How Much Money is Enough (for a sustainable business) (ep. 2)
How Much Money is Enough (for a sustainable business) (ep. 2)
EPISODE 2: How Much Money is Enough (for a sustainable business)
Even if you’re in business to make a difference, you still need to create enough revenue to make your business sustainable. If you’re aiming too low or too high, you’re constantly fighting to stay afloat.
In this episode, Pamela shares:
- The three models to set up your business that is sustainable and scalable.
- The minimum viable revenue for coaching, consulting, agency, or healing businesses (this will surprise you!).
- The #1 biggest mistake that most transformational entrepreneurs make when calculating revenue and income.
01:26: If you need additional coaching after today’s mindset exercise, go to BookMyBreakthroughCall.com.
03:53: Pamela describes the 3 models of business to help you decide which is right for you.
11:09: Pamela shares the biggest mistakes she sees transformational entrepreneurs making.
Want to know more about how to attract your ideal clients online? We’d Love To Chat! Grab a Breakthrough Session with one of my coaches to learn how to create real impact and income online.
Episode 2: How Much Money is Enough (for a sustainable business)?
Intro | (00:00):
You’re listening to ‘A Profitable Impact.’
When it comes to talking about revenue, if you’re aiming too low or too high, you’re constantly struggling to stay afloat.
Welcome to ‘A Profitable Impact,’ where every week we help coaches and healers to expand their reach, increase their impact in the world and be well-paid for their extraordinary skills and talents. My name is Gene Monterastelli. I am the lead coach and Pamela Bruner is impact accelerator coaching program. And please welcome my friend, my colleague, and the CEO of Attract Clients Online, Pamela Bruner.
Hi, Pamela. How are you doing today?
I’m doing great Gene. Good morning. And, and this is a great day to discuss money.
Yeah. I was just kind of looking through our show notes, getting ready for before we hit the record button. And I love the really provocative question, “how much money is enough for a sustainable business?”
You know, I think the key here is: even if you’re in business to make a difference, you still need to create enough revenue to make your business sustainable. And I know when I talked to the coaches and the healers that we are privileged to work with, a lot of people say, “I’m not in it for the money. I’m not in it for the money.” The thing is, and then I talk to people who say, I really want a million-dollar business. And I’m like, “great!” because what that means to me is you’re going to create an enormous impact with a business. But the thing about revenue is if you’re focusing too low or too high, you are constantly working to stay afloat.
As our conversation unfolds today for those of you who are listening, if a question comes into your mind or if you’re really looking to explore this topic a little deeper, we would love it for you to have a conversation with another one of our coaches, Jon.
If you go to book my BookMyBreakthroughCall.com, that’s BookMyBreakthroughCall.com, you get an opportunity to sign up for a free conversation with Jon to help you to continue to unpack these ideas.
And Pamela, I think the thing that originally when, what you just said that struck me is it’s interesting that we can have a problem if we set a goal that is too small or a goal that is too big, because oftentimes how much is enough money. We just think more is enough, but in what you’re saying, it sounds like it’s not just about the money that we bring in, but how we structure ourselves for success. As we’re kind of stepping into running a business that is transformational and is also providing support for us in the life that we want to live.
Yes. And it’s not just providing support for us. I often compare a business to raising a child. And when you think about, “I need to feed the kid” and “I need to take care of it” and “I need to make sure it’s got a great environment.”
Businesses are the same way. They need to be fed and nurtured in order to grow. And so in this episode, I want to talk about three very different things that are all critical in order to build and grow a successful transformational business.
And one of them is the three models that I believe create a business that is successful and sustainable. How can you create something that’s not got you scrambling every single week?
And the second thing is what the minimum viable revenue is for a business of this type. And I think there’s a lot of illusion in the marketplace about what you need as a minimum, really what you can make. And I want to uncover that illusion and start putting some real numbers down.
And the third thing is the #1 biggest mistake that I see transformational entrepreneurs make when they’re talking about revenue and income and bringing in clients, there’s just a misunderstanding and there are actually three different ways to think about revenue, and so we’ll go over those. Lots, lots to talk about today.
Awesome! Well, let’s just, just dive right in. When you say three models of business, what do you mean by a model of business? And, what are those different models that you’re thinking about?
When you first start some kind of transformational business, generally you are, you’re doing everything. You are providing the coaching. You’re providing the healing. If you’re an agency model and you’re providing expert services, you may be doing the done-for-you work, and that’s very common and that is appropriate. I’m not suggesting that anyone should start their business with a model that’s appropriate for half a million-dollar business. You start your model with where you are, but even as you start off thinking about what is the model that I want to grow into can inform the decisions you make. So I’ll specify these three models.
The first is what I’ll call the coaching model. And that’s actually the model that you and I engage in, where when I started off, I was providing all the coaching. And then as I grew, I brought on associate coaches, including you, because you’re one of the best coaches I’ve ever seen.
And you, you coach me as well as our clients. And so to bring you on to serve our clients, enabled me and us to scale the work that we do with people. Usually that coaching model is you have associates. Sometimes you have full-time employees who work for you as coaches, but, but it is you control the interactions between your team and your clients. That’s one model. Second model is the agency model, and this is more appropriate for done for you. So especially for marketing companies where the done for you is we’re going to build you a funnel. We’re going to run Facebook ads for you. Maybe we’re going to create a website for you. When you start an agency model, you generally do the work. And then as you grow, you bring on other people, you may continue doing say the sales for your company, but the other people in your company will actually create the website or run the ads or something like that.
And then the third model is a certification model. And in this, you’re not controlling the coaches or healers or practitioners who share your work, you’re certifying them in your process. And then they are usually going out and doing the work on their own, getting their own clients. So it’s a much more distributed model and it’s a great way to spread the process. If you believe that you can trust the practitioners that you are certifying to deliver your process in a way that feels congruent with your brand. So those are the three models, the coaching model, the agency model, and the certification model. The thing I’ve had,
I think those are really great lenses for us to look through. Because when we’re trying to grow a business, we’re trying to be more successful. It’s important that we’re comparing ourselves to the right type of model and the right type of people. And the thing I find really interesting inside of that is with each of those models, as you’re explaining them in you’re showing how there’s actually different ways to execute those models as a business grows, you know, like in the coaching model, we go from a circumstance where I might be doing all of the coaching to, I am doing some of the coaching and I have associates coaching too. I’m leading a group program, but I’m not the one who’s doing the one-on-one stuff. And so I think it’s useful for us to recognize that not only is there models that are appropriate for us, but also to recognize that their stages inside of those models, which makes sense for where we are in our business growth as we’re moving forward.
And I know a lot of people that I talk to say, well, I want to do all the coaching, or I want to do all the healing. You know, that’s why I got into this and my experiences as you start growing a successful business, and you realize the impact that you can create when you have other people who are working within your company, it becomes a no brainer. It becomes a very natural thing to bring on additional people to expand the transformation you want to provide. And I think it’s,
It’s also good to recognize that you know there’s a tension inside of this between like you’re saying the impact that we get an opportunity to make in the world and the way that we want to show up in the way that we want to structure stuff. And the really cool thing is it’s not, there’s not a one size fits all in this, but it’s important that we get to choose the model and the size and the scope of the business. That actually makes sense for us at this particular moment in our lives.
And that’s the perfect segue actually into the next thing I wanted to talk about, which is minimum viable revenue for a company like this. So I distinguished between two different levels. One is what I call an empowered practitioner. And that’s someone who’s got a small, very lean team, might be a team of all contractors and no full-time employees. And this person is probably making $200,000-$250,000 a year enough to support their team enough, to support a nice lifestyle and enough revenue coming in, that they can deal with the ups and the downs of the market. So empowered practitioners, a great place to be. The next business model is what I call the empowered business owner and that someone usually with half a million dollars and up might be in seven figures or multiple seven figures. And the business owner generally has full-time employees.
And they are scaling in a much more automated way. Now there’s no virtue of between one model or the other. It’s not better to be one or the other. It’s not better to be an empowered business owner rather than an empowered practitioner. And if you want to be an empowered business owner, and you’re not even at six figures, yet you have to go through the empowered practitioner stage in order to get to an empowered business owner. So it’s all right to say, Hmm, I think I’ll shoot for empowered practitioner first. And then when I get there, I’ll take a deep breath and see if I actually want to grow beyond this. That’s perfectly appropriate as a scale in which to work. But what I find is that when people aim too low and there’s a lot of talk us in the transformational industry about let’s make six figures by the time you pay your taxes and your expenses, and maybe your training and then your infrastructure. And you’re trying to create a list and put Facebook ads out, or you’re trying to pay referral fees or something like that, you end up with very little to show for it on the back end of it. So this is not to discourage people instead, hopefully, it’s to inspire people that is very possible to get to the level of an empowered practitioner, and shooting for something that high will often mean that you end up closer than if you shoot for something low.
And I think what you were saying is, it’s a mistake a lot of coaches and healers make. And in other cases, I think it’s kind of an, an ego thing where we talk about things in a way that is sometimes less useful, where oftentimes when I hear people talking about their business, they’re talking in terms of sales and sales is a really great metric. You know, I have sales numbers for my business that I’m working off of weekly, monthly, and annually. But what you touched on inside of that is it’s not just about sales. Like there’s a difference between how much I sell and how much I get to take home at the end of the month. And as we’re thinking about the structure of our business, and we’re thinking about the way that we show up in the world, it’s not just about how much we sell and how much that dollar amount is, but making sure that we’re thinking about it in a really thoughtful way and restructuring our business so that we’re getting a chance to make the money that we want, not just make the sales that we want.
And those are not the exact same thing.
Exactly. And that really takes us into this number one biggest mistake that I see the transformational entrepreneurs making when they’re talking about revenue and income. And that mistake is thinking like a freelancer and not a business owner. So I want to distinguish three different types of revenue that you can look at in your business. They’re all legitimate types, but you should know what type of revenue you’re focused on at any given time. For me, the definition of a freelancer. And again, there’s no judgment here. It’s just, if you want to make a profitable impact, if you want to do something that’s sustainable and scalable and lets you sleep at night and not constantly be looking for the next gig, then thinking like a freelancer is not to get you there. Thinking like a business owner is going to be much more useful for you. The three types of revenue that I want to talk about are recurring revenue, new business revenue, and cash infusion.
Now recurring revenue means you’ve booked clients who are on some kind of contractor payment plan, and that’s not at all unusual in the coaching or healing or agency, world where you, you book people in and they pay you a certain amount per month for three months or six months or, or a year. And the nice thing about recurring revenue is that you can look at your books. You can look at a cash projection and go, wow. You know, because of the clients I’ve booked in this month. I know that for the next three months, I have a minimum X amount of revenue coming in. And that’s important in terms of thinking like a business owner, it allows you to make good investment decisions. The second kind of revenue I mentioned, new business revenue means what are you booking this month? How many clients are you bringing in this month?
Some of them may go on payment plans. And so some of them may join your recurring revenue, but looking at what do I need to book in new business every month to reach my revenue goals is important. Now the third kind of revenue I mentioned is cash infusion. And this is to me, the, the archetypal freelance revenue. So cash infusion is when you say, wow, you know, I really need to generate $10,000 in my business in the next two weeks, I just got a tax bill or, you know, my roof needs fixing or whatever it is. And so you, you may take actions for cash infusion that you would not ordinarily take as a business owner, but they bring in much needed cash, right? When you need it.
As you go through those Pamela, I think back, yeah, it’s about three and a half years ago now, in which I restructured the way I was doing my bookkeeping and created a new set of KPIs who was tracking what was going on and broke them down in basically the way that you just described. And immediately within three months, it transformed the way that my business was acting because I was acting differently inside of my business because every single month I had a goal, certainly for recurring revenue and a goal for new revenue and every so often, depending on what was going on in my life, I would dip into some of those cash infusion tactics as well. And it just completely transformed what I was doing because it wasn’t just, boy, I hope I sell some stuff this month so I can make some money, but by having a really clear lens, it made it easier for me to make good thoughtful decisions as a business owner, not just someone who works with clients that helped me to structure my business in such a way that it led to success a lot faster.
Exactly. And sometimes chasing the cash infusion, which a lot of people do, or they get confused between cash infusion and new business revenue in constantly chasing the cash infusion. What happens is that we lose the long-term business focus. It’s always, what, what can I launch month? Or what can I sell to the people on my list instead of who do I want to show up as in my business and how am I offering great offerings to my readership or to my list or to my social audience on a regular basis. And that’s really the new business revenue. You mentioned an acronym that I think we ought to explain because I have heard people ask, I’ve heard our clients ask, I’ve heard readers ask, what are KPIs? KPIs are key performance indicators. So, KPIs might be how many clients did I book?, how much revenue did I bring in? Do you have other KPIs that you watched Gene?
Do I watch my audience KPIs? Downloads of my podcast? How many people watch my YouTube channel number of people who are on my mailing list. And so it’s, it’s not just about the things that I am selling. I also have all my expenses inside of my KPIs as well. So I’m getting a chance to look at the expenses by themselves month to month, making sure that they’re on track and looking at the relationship between sales and expenses, to make sure that I’m getting the return on those sales that I want based on the amount of time, energy, effort, and money I’m spending to make those sales.
And often I’ve found that when I talk to clients about the amount of effort they put in to generate revenue, and I’m not even talking about investing, say in a new piece of software or in a marketing tactic or something like that, but the amount of time that you put in to serve people in a certain way, like there was an offering that I had, there was a high ticket offering. I was, I was looking at this saying, Hmm, is this something that I want to continue to expand? And I realized that I was spending four times as much time to create and to service that particular offering than I was in my sort of moderate ticket. And I said, well, maybe I don’t need that super high ticket. Let me, that’s, that’s too much. The $20,000, $40,000, $50,000 is not an arena I want to work in and I want to work in the three and five and $10,000 arena.
So I think making sure that, that you don’t give away all your private time, you don’t put yourself in an upside-down situation in terms of energy can be very important. I mean, that being said, we always lead with high ticket signature systems. And in other episodes, we talk about high ticket offers and how important they are. So this is not meant to discourage anybody from high ticket offers, but it is meant to have everyone listening. Please look at what am I spending in terms of time and money to make what I’m making.
So a little bit earlier, as you were talking about some of the structures and the way we structured our business is you created the difference between an empowered practitioner and an empowered business owner. And I think those are really key concepts that I love, you know, learning that from you and really looking at the way that I’ve approached my own business. And that is changing this moment in my life. I would love to hear you talk a little more in detail about those two so we can just kind of flesh it out. So listeners can really get a sense of what you’re talking about.
Well, one thing that I love about talking about this concept with Gene is that you and I have different business models chosen very deliberately. You know, I have an empowered business owner model. I love having a team. I have a team of employees and obviously contractors as well because you’re a contractor with me, not a full-time employee and you have an empowered practitioner model, or at least you have for a number of years. And you very deliberately made that as a lifestyle choice. And I wondered if you wanted to talk about that.
Absolutely. About a little more than seven years ago, I moved to New York City. The reason why I moved to New York City from Baltimore, Maryland is because of New York city. And in the process of making that move, I tripled my expenses because New York city. And so when I moved here, I didn’t want to pay a whole bunch of money to live in New York and not experience New York. So I have very deliberately over the course of the last seven years, run a business that is about my lifestyle. I always say, I’m building a life. I’m not building a business. And the business I’m building is supporting that lifestyle. And so there have been times over the course of the last seven years where I’ve had opportunities to expand my business in different ways, taking on other coaches and things like that, that I’ve chosen not to do, because right now it’s been about living the lifestyle that I wanted and being able to just really love and enjoy and just take everything I can from this amazing New York experience. And so it has, has been a really intentional choice to have a leaner nimbler business because it really accommodates the lifestyle that I want to be living at this point. Right.
You know, when you say that, it sounds like, well, “Pamela, how much are you working to be an empowered business owner?” And the truth is I don’t work twice as much as Gene. In fact, I suspect we work about the same amount of time, but I do have different obligations because I’ve got a payroll of full-time employees to meet every single week. That’s a deliberate choice I’ve made. And I love the fact that I have this dedicated team. And so now if I want to take a Friday afternoon off, my team is still working for me. And that is pretty exciting to me. So it’s just a different level of support and different level of infrastructure that I’ve chosen to bring on for the way that I want to live my life.
I think that the thing that I think you do a really good job in talking about was we’ve talked about this in the past is recognizing the fact that it is not a value judgment to choose one of these types of businesses over the other. This is, this is a dispositional thing. This is about what makes sense for you and your life, where you are now, as you said earlier, in order to be an empowered business owner, most people need to grow up through being an empowered practitioner first, because we need to be heightened our skills, getting good at our craft, learning how to market growing our lists, doing all of those things. But just because you are passing or you are an empowered practitioner, doesn’t mean you need to go anywhere else. Like this is, you know, when we’re coaching our clients and they’re like, well, Gene, what should I do?
And I’m like, there is no, should, this is your business. And you need to make really good choices. I’m going to coach you. I’m going to give you all the options. I’m going to share my expertise. So it’s easier for you to achieve those goals, but there’s no should it’s your business and it’s your life. And it’s important that you’re creating it in a way that you’re having the impact in the world that you want using your gifts and talents, but doing in a way that you’re not losing yourself and doing the thing that makes the most sense for you. Some of us are built to be running a business with a staff and a team and doing that in some tight the world. And other of us that just isn’t something that makes sense for us at this point in our lives. And the other thing that, you know, your disposition is going to change as you work your way through this and know that what you choose to be today and how to run your business today is not what it’s going to be forever. You get a chance to evolve in the way that makes sense for you and your lifestyle.
I think that’s the perfect way to actually wrap this up and bring this together. So to review, we discussed the three models that I believe work in order to have a business that’s sustainable and scalable, and those are coaching and agency and certification. We talked about empowered practitioner versus empowered business owner, and then the three types of revenue that recurring revenue, the gym business revenue and cash infusion. So a lot of really meaty concepts in here. And the bottom line is how much money is enough. I believe you need to run enough so that your business is constantly running with you, putting in the appropriate amount of work for the lifestyle you want to live. And for most people, I find that shooting for empowered practitioner at a minimum 200,000, 250,000, is this a revenue level that allows them to sleep at night, to have a good lifestyle, to support at least a lean and agile team. And so the question today is what kind of business do you want?
And so if you’re in a circumstance where you’re wrestling around with these ideas, and you want to have a chance to have a conversation with a really excellent coach you can actually book a free session with one of our coaches, Jon, if you go to book my BookMyBreakthroughCall.com, that’s BookMyBreakthroughCall.com. We can get you set up so that you can continue to explore, to see what’s the business model that makes the most sense for you and how you become that empowered practitioner powder business owner that you would like to be. If listening to this conversation today, you know, someone in your life, a healer, a coach, a transformational entrepreneur who could really benefit from this conversation. Could you do us a favor and pass it along? The easiest way people find a new piece of content is from the recommendation of a friend.
And if there’s someone in your life who could really benefit from this conversation, just pass it along. If you haven’t done so already, please subscribe to the podcast. And podcasting subscribe is free. It’s not like Netflix, where you have to pay to have that subscription. You can subscribe in Apple, Google podcasts, Spotify, Pandora, Amazon music, anywhere that you listen to audio, just search for a profitable impact. You’ll be able to find the show. And when you subscribe every single time, a new episode comes out, you will receive a notification. If you have any questions, any comments, or a topic you’d like us to cover in the future. Something you’d like to hear Pamela’s input on. We always love hearing from listeners, just like you. If you go to attract clients online.com, click on that contact link, drop us a note so we can be helpful as we continue to move forward as entrepreneurs, as business owners, as coaches, as healers. So you really get the opportunity to take your skills, your gifts, your talents, and to create the transformation right where you are today until next time. I hope you have an impactful week.
ABOUT THE PODCAST
Building a business as a coach or expert is challenging, especially if you’re trying to find your clients online.
Join business coach and online marketing expert Pamela Bruner as she uncovers the secrets of successful transformational businesses. If you want to make a difference in people’s lives, expand your reach, and attract high-paying clients, you’ll love this show!