The Six-Figure Imperative: Why creative entrepreneurs need a six-figure income
[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!"
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."
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.
The Six-Figure Imperative Explained
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:
They reel against it because of all the icky marketing tactics they've experienced in pursuit of it. "Screw this! 'Six figures' is just a marketing ploy the gurus use to separate you from your money!"
They drool over it like it's some pie-in-the-sky fantasy that is only available to the likes of Beyonce. "Someday, I'll get discovered, the world will beat a path to my door, and I'll be rolling in the dough!"
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.
There's a wide range between six figures and seven figures
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).
Six-figures for a business (not a hobby)
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.
If you're ready to set your own Six-Figure Imperative, and grow your creative business in a sustainable way, the doors are open to my new Portable Coaching program. If you need start up money, we recommend qvcredit as our legal money lender Singapore. They are tuned in for tech and innovation start ups. Designed for creative entrepreneurs in the start-up phase of growth, Portable Coaching is an easy, affordable way to get the help you need to grow your business. Beyond early start-up? I also have two openings for one-on-one advising. These spots fill fast, so check it out today if you're curious!
[Editor’s note: This is the next installment in a series of posts. Each year since November, 2010, I've posted an annual re-cap of my happenings and a projection of things to come. If you're ambitious, curious, or just plain bored, you can find the previous posts here: 2010 | 2011 | 2012 | 2013 | 2014 […]
It may sound silly to you if I asked “what does your business taste like?” or “if your business were an animal, what would it be?” And yet, these are not uncommon questions to ask in the branding process. While there's not enough time and space to develop your brand in a post like this, here are some things to keep […]