You dream of a six-figure business, launch or offering that finally gets you out of the red and into a financially profitable position. You hear all these entrepreneurs talking about their six-figure businesses and wonder, “Why not me?”

Thing is, there’s a lot to the “six-figure business” that is anything but accurate.

In fact, most people don’t realize how easy it is for a business to claim they are six-figure generators AND the actual expenses required to reach the six-figure mark.

Today, I’m pulling back the curtain and sharing some interesting insights into the six-figure hyperbole that plagues the internet these days. Then I’ll share with you the REAL numbers and what it takes to make six-figures in today’s digital world.

Six Figure Business

75% of women entrepreneurs generate less than $50k annual revenue

According to the US Chamber of Commerce Center for Women in Business, only 1 in 8 women entrepreneurs generate more than $100k per year. 

Which means claiming the six-figure title isn’t as easy or common as it’s made to be.

But that also means that women aren’t making nearly as much as they should be!

So if women aren’t making the money they desire, how can so many claim they are six-figure businesses?

The truth is that many women can make six-figures – over the course of their business lifetime – but that doesn’t mean they are making that amount of money yearly. 

The Detailed Costs of a Six-Figure Business 

Let’s say Sally Mae has just shared she did a six-figure launch (or year) on Facebook and you think, “Oh my gosh! She must be rolling in the money! Lucky her!”

Before you jump to the conclusion that Sally Mae has pocketed that cash and set sail for Aruba, let’s break down the costs of what it actually took to make that money and how much lands in her bank account post launch.

How to Calculate Your Business Profit

Expenses, operating costs, financing…your business profit is far from your gross income. While you may have generated a certain amount in sales, your business profit must take into account your expenses.

Expenses include things like website hosting, paying your virtual assistant, marketing costs, office rent, your internet bill, and basically any other regularly scheduled payment that helps run your business or launch your product. 

For the sake of this article, I’m not going to go too in-depth when it comes to operating costs versus expenses. But just note that costs are often fixed while expenses occur at regular intervals. Most digital businesses have more expenses than costs, but this is a generalization and you should assess your costs and expenses with a certified tax professional or accountant.

Let’s not forget financing. If you’ve taken loans, owe interest or have investors, you’ll need to include the financing fees and payments as an expense.

So let’s say Sally Mae makes $112,401 USD on her last course launch.

She’s giddy and excited to share that with her Facebook friends or #bossbabe mastermind. 

What she might not be sharing is her business profit.

That’s gross income minus expenses.

For a typical digital business, average expenses can break down something like this: 

  • Virtual Assistant (part-time): 10 hrs/wk x $15/hr = $600/month
  • Website hosting/maintenance: $40/month
  • Course platform (hosting like Kajabi): $104/month
  • Canva (for image design, business edition): $10/month
  • Fiverr (for the new opt-in or course PDFs): $100/project
  • Facebook ads: $1,000/month up to $10k+
  • Facebook ads manager: $1,000/month
  • Business coach or how-to course: $500/month or $1,000/course
  • Copywriter (for sales page creation, opt-in, etc): $1,000

On the low-end of the spectrum, that’s roughly $4600 for that month alone. Most of these costs are ongoing and don’t include web developers, time spent creating the course, ongoing masterminds or business events, networking opportunities, expenses related to email servers, customer service or services such as LeadPages or Deadline Funnel.

(Inside Secret: I know more than one seven-figure entrepreneur who pays well into the six-figures for not only team support but also Facebook ads and website developers. The more money you make, often times the more money you spend. Keep that in mind!)

And of Course, There’s Paying Your Taxes Too

Depending on your business’ legal structure, you’ll either be paying quarterly or yearly taxes based on your income. You’ll want to speak with a tax professional if you have any questions on when you should be paying taxes for your business.

On average, you should expect to put aside 20-25% of your earnings per month for your taxes.

In Sally Mae’s case, that’s $28,100 from total income earned (not after expenses).

Investing in Your Business & Paying Yourself

Next you’ll want to consider your personal salary versus reinvesting in your business.

While it might seem tempting to pocket the remaining cash, it’s not the smartest choice.

Most business owners understand that the majority of the money they make will need to be reinvested in the business.

Whether that’s for ongoing support (adding more hours for your VA, monthly expenses, etc.) or for your next launch (increased Facebook ad spend, project managers, business coaches, etc.), reinvesting in your business will take the bulk of the money left over.

And what about paying yourself? You’ll want to accept a modest personal income that can support your monthly bills and lifestyle. 

MORAL OF THE STORY: YOU GOTTA PAY TO PLAY

Six-figure success is attainable and with more smart, ambitious women starting digital businesses everyday, I have no doubt women will reach that six-figure yearly mark more than ever. 

But in order to do so, they’ll need to invest in their business.

And while money can be tight – especially those first few years – knowing your money is going toward growing your business is the smartest decision you could make.

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