““When nothing is sure, everything is possible.” - Margaret Drabble”
I'm sure you agree that we all have the tendency to hold on to what's familiar to us, even if that means we remain sitting still in discomfort.
Ahhhh, the comfort of certainty!
I'm going to be flat-out honest with you. The entrepreneurial journey is filled with uncertainty regardless of where you are at in your business. There's no way around it.
But is "predictability" a lot better than "giving a shot at something that's loaded with new possibilities"?
See, holding on to certainty can delay your progress in growing your business. It's because you are perpetuating the status quo.
Think about your own experience for a sec. You might have delayed quitting your job just because you didn't have enough evidence to support the idea of you making the right decision.
You might have held off on going on your own because you weren't sure if you could hack it & ended up keeping your side hustle as a side hustle for the longest time.
You might have stayed on the job you passionately hated because, at least, you knew they weren't going to fire you any time soon & your paychecks were guaranteed.
Looking back, is it safe to say you feel like you should have done it a lot sooner?
That's the point.
"Well, I wouldn't have known what I know now back then. If I did, I would've done it much sooner!"
If you just said this to yourself, that's an indication that you are in the right place. Today, I'm going to map out the typical journey of an entrepreneur in the service business from 2 perspectives: revenue & time.
This will help you understand that the experience you are about to go through isn't at all like driving on a highway during a tropical storm. Instead, you'll see your runway clearly without the help of a fortune teller.
How does this sound? Good?
Ultimately, understanding the trajectory of your entrepreneurial journey is the best way to reduce the level of uncertainty you might be feeling right now, as it allows you to focus on the bigger picture in the most realistic manner.
What does this mean, you ask?
This means you won't ever have to feel like you are going after a mirage or chasing down rainbows with your sheer grit & willpower while you keep telling yourself, "I'll work more." As you read on, you will notice this is the trap most first-time business owners are going to find themselves in.
Just so you know, I’m speaking from my own experience. Yes, I’ve been there many times.
Having said that, let me be clear. This post is NOT about taking uncalculated risks. I'm sure you know this, but I want to clarify this just in case.
Hey! I’m Maiko.
Thanks for stopping by. If you are a visionary business owner with the desire to build a high-functioning, profit-generating machine of your dreams, let’s connect!
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Assumptions & Disclosures
I know. But I have to because there are many variables. Here is the list of assumptions I'm making to help me write this post in a digestible, action-inducing manner.
● This is designed to help service business owners who have started out as first-time business owners.
● Obvious variables will be presented to the best of my knowledge. However, there are some that will not be covered in this post.
● This is NOT financial advice or legal advice. Each case is unique & I don't know your specific situations. This post is meant to be a generic, informational guideline (that is still mighty useful.)
By the way, I am more than happy to chat with you about anything specific to your business. Add comments at the end of this post or DM me.
Your Journey Explained by Revenue Sizes
Too many business owners I encounter have this “vague notion” of how they want to generate X amount of dollars in their business in a year or in 3 years, etc. Daydreaming vaguely about “someday, I’ll hit X” alone will not help you get there faster.
There’s no need to reinvent the wheel. Lucky you, this is the part where there's nothing for you to “figure out.” This is something we as service business owners go through.
If you are slightly skeptical, that’s OK. You don’t know what you don’t know, so they say. But soon enough, you are likely going to say, “How funny, this is exactly what happened to my business.” Trust me, you don’t want to go into a bet with me on this one because I’ll win.
First, we are going to start by looking at this journey from revenue milestones.
Below is the quick low-down based on annual revenue sizes and what you will be doing. We'll dive deeper on each in a few.
<$100K: Take on anything that moves to avoid the feast & famine cycle.
<$300K: Niche down from the experience you gained from being in the $100K range & make the first PT hire.
<$500K: Build a team (non-FT) & systems. You might consider pivoting as the current model no longer serves your vision.
<$1M: Need a solid semi-perm team to take yourself out of the day-to-day while widening your offers vertically and/or horizontally.
Voila! Not that complicated. Right? Just by looking at this can reduce your level of anxiety or uncertainty.
Now that you have a rough idea of what your patch looks like, we are going to dive in deep. At each stage, you will see it’s broken down into 3 sections:
● What You Can Expect
● Potential Pitfalls
● What You Can Do to Get to the Next Level Faster
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Up to $100K
What You Can Expect:
Here, you are most likely starting out in a general & wider market i.e. Social Media Management, Residential Interior Design, Wedding Photographer, Website Copywriting, etc., mainly through referrals.
You have enough work experience and expertise in the industry you are in. But you are likely to remain as a solopreneur until you hit $100K/year revenue mark.
At this stage, in order to avoid the so-called "feast & famine" of not knowing where your next customers come from, you are likely to take on any project within your capability.
The beauty of this stage is that this is where you learn the majority of business acumen that you will carry with you for the rest of the journey.
Here are some examples of what you will learn:
● What you enjoy helping your customers/clients with.
● How to not have to justify your expertise.
● How to price your offers.
● How to own your new identity as a business owner.
● What happens when you ignore red flags & take in customers/clients who are unfit.
These are not roadblocks or failures. These are the experiences necessary to help you design your own business. This is the stage where you want to make as many mistakes as possible so that you don’t have to make them at a later time.
Potential Pitfalls:
I've seen many do this, but don't make $100K your goal. Instead, consider this just another milestone and focus beyond $100K.
The reason is simple. There's a difference between earning $100K as an employee and generating $100K revenue as a business owner.
Let me break it down in numbers for you. Here's a rough breakdown if you are to generate $100K in sales:
Gross: $100K
Tax: $30K (30%)
Expense/Labor: $20K
Your pay: $40K
Profit: $10K (10%)
That's not what you want forever. But this is a great milestone to get to as soon as possible, preferably.
Another potential pitfall here is trying too many things all at once because you’re copying what worked for those who are way ahead of you. They are at another level and they have time, money & resources to pull it off, but you can’t.
This is a typical setback I see with entrepreneurs at this level. What you want to do here is to focus on building a robust foundation for your business. If you do this now, your future self will thank you for it.
What You Can Do to Get to the Next Level Faster:
At this level, I suggest 4 things for you to implement:
First, invest a portion of the revenue back into your business to learn:
1. Better pricing
2. How to streamline & organize your business
3. Strategic planning for significantly investing revenue without working harder.
Second, I recommend taking a couple of personality tests i.e. Enneagram, MBTI, VA, etc., so that you can be clear on what you are naturally good at and what you can delegate effectively.
Third, this is the stage where you truly want to put a solid business foundation in place, and here are some examples:
1. Find a good accountant who understands your business model & personal goals.
2. Lawyers who can help you with setting up your entity properly and creating/reviewing contacts.
3. Insurance agent who can advise you with the appropriate business protections.
OK, I get it, this is not sexy compared to trying new marketing tactics. This is the reason many skip this part and regret immensely not doing so earlier. So, take it from me and focus on this.
Lastly, whether you like it or not, building up your sales process is vital. Needless to say, no customers (clients), no business. If you just rolled your eyes, I highly suggest you check out this post that shows you how to shift your thoughts about sales.
Up to $300K
What You Can Expect:
Between $100K to $300K, you will start to see (and feel) the capacity limit of your business.
You want to keep growing, but you alone are already beyond your capacity. Some will experience burnout, depression and illness and realize that “working harder & longer” isn’t the solution to your capacity problem.
This is where you start to reassess your business by looking at the data, seeing what worked & what didn't, and starting to explore the idea of hiring help and building a small team of contractors.
Your most valuable currency is no longer money, instead it's time. You are beginning to learn the difficulty of hiring & firing at this stage that calls for creating a process & guidelines.
Also, in order to scale, you no longer take on all projects within your capability. You will want to be very specific in terms of what you offer. But some of you will go through a harder time letting go of the “scarcity mindset”, thinking you will lose business by turning work away.
This is where discovering your unique & profitable niche plays a huge role.
Keep in mind some businesses grow much faster than they anticipate. If this happens to you, you are likely to skip what I previously suggested in “Up to $100K.” This means you are going to have to play catch up really fast.
If you still don’t have processes and guidelines written down or video-taped, you need to start right away. Just by streamlining your workflow and making this available to potential new hires will resolve the majority of your capacity problems.
As a result, you will free up your time while consistently growing your business. This is the stage where you learn how to do less while generating more revenue.
Potential Pitfalls:
The biggest pitfall at this stage is delaying hiring help. Ideally, you want to start testing the waters by hiring part time help while you are still at a 5-figure mark so that you get to practice the process of hiring.
The longer you hold on to the belief of, "I need my hands on everything," the longer it takes for you to grow your business above $150K.
Another pitfall is "getting too comfortable" with the amount of money your business generates... until something unexpected hits. This complacency will stagnate your business growth.
You can, however, make a conscious decision to stay at this stage by further fine-tuning your business model and generate the same level of revenue consistently.
The only caveat is that it may not be enough for, once again, unexpected life happenings to protect your business.
What You Can Do to Get to the Next Level Faster:
Actively seeking out partners, allies, and entrepreneurs who are a few steps ahead of you is key at this stage. Their genuine insights and suggestions can help you stay out of the place of “more of the same every day” and forces you out of the comfort zone that stagnates business growth.
The major hurdle I see with entrepreneurs at this stage is that many find themselves alone & fighting their way to the next revenue level by working harder all by themselves.
Keep in mind that mastermind, business communities and membership programs are available so that you have enough access to the resources and mental support you need.
Also, this is the stage where you start to explore lead generations you haven't considered before. The key is not to throw money at problems. If you are going to experiment with a few new business development ideas, be sure that, ultimately, you are accountable even if you outsource the actual experimentation process.
Up to $500K
What You Can Expect:
At this level, you will continuously build a team that is sustainable by staffing both PT and FT employees.
You will also make improvements on the systems you built so that you'll continue freeing up your time to focus on 1) business development, 2) team management, 3) future-proofing your business.
Most likely, you have a few failed projects under your belt at this point. Based on your own experience, you may consider cutting down on available offers only to focus on what's likely to continue working for the next 2 to 3 years.
Doubling-down on offers that are replicable where you can slowly remove yourself from the work you don't need to do is key to keep the momentum going in your business.
Additionally, you might experience a different type of growing pains, which is moving away from a transactional business model to a leveraged (transformational) business model in which your goal is no longer to sell more.
Instead, your new goal is to up the current “perceived value” to increase your prices and to find affiliate, joint-venture or partnership opportunities that are highly leveraged.
When I say “leveraged,” it means taking advantage of what you already have & turning it into another stream of revenue without requiring upfront costs.
Potential Pitfalls:
Some may feel this is not enough and be worried about the longevity of their businesses at this stage. When you were in the $100K/year range, you probably thought all of the insecurity, problems & challenges would go away once you hit $100K.
You’ve guessed wrong.
A new level, a new devil. At this stage, the thought of “this may not last forever & I’m not sure if I can do this year after year” will start to weigh heavy on your mind.
Because of this reason, between $300K to $500K is where "pivoting" and/or "regrouping" starts to preoccupy your brain. Often, new business ideas and opportunities can stimulate & accelerate your desire to "try something new & different."
Another typical scenario I see is "hiring too many, too soon." This is one of the symptoms where business owners are attracted to throwing money at their problems.
See, you are not used to seeing this much money following into your business. Now that you do, and coupled with some feelings of burnout & frustrations and/or complacency, you think money will solve problems.
Here, it's not limited to hiring for your team. This includes hiring a PR agency you don't need or hiring a digital marketing agency thinking they will take over the job of creating an infinite amount of leads to your business.
Because you have money, you skimp on doing due diligence with these people or you hand this task over to an employee without clear guidance.
What You Can Do to Get to the Next Level Faster:
Simply put, start scouting for your management team. It can be called your "right-hand," "COO," "project manager" - the point is to get someone who can take on the role of overseeing vital areas of your business.
At this level, you have enough experience & resources to get help on filling a couple of key management roles, if you’ve done the homework from the previous milestone where you surround yourself with people who understand and have experience with what you are going through.
Your focus is on discovering high quality talents who are not afraid to tell you to back off from micromanaging. This is going to be the continuous theme from here on out: removing yourself from tasks that are out of your core responsibilities.
Once you have made a commitment to build a solid management team for your business, the next step is for you to get out of your own way. Let them do the job that they are hired to do.
““Without the element of uncertainty, the bringing off of even the greatest business triumph would be dull, routine, and eminently unsatisfying.” - J. Paul Getty”
Up to $1M
What You Can Expect:
At this stage, you will have a few FT employees on payroll as well as several independent contractors on a part time basis. If you have done your homework in the “Up to $500K” by bringing in a solid management team, you may not be the one to know everything that goes on in your business, and that’s the way it should be.
The one who should know everything that goes on in your business is your right-hand, COO or Dir of Operations – whatever you decide to call this person. Finding the right talent for this role will be a significant amount of investment. But if it’s done right, you can expect a high ROI.
On the flip side, if you are stuck with the unfit operations person, it will no longer be an investment; it will be a money pit.
Your main role for the business will continue to be 1) business development, 2) team management, 3) future-proofing your business.
All the vertical and horizontal offers you’ve created in the previous category will also need to be re-examined to see if there is enough demand to blaze through the first 7-figure mark and beyond. To do this, you should have access to a good group of finance specialists including but not limited to: an interim CFO, FT controller, CPA, and Jr. accountant or bookkeepers.
You are not out of the woods with the temptation of “throwing money at problems” just yet. If you have a tendency to go that route, your management team should be the one to manage it better by sticking with the unified business vision.
Potential Pitfalls:
More likely than not, you are a starter, not a finisher. At this level, you might feel like you’ve created a monster you never planned to create. Because of this, you might experience the feeling that you may be at a crossroads with your business.
What happens with some entrepreneurs at this stage is to start a completely different business. At this stage, some entrepreneurs will walk away from what they built by selling it or letting someone else take over; some will stay on with limited availability to spend more time on a new project.
There is no right or wrong way to go about this. It depends on your end game. “Soul searching” is often on the menu for these entrepreneurs.
While that is going on, you might also experience a high turnover rate among your employees. Creating and maintaining a culture that reflects your business vision requires constant upkeep. You may have been OK with 3 employees in the beginning. Regardless of full-time or part-time, managing more than a 10-people-team is a full-time job.
A high turnover rate is a symptom that you are not taking care of “your people” – the asset to your business – in the most optimal manner.
Here’s the bonus bit: For some reason, I have seen many service businesses hit a plateau at $1.7M mark. They stay there for a couple to a few years. Why do you think they struggle so much to cross the $2M mark?
The answer is a lack of mindset shift necessary to be the CEO of your business.
It’s that simple. For creative service entrepreneurs, stepping into the role of CEO is much harder than that of those in different industries. The battle between being a leading figure who makes critical decisions and being a creative is never-ending.
The only way to overcome this barrier is to choose one over the other. Again, this may mean that you will hand over the operation of your business with someone who is fully vetted and trusted. Or, this may mean that you give up on the creative side of the business to focus on the growth of your company.
What You Can Do to Get to the Next Level Faster:
The road to a multi-7 figure business requires a whole new level of strategies. Moreover, this is the point where you want to be crystal clear on how to best serve the business you created while ensuring you are achieving your overall life goals.
More than ever, a balanced combination of mindset work and solid strategies is the winning ticket to continue navigating the sea of uncertainty to building a multi-7-figure business and beyond.
You will continue to invest in:
● Building a team of people who will support you in creating the vision you have,
● Official or unofficial “board of directors” who will show you possible paths you can explore,
● Yourself – your continuing education through actively being part of business communities, your physical & mental health, your family and anything else that matters to you the most in your life.
When I had the opportunity to speak to a few multi-7-figure business owners (link), what stuck with me for the longest time was the comment they all made:
They consider making the goal to hit the first million-dollar mark & fixating over it without a solid plan beyond the first million was a mistake.
I want you to take a moment to give this a deeper thought.
They all said their life in general did not change after they achieved this goal. They did not feel significantly different about themselves. They did not find themselves surrounded by rainbows and puppies. At least for a brief moment, they all felt they were lost with this question, “OK… now what?”
I’ve also heard many other entrepreneurs at this level ending up going into depression because what they envisioned their lives to be at this stage did not happen. Somehow, they thought they would be happier when they finally made it to this point only to find out that they were actually miserable.
So, I urge you to learn from this and avoid making the same mistake by continuously tweaking your vision and goals from both perspectives – revenue & time. And, this is the perfect segue to go over your journey explained by time.
Your Journey Explained by Time
How do you feel so far? I bet you have more clarity around what needs to happen at each stage & it’s easing your fear of uncertainty as a result.
Now that you can see what your path looks like from the revenue standpoint, let's tackle the million dollar question:
"OK, I get all this but how long does it take to get to each milestone?"
To do this, I'm going to use the "The 1,000 Day Principle" created & coined by Dan Andrews and Ian Schoen from Tropical MBA Podcast as the benchmark.
By observing hundreds of entrepreneurs in their location, independent members in their community, plus their own entrepreneurial journey, they found on average, it takes 1,000 days to replace the income they used to earn as employees. That’s a quarter shy of 3 years.
The original hypothesis in the article says exactly this:
“Our basic hypothesis: you’ll be doing worse than you were at your job for 1000 days
after you start your muse business.”
Of course, there are a great number of variables that can change this theory, such as:
● Cashing out on a portion or all of your savings before starting out.
● Borrowing funds from family & friends.
● Taking clients from your previous employment to start off (so long as this is no violation of non-compete).
● Side-hustling while keeping your day job to build up your customer roster.
● Investing in paid & vetted business groups where members give each other businesses by design.
● Co-founder happens to be putting down sizable funds while you agree to put sweat equity into it.
● Securing grants and/or small business loans.
These can significantly shorten the 1,000 Day Principle even down to 6 months.
However, anyone starting a business for the first time with only the skills & craft obtained from his/her previous work experience with no seed money will likely take 1,000 days. I do agree with this principle from my own observations.
If you can shorten this, that’s great. At least you know that, typically, this is how long it might take for you to get to a comfortable place which will allow you to strategize your next move without breaking out in sweats at 3 in the morning.
It is all about setting the right expectations at each stage. Putting too much pressure on yourself to achieve grand & audacious goals at the very beginning of your journey may hinder your success.
Conclusion / Final Word
Well, well, well. I know this was another hefty read.
But my guess is, the 15 min you just spent going through this post has probably saved you days worth of contemplation, hesitation and resistance towards overcoming the entrepreneurial uncertainty.
The revenue milestones I laid out alone can move your mind out of a fog-filled dark forest in your mind.
Remember, if you are to take away just ONE THING from this post, it should be this:
Do not attach special meanings (that are not realistic) to each milestone of your journey as if your life is going to be a radically happier one. Happiness is not guaranteed and does not come with these milestones.
In other words, your pursuit of happiness should be a separate work from growing your business.
Think of it this way.
By understanding the trajectory of your entrepreneurial journey, you are able to focus on reaching each milestone without spending too much time on getting lost in the process. This, as a result, allows you to have enough mental capacity to assess how you want to design your business to operate while considering improving your overall quality of life.
I know you are filled with all kinds of thoughts right now. I would love to hear what you think about this post. As I mentioned in the beginning, feel free to comment below or reach out to me privately.