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In episode #532, Eric and Neil discuss what to do once your business hits 7 figures. Ultimately, there are two paths you can take. Tune in to hear their advice about optimizing your business for growth or stability.
Time-Stamped Show Notes:
- [00:27] Today’s Topic: What You Should Do After You Hit 7 Figures in Revenue
- [00:34] Eric believes that once you hit 7 figures, why not strive for even bigger numbers?
- [01:18] Look at what works and double down on that.
- [01:47] Invest in what you can control.
- [02:10] Neil thinks that what you do to get to 7 figures, isn’t necessarily what will get you to 8.
- [02:58] 7 figures are hungry to make money right away, while 8 figure businesses look more to long-term investments.
- [03:24] If you can spend more money on acquiring customers than your competitors, it’s much easier to grow your business.
- [03:37] Celebrate that your business has reached 7 figures, but then think about what else you can do to optimize your business.
- [04:29] Really good marketers consider “scaling”.
- [04:51] Once you get beyond the strategies that helped you reach 7 figures, think about what systems and processes you can build to reach 8 figures.
- [05:58] You have to be able to convey your vision to others (employees and investors), so that they can get on board and help you reach 8 figures.
- [06:20] Some people do not care for money and just want to live a quiet, relaxing life.
- [06:48] If you are one of these people, optimize your business for profit and don’t try to reach 8 figures.
- [07:12] Once you optimize your business, don’t spend too much and save your cash in order to float the “chill” lifestyle you desire.
- [07:42] Mergers and Acquisitions are another way to make quick, stable money.
- [08:15] If you look at Dentsu or Ogilvy, they have a number of different services and have grown through M&A.
- [08:42] Hitting the 7 figure mark is rare!
- [09:33] Once you reach 7 figures, you can’t take your foot off the gas.
- [09:44] Remember to CYA (Cover Your Ass): always have two to three months of expenses in the bank.
- [10:23] That’s it for today!
- [10:26] Go to singlegrain.com/giveaway if you want to get in on a special giveaway opportunity!
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The post What You Should Do After You Hit 7 Figures in Revenue | Ep. #532 appeared first on Marketing School Podcast.
Full Transcript of The Episode
Eric Sui: Welcome to another episode of Marketing School. I'm Eric Sui.
Neil Patel: And I'm Neil Patel.
Eric Sui: And today, we are going to talk about what you should do after you hit seven figures in revenue. So I'll kick it off and I think Neil and I have maybe differing philosophies here. But, I think once you hit seven figures, why not go for bigger? Depends on what your goals are. It might be you want to live a good lifestyle so, in some cases people call it a lifestyle business. This is like starting your muse in the 4-hour work week, or maybe just building something where you just live really comfortable. I don't think there's anything wrong with it. I think some people think a lifestyle business, I'm air quoting right now, is not a good thing to have. People kind of look down on it. I don't think so. I think it's just what your goals are.
And then other people, they want to roll the dice and they want to go for something bigger. Maybe they want to go for eight figures. So, what I like doing is, looking at what profits were for the year, and I like thinking about what kind of investments can we make for the future? So I like doubling down on what's already working and going for something bigger. This is assuming that you have your goals mapped out. If you haven't already, going into the new year or whatever quarter you're in, map out your goals. Figure out what makes sense for you first and foremost. Do you want a lifestyle business or you want to go for something bigger? If you do, instead of thinking about investing in crypto currencies or all of the new hotness around you, why don't you think about investing in what you can control. Because Elon Musk, if you look at him, he thinks the best investment is in yourself ultimately because you can control the outcome more than anything else.
Neil Patel: Yeah, and most people when they hit seven figures, as Eric mentioned, why not go for eight? Everyone has a mindset or most people that I meet like, "Oh, I hit seven figures and now I'm going to hit eight." I hate to be the bearer of bad news. What you do to get to seven figures usually doesn't get you to eight, if you do the same exact thing. It's very rare that people just keep scaling and growing to eight figures just by doing the same exact thing that they're doing when they're at seven figures. And no, it's not mindset where you're like, "Oh, you have to think and believe it, and then you'll end up hitting it." That doesn't end up getting you there. You have to end up thinking bigger.
Most people who are hitting seven figures, their businesses are all about, "Hey, how much can I spend right now and how much more can I make?" So a lot of people, let's say if you're doing paid ads, you're going to be like, "Oh, I spent a dollar and I made two." That's awesome. And you keep doing that and then you're eventually going to be like, "Oh, I'm tapped out, we can't scale anymore."
The difference between seven figure, eight figure, and even nine figure businesses is, seven figure businesses want to make money right away. Eight figure businesses more so think about lifetime value of your customer. How are you getting them? How much does it cost? Are there up-sells and down-sells? What do you need to do to get more revenue out of each customer? If you don't have up-sells and down-sells, you may have to end up adding them. But, by doing this, what that allows is for you to spend more money to acquire a customer. If you can spend more money to acquire a customer than your competitors, it's much easier to grow to eight figures. But you have to really optimize your business, your profit margins, and your LTV.
So, once you hit seven figures, give yourself a pat on the back. But keep in mind, there's still so much more that you can end up doing. And, when you're doing it, keep in mind that what can you do to optimize your business to give yourself a leg up on your competitors or specific channels such as paid advertising, SEO, content marketing, whatever it may be so that way you can scale out more. And you know, when you're talking about the seven figure mark, Eric, do you ever share your revenue or no?
Eric Sui: No.
Neil Patel: Okay. So do you ever share what range you're in?
Eric Sui: Yeah.
Neil Patel: Okay, what range are you in?
Eric Sui: Two point five to three.
Neil Patel: Okay, sure. So you're in the seven figure range and you want to hit eight. All right? I'm assuming cause you work your butt off. So what are you doing specifically after you hit seven figures? Cause you've been there for a bit and you've been growing, and you've done a good job because the company you acquired you had to pretty much rebuild it all, and start over from scratch. What are you doing after you hit your first million bucks in yearly revenue?
Eric Sui: Yeah, so just to back up a second, I think what Neil's talking about really relates to how really good marketers think about scaling. So a really good example of this is, when you look at Russel Brunson and [inaudible 00:04:42], it's really dialed in. He's willing to lose money on the frontend when he's running ads, and then he knows his backend's going to make up for that. That's when you get more sophisticated.
Now, I think, from a business perspective when you get to seven figures, you know, zero to seven figures or so you're really trying to figure out product market bit, you have people that are interested in your product or your service. But once you start to get beyond that, it's really beyond you, because it's about ... who are the great people that you can hire to your team? What are the systems and processes that you can build to get to that eight figure mark? And even going beyond that, the people that I've talked to that have gone even beyond eight figures to nine figures or so, it continues to be more about the executive team that you have, the people that you have, the culture that you have.
This seems like, this is a marketing podcast. But keep in mind, if you're interested in marketing, you're probably interested in templates, systems, and processes. I'm really into that stuff, I think it's like a game. So when I look at things right now, when I look at the people we have that are senior on the team, I'm comfortable knowing that we are going to get to the next level because these are the people that I can rely on when I'm not there to grow the business. Those are the kind of people that you need to find. But first you need to figure out ... you figure out the product and service, but what do you want your company to look like next? What are the goals next? And then you have to be able to convey that vision to those people and sell them on it, cause you're always selling, and then get them on your team and then grow the business for the long term.
Neil Patel: Yeah, and the other thing Eric mentioned earlier on is, if you want to live a lifestyle business, you can. A lot of people are going out there and they're like, "Yeah, I want to create an eight figure or nine figure business." And why not? But here's the thing. Some people like my dad or my sister are perfect examples of this. They don't really care for money. All they want to do is just live a chilled relaxed life.
My dad was a loan processor, made decent money, never made a fortune, and he retired early. I think, fifty, something, I forgot the age. And once he retired I was like, "What are you going to do?" And he was like, "I'm going to watch TV, soccer, I'm going to do my gardening, fix the home, whatever I can." He was like, "That's what I enjoy. Why do I need to keep making more money?" If you're one of those lifestyle people, then by all means. Optimize for profitability. Don't try to go to eight figures. Cause to try to go from seven figures to eight figures, you can't do it on your own. You're going to end up building a huge team. It's too hard to scale to eight figures with just one or two people.
Your margins are going to decrease. You're going to be grinding it through and, if that's not the life you want to live, then get out early, just optimize for lifestyle. Don't spend too much, save your cash, and then live a chilled life for the rest of however long your money lasts.
Eric Sui: Yeah, the final thing I'll add is, also, it doesn't have to be linear. It doesn't mean, let's say for example, Neil has an agency, I have an agency and we're growing. But you might just say, "Okay, we just need to add more sales people. We just need to dial in the marketing machine more." But there is a faster path. Instead of just taking the stairs sometimes maybe you can take the escalator or the elevator, and move a little faster. What do I mean by that?
There's a lot of ... especially you look at people out there, there's a lot of capital out there. People are looking to acquire other businesses right now. Mergers and acquisitions is a way to think about doing it. I'm just saying, this is an example of another way to do things. So, by the way, if you have an agency, maybe an agency you want to sell, maybe you can reach out to Neil or myself in the future, if you're interested in selling your agency, cause that is a model that we'd look at in terms of kind of stacking on the growth instead of having to build everything from scratch.
Especially, if you look at ... I'll just continue to use agency as an example. You look at [inaudible 00:08:18], or you look at the Olgilvie's of the world, they have all these different services. And they've grown a lot through mergers and acquisitions, and not like they had to build everything from scratch. So don't think that you have to do everything on your own when the capabilities are out there. And people are perhaps looking to move onto the next thing or they're getting tired of their business. And, again, feel free to reach out to Neil or myself, if you're looking to sell your agency. Neil?
Neil Patel: Yeah, best of luck with everything. And, you know, hitting that seven figure mark is very rare. Most people don't do it. But, whatever you're doing, it's working out so far. Keep chugging away.
Eric Sui: Great. That's it.
Neil Patel: Oh, one last tip. A lot of people who hit seven figures they're always like, "Oh, yeah. Life is great." They're on cloud nine. And what they don't realize is, shit always goes down. The question is when. Even Apple Computers, yes they're the biggest company in the world right now. But they were struggling at one point. So much so, Microsoft gave them a hundred million dollars to bail them out so they wouldn't get sued for antitrust related stuff, cause they needed a competitor to just be alive and kicking, so that way people wouldn't go after Microsoft and tear them apart. And it's like, look at now, Apple's bigger than Microsoft. Microsoft had its hay days where they were climbing, then they tanked, and now they're back up. And it happens with most companies. It's the natural cycle of businesses.
So, now that you're at seven figures, keep in mind, if you take your foot off the gas you're going to end up dying down, you're going to lose that money. The question is just when.
Eric Sui: Yeah, and the final thing I'll add on top of that, actually, is CYA, cover your ass. Whether it's getting a line of credit when you don't need it, getting some kind of preapproval for some SBA loan, or something like that. Just to have these reserves in place and also make sure that you have two to three months of expenses in the bank, cause like Neil mentioned, bad things are going to happen. There are going to be cycles in the economy, or cycles in your business, whatever it is exactly. Maybe you lose a massive client, which this is why you need to diversify. But you've got to protect yourself. Otherwise, if a bad thing happens, you're going to go under and people are going to be out of a job. And not only that, their families are going to struggle because you didn't cover your ass. So cover your ass. And that's it for today. I think this was a good episode, and let us know what you think.
By the way, before we go, go to singlegrain.com/giveaway, if you want a special giveaway. It's a marketing tool that we have for you. And we will see you tomorrow.
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