little bit. They're losing hundreds of millions of dollars. That's why there's this thing out there called venture capital or even private equity. You have to have the stomach for it if you want to create something big. Without it, it's too hard to compete with the other companies who know their LTV and know that they can lose money because, in the long run, they'll make it back.

Eric Siu: Yeah. We talked about that from a marketer's perspective, but just to cap it off for you from a entrepreneur's perspective too, to build a seven-figure business, you got to hit product market fit, right, or service market fit. You got to have something that people actually want. You're able to figure things out in the early days. You're going to be able to get to seven figures. Even, sometimes, you might get lucky and get to seven figures, right?
Now, to get to eight figures, from a entrepreneur's perspective, it's like, okay, we have the product, we have the service. How do we dial things in? What are the processes that are going to get us to eight figures, right? At the end of the day, you can't just run everything from kind of shoot from your hip, right? One of the people on our team, we kind of had him learn the hard way because it's easier to just let people learn sometimes versus giving people advice. People have different personalities, but he's learned that he can't just do things run and gun. Process kind of liberates people at the end of the day, right?
A quote I like to use is 5% of the time, it's a people problem. 95% of the time, it's a process problem, because even if you hire the wrong people, it's a process problem, right? Process is going to get you to eight figures and, eventually beyond that, you're going to have to start, even at the eight-figure range or getting to eight figures, you got to hire really great people to your senior team, your management team. Then when you're going for nine figures, that's when you start to think about, okay, what does the executive team look like? Every single mentor or person I've talked to that's gotten to that point has said it's exactly that roadmap, right? How can you build that roadmap from a entrepreneur's perspective but also a marketer's perspective?

Neil Patel: Yeah. The other big thing about this, and Eric has it right, is when you're looking to go from seven, eight, or nine figures, you need teams to start scaling up. You can't build a nine-figure company yourself. I know so many solo entrepreneurs who just run YouTube ads or Facebook ads and have seven-figure businesses. It's a totally different game when you're trying to get into the eight and nine figures. Eventually, you'll find yourself with hundreds of employees if you really want to sale and grow. Your profit margins will be lower, but your company is more sellable and it's more valuable.

Eric Siu: Yeah. It's all about what you want, ultimately, at the end of the day. What's important to you? It's fine if you want to build a lifestyle business. It's fine if you want to go big. Just decide what you want. Don't hang around in low no-man's land. You got to know what you want, and then you got to go for it.
That's it for today, but before we go, go to to get in on our special giveaway just for you, and we will see you tomorrow.

Speaker 1: This session of Marketing School has come to a close. Be sure to subscribe for more daily marketing strategies and tactics to help you find the success you've always dreamed of, and don't forget to rate and review so we can continue to bring you the best daily content possible. We'll see you in class tomorrow right here on Marketing School.

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