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Did you know there could be 2 businesses growth making a $100,000 gross revenue, but the business owners could be taking home radically different amounts of take home pay. We rarely talk about what happens once that money comes into the business and where it goes from there, And this has led to a lot of entrepreneurs and small business owners focusing only on revenue goals and not thinking about the actual profitability of their business. Well, today I want to talk about the numbers and exactly what it means to have a 6 figure business versus a take home pay of 6 figures. Let's dive in. Are you that driven entrepreneur who believes that working harder holds the key to your dreams? Are you drowning in the day to day task wishing you had more time to strategize and cast the vision for your business growth? Hi. I'm Donna Dube, your guide on this entrepreneurial journey. I've walked in your worn out shoes, burning the midnight oil, convinced that sheer hard work was the secret to success. Just one more email, one more task until I found myself on a one way track to burnout.
But here's the twist in the tale. I discovered that success isn't just about working harder, it's about working smarter. It's about being intentional with our time. It's about steering our ship with focus because no team, system, or automation can outperform a lack of direction. In this podcast, I am sharing with you all the strategies for business growth that it took me years to learn. If you're ready to step out of the daily overwhelm, so you can amplify your profits, then I'm ready to teach you. I believe the only limit to your business growth is the one you set for yourself. Go grab a notebook, warm up that cup of tea, and let's do this.
Well, hello. Hello. Welcome back CEOs. If there's one thing I want you to get from this episode, it's that what we're talking about today is all within your control. That's right. You get to decide what size of business you want to have, and you don't have to model your version of success off of someone else's version. Some people's version of success really comes at the expense of their life, their health, their well-being, their relationships, and I'm here to tell you, you get to choose a different way. So let's start.
How do you decide the right size of business in the first place? Well, we have to look at 2 things. How much time and how much energy do you have available for your business? Now I know there are some people who work 60 hours a week and they may have time to work that amount of time. I'm not sure where you stand on this, but I can share with you that I definitely don't have that time. But the point here is if you don't know how much capacity you have, how much time and energy you actually have to dedicate towards your business, then it's really, really easy to overextend yourself. And this is when you find yourself on a fast track to burnout, on a fast track to major health issues, on a fast track to breaking relationships and it's often a recipe for disaster truly for a lot of us. And I'm sure you've all heard of someone in your circles or someone who went through a terrible burnout process and we don't want to go there. Right? So let's ask ourselves how much time do we have to invest in our business? And when I ask you that, if you're not sure, don't panic. We can easily find this out.
Pull out a calendar, an empty calendar, and block out the major things you have going on in your life right now. This is gonna help you figure out what your availability looks like. So I always tell my clients, start with your life first. So you're gonna go through Monday to Sunday and you're gonna block off times for all the things that you have to do, whether that's dinner prep, whether that's cleaning the house, whether that's a spouse date, pick up kids from school, see your aunt Mary every 3rd Saturday, whatever that is. Time to look after your parents needs. Make sure you go into your calendar and block all that off, And then how much time do you want to have set aside for each day for your own health? Maybe it's a morning routine, maybe it's your walk, your workout, maybe it's spending time with your spouse or your kids, or heaven forbid doing other hobbies. You mean time for other hobbies outside of my business? Yes, that's what I mean. And then how much downtime or quiet time do you need? And so I want you to map out your ideal day or your ideal week.
How much time are we actually looking at? And chances are when you do this, if you're plugging in your life first, you're probably not going to have 60 to 80 hours left left to be able to work on your business. It's probably gonna be more in the 20 to 40 hour range. Okay. Then the next piece of this is you wanna ask yourself how much energy do you have available? Are you like Bugs Bunny and Roadrunner and they just don't seem to stop? Or do you actually have time when you need downtime? Most of us do. Can you actually work and stay focused for a long number of hours? This is key guys because the research actually shows that after about 30 to a 35 hours productivity drops dramatically, and so in general most of us work better in short focused bursts rather than long periods of time doing focused work. So I wanna ask yourself how much energy do you actually have And know and understand that not any everyone's energy level is the same, right? You might have friends, you might have business besties, and they seem to be able to just keep going and going and going, and your energy is not at that same level, and that's okay. Just be realistic with where you are right now. We all need time to rest and recover, and sometimes this is honestly more important than the time we're working.
Okay. The next part of the equation, once you've figured out your time and your energy, or in a sense, your capacity, then you have to ask yourself how much money do you need to take home from your business? And this is really important and this is going to kick off the conversation today. And yes, we're gonna dive into the math because the numbers behind your designing your business are so, so important. When I see clients come to me or even in this online space and you hear people talking about setting their revenue goal, Most people just seem to pull a revenue goal out of thin air. Right? They're looking outside of themselves. They're looking outside into the world to see what people are telling them their revenue goals should be. And I don't believe this is the right way to come up with your revenue goal for your business at all. Again, it's your business.
It's in your stage of life right now and my stage and my business could be completely different from yours. So we have to go back to the foundations. We have to start with our life. What does it actually cost to feed you, to house you, to clothe you, to pay all your bills, take care of your family, etc. And as you can well imagine this is going to be something different for so many of us, right? For some of us, we entered the workforce and we were given a salary and from that salary we had to learn to budget and that's what we had available to pay for our life and our lifestyle. So some of us were limited by what that salary, what we got in that salary. Others of us had more room, right? To choose different things and add different things to our lifestyle and upgrade because we had a bigger salary. But when you're an entrepreneur, it's a little bit different.
No one is giving you a salary. You have to decide what your salary is going to be. So you actually have to sit down and look at what it costs to live your life and figure out what your paycheck needs to be so that at the end of the month or halfway through the month you don't have to pull out your credit card to pay for your groceries. You don't have to take out a personal loan or to deplete your savings while you're trying to get your business up and running, and while you're trying to grow your business. So understanding what your personal take home income needs are is crucial in this process. And if you haven't come up with this number yet, and you're not sure where to start and you'd like some help, then I want you to head over to the show notes, Stop this playing right now and go grab the resource that I have for you. It's called Get Paid Like a CEO and it's gonna walk you through what we're talking about today and help you to determine what your take home pay needs to be. So take a pause, go grab that from the show notes, and then come on back.
Okay, so we're gonna determine what our personal expenses are. Remember friends, these aren't your business bills just yet. These are the bills that you have to pay to live your life. And in the Get Paid Like a CEO resource, you'll find that I've put together your monthly expenses, your personal average current needs are. Right? So take a look at if it's something you pay annually divided by 12 and put in what your monthly cost would be. Alright. So once you've done what your current needs are, the next piece of this is looking at your future needs. See, it's one thing to be able to cover our baseline now.
Right? What our needs currently are based on our operations, But most of us when we're setting goals for our business, we're looking ahead. Right? We're trying to see where we want to go, and we're doing this a lot of times because there are personal financial goals that we want. Maybe there's some upgrades to our lifestyle that we would like to have. Right? Maybe you're looking at upgrading your home within the next year or thinking of buying a new car, and that's gonna, you know, change your car payments and change your insurance. Right? Maybe you want to budget some savings that you hadn't been able to do before. And so I want you to take a look ahead and readjust those numbers to what you would like to be able to do a year from now. Because we wanna make sure that we're not just looking at our current obligations, but that we add in for what future expenses we expect or we would like to see. If we build this into the equation so that when we get there, we have that increased revenue, We have that increased take home pay, and we can now do those things that we wanna be able to do.
Okay. So these things are really, really important to consider. If we don't look ahead, we tend to default to something that seems, I'll say an easy way to come up with how much our take home income should be. And I've heard this multiple times from different clients that I work with, you know, they'll leave whether it's a corporate job or whatever their profession is. And they'll say to me, well, my last salary was $40,000, $50,000, $80,000, whatever. So that's what I want to make in my business. My business needs to make what I was making in my previous salary, But there's a big piece of the puzzle here that you're missing. If you're looking at it this way, because the salary you had is not going to be your top line revenue.
We have to remember that what our business brings in is not what we actually get to take home and pay ourself. Right? You don't have to be in business for very long to know that there are costs to running your business. There are things that you're going to have to pay out of your business revenue that you get. So your take home income really depends on how expensive it is to run your business. How much costs you have to run your business. Okay. Let's start reverse reverse engineering a revenue goal here. So you can kind of see where I'm going.
We have to start with understanding what money is going out of the business. So there's money coming in from your clients, from your programs, from your services, whatever you're selling. That's your income. They're paying you for those products and services. And then there's money going out your expenses, Right? You have to pay taxes to run your business. You have operating expenses to run your business. Those are the major things aside from owner's pay that you need to take care of. And what I see happening is that most entrepreneurs, they really only pay themselves whatever's left over at the end of the month or worse at the end of the year.
And for a lot of us, that's not much. And so I want to flip the script here, and I want us to do it a different way. There's a simple and easy way to figure out what our revenue goal should be. And trust me, it's super, super simple. We're gonna take your salary goal. So what you would like to have as a take home goal to pay yourself on a yearly basis, and we're gonna double it in order to come up with what your business revenue goal should be. Now, you notice I did this based on facts and data. I didn't pick a revenue goal from the sky.
I didn't pick a revenue goal that my friend or the best guru that I'm following has. I picked a revenue goal based on where I am in my life based on my current expenses and the take home pay that I need to be able to pay for those expenses, And then I double it in order to come up with my business goal revenue goal. Now, how how did I come up with this? Like, is this just some arbitrary thing that I just pulled from the sky and said, well, if I wanna make this much, I'll just double it, and that'll be my revenue goal. No, not at all. If you know me by now I hope you know that I just don't randomly pull things from the sky. This is actually based on the book called profit first by Mike Michalowicz and this by far is one of my top ten business books. If you haven't had a chance to check it out, I highly refer I highly encourage you to either download the book from Amazon, go get it in paperback, whatever works for you, but take a look at the book because it really helps business owners adjust their mindset to pay themselves first. And when we flip the script on this instead of putting ourselves absolutely last, right, instead of putting profit last we put profit first.
When the revenue comes in you take out the profit first. Then there's percentages for how much goes to your taxes, how goes to operations. So the cost to run your business, how much goes to owners pay. All of this is based on a sliding scale that depends on the size of your business. So for this particular episode, I'm going to use the percentages that Mike Michalowicz gives for businesses who are making up to $250,000 in annual revenue. And if you have the get paid like a CEO resource that we talked about earlier, you're going to now move into the second tab. And this flows really nicely into the profit calculator. Now you'll notice that this tab is mostly done for you.
What it's gonna do is it's gonna pull in what your future need was in terms of your personal salary, and it's gonna calculate a revenue goal and calculate all the percentages using profit first. So it's going to adjust what percentage of your revenue is now going to go to owners pay. What percentage of your revenue goes to profit. What percentage of your revenue goes to tax and what percentage goes to your business expenses. And then it will even break it down more and tell you how you need to allocate that money each and every month. So it's going to give you the percentages and also the dollar amount so that you can quickly and easily see every month how much money do I need to be putting towards each of those categories. Owners pay, profit, tax, and business expenses. So if you haven't had the chance to check it out and play with it, I highly recommend it.
You know, a bit of a nerd when it comes to these things, but I find it so fun to play with and manipulate the calculator and see what kind of numbers I get. If you know for example that your tax rate is different than the one that's proposed in the, spreadsheet go ahead and change it to what your actual tax rate is. Right? Feel free to mess around with it and play with it, and you really get to see where your business is revenue wise and how much you personally profit and a budget for your overall business expenses, which if we're not careful and we don't stay on top of can really get out of hand. Okay. So you're going to have a per profit percentage in this scale. Mike Mokalowicz recommends 5 percent. For businesses that are under $250,000 in annual revenue, 5% of your revenue is going to go towards profit. 15% towards taxes.
30% towards incoming revenue. The money you're getting paid from your clients towards operations. And, 50% is gonna be owners pay. Just a reminder here that operations is whatever it costs to run your business. So this includes your software, any tech, any equipment, as well as labor. Okay? So you can see my friends 50% of the income you bring in should be going towards you for your personal salary. It's not about what's left over at the end of the month or the quarter, And you can see that this helps you have actual business savings. This helps you reinvest back into your business.
Right? Helps you fund your growth and it gives you maybe a little bonus every year. So if you follow this approach, it's so fun to see every quarter. You might be able to write yourself a little bonus check. Right? And then you can use that to do the things you want to do. Take your kids on a trip, do the renovation in the kitchen, have a piece of down payment for a new house. So when you're looking at it from this perspective, it really starts to change the game and helps you see where you can upgrade an area of your life. It helps you see how your business growth can also fund your lifestyle. So you're not just stagnant based on wherever you were previously in the other salary that you got in a full time role.
All right. I know this isn't the easiest to picture over the air, but I'm going to give you some examples for how this percentage breakdown actually works. And I'm gonna walk you through 3 different scenarios. And I think that once you hear the difference between the 3 businesses at each level, you're gonna start to see very quickly where your revenue goal should probably sit. Alright, first up, let's think about the person who comes to me and says my last salary was about $50,000. So that's what I want to be my revenue goal. Now, as an aside, remember I've already shared with you that your revenue goal is not going to be a take home of $50,000 So let's actually break it down and see what's going on. If you were bringing in $50,000 of revenue per year and you're using these percentages that I've just talked to you about to help you figure out what it's gonna cost to run your business and how much you get to pay yourself. So if you're using this method you'll have 2,500 in profit.
That's a little bit of a bonus for you and a little bit to keep in the business account for any needs or any reinvestment that you have coming up. But it's not a lot, right? You'll have about 7,500 that you'll have to give to the government for tax around 15,000 So operations includes So this includes your bookkeeping fee, your website hosting, your email service provider, any other expenses that you might have, your internet, your cell phone. So I think you can quickly see here that that $1,000 a month isn't gonna go very far and it certainly doesn't allow us to pay to have someone help us in our business. Right? All right, then for following this model, we're going to have around 25,000 per year to pay ourselves. A little bit over 2,000 a month to actually take home and pay our bills. Now to break this down even more, let's say you look at the time that you're putting into your business in order to make that amount of money. So let's say that you're gonna take 4 weeks off for the year for holidays. So we're going to base this on a 48 week year.
And, let's say you're averaging, you know, 20, 25 hours a week in terms of the amount of work. So when we do the math, you're actually only paying yourself around $20 an hour in order to make that money. So for all the work you're doing, you're getting paid $20 an hour. And I think for most of us, this is a tough pill to swallow, right? And not sustainable for most of us. Certainly not the goal that most of us wanted when we got into business. So I'm not bringing this up to scare you or to, to, you know, frighten you by any means, but when we break it down, when you actually see the numbers, I hope you get to see why we have to start getting really clear about the numbers and not being scared of looking at them. It's about being realistic and looking at the numbers so we can understand how to set appropriate goals. And we start to realize pretty quickly that we need to be able to grow the business in order for it to be more sustainable, right? In order to make sure that our actual personal needs are being met and to make sure that we're just not overworking and burning the candle on both ends.
Right. Okay. So let's head into the next example, the next sort of milestone. So now we have a business owner who has, or has a goal of a $100,000 of annual revenue a year, and I know this number is thrown around a lot of times and sometimes there's some feelings that are associated with this number when we say it. Today I want to say it. I want to say it. I want to say it. I want to say it.
I want to say it. I want to say behind the $100,000 a year annual revenue goal, and I think it's so important because when we don't look at the math then we start to get let our feelings dictate our operations, and I want to look at the data, and I want the data to help me make my decisions not just my feelings. Okay, so we've got a $100,000 a year that's our revenue goal. When we use the profit first perspective, we're going to plug these percentages in and we're going to see that 5% of our profit becomes around $5,000 a year. Now, this is growth, right? Because at the end of the year we can now reinvest half of that back into our business, into our business slush fund, or to help us get some more support to upgrade something in our business, And then we could give ourselves a bonus of the other 2,500. Again, this is the fun. This is the vacation that you wanted. This is the extra thing that you don't have time or money for.
Maybe it's getting a whole new wardrobe. This is fun money for you, and then you're gonna pay tax. So 15% is around $15,000 in tax tax and operations will be about $30,000 per year. Now, you might be thinking hold up just a minute, Donna. I run an online business. I don't need to spend $30,000 a year to run my business, and it might not be required to run your business. But you know what is amazing what happens when you get to this level? Now you can afford to get a little extra help and that's where you really unlock the potential in what your business can do. Because with $30,000 available in your budget to invest not only in the right technology and the right tools or equipment, you can start hiring a few people to help you out on a part time business.
Because at this level you could have 1 or 2 people in the team who are helping you do the administrative work, the bookkeeping, the customer service, to do some of the techy stuff that you don't like to do and don't want to do. And this might cost you anywhere $1,000 a month, but you still have money left over to handle other things, other expenses in your business. And the real golden nugget here is that when you can start to hire help, this gets you out of the day to day. It gets you out of those maintenance tasks, those lower level value tasks in your business, and allows you and buys you time so you can focus on those higher level activities. Working with your clients, focusing on your marketing and your sales, growth related activities, right? Creating your next level product or service. That only happens when you can free up your time and your energy. Remember at the beginning of this podcast, I was talking about how much energy and time do you have? What's your capacity? And so when you bring on someone to help you they take some of those tasks away from you. You get your time back and now you can refocus that time on those higher level tasks.
And this is where things really start to change. You actually get more of your time back. And then, of course, we still have the 50% take home pay. So this gets you closer, right? If you had a goal of taking home $50,000 a year, this gets you a lot closer. All right, But what does this look like if you want more than that? Maybe you're like some of the clients I work with who want to be able to pay themselves $100,000 a year, not just have their revenue goal $100,000 a year. So in that scale, they need to bring be bringing in close to around $250,000 a year. So if your annual revenue was 250,000 now let's look at the scenario. You have 12,500 in profit.
That means you could split that, right? 6,000 for bonus for you, and you still have 6,000 to put towards your business next year to fund the growth for your slush fund, business savings, whatever you want to use it for. And that's pretty good, right? Because that money can massively uplevel your personal financial goals and help you reinvest into the growth of your business, and then of course we're gonna have taxes and we're still going to be paying that 15%, So that's 37,500. And our operating expenses. So that's gonna be around 75,000. That means we can spend a little over 5,500 a month to run our business. And this could be divided up in so many ways. The biz the biggest expense obviously in this line now becomes your team, right? And getting support, but imagine if you had $5,000 a month to hire a team, you can get a lot further, a lot faster. And then obviously you still have your 50% owners pay.
So out of that 200 $50,000 business, now you can have a salary of 125,000 and this is my friends is where the numbers get so exciting for a lot of us because this is our actual take home plan, not just our baseline needs but a chance to upgrade. Right? A chance to make a difference for ourselves and our amplify. And this is where things start to change in your business as well, where you can start to work a little smoother and a little easier. Alright, I hope by running through these three examples you're getting a sense of how actually taking the time to reverse engineer the numbers and follow the pattern that profit first has put out. You can see how critically important it is to know where you stand. And without following that pattern and without reverse engineering the numbers, you can also see how 2 businesses with a revenue of a $100,000 a year could have very, very, very different take home pays. 1 could have a take home pay as the example I gave here, right? Where they're taking home close to $50,000 a year and the other one could be taking the crumbs. What's left over at the end of the quarter end of the year? I hope you see how important it is to do this ahead of time, right? It's time to be proactive and not reactive when we're setting our revenue goals.
All right. There's just one final thing I want to touch on here before we wrap up this episode. And this is a belief that a myth, I think that needs to be talked about. And that is that when you're growing a business, people believe the more revenue you're bringing in the harder you have to work. And I think this is a reason why a lot of people, when they're setting their revenue goals, they're scared or hesitant to set a higher revenue goal because they believe they're gonna have to work more. They're gonna have to work harder to get there and they don't have the capacity for that. And I'm here to tell you that you will not have to work more to make a $100,000 than you will to make $50,000 You won't have to make more to bring in $250,000 as you did to bring in a $100,000 you're going to have to work differently. And the reason is because now you have some funds available to help you get some support.
So it's not just you anymore. You're bringing on a team, you're hiring them. Them. You're learning how to delegate. You're learning how to lead and how to manage. Right? And so you're getting some of your hours back in your business that you can then refocus on those CEO level tasks. Going after higher level of revenue means we're going after higher level of revenue means working more hours. That's a very employee driven mindset and definitely not how owning a business works.
Alright, I'm done with my soapbox now. Thank you for listening. I hope this was helpful for you. Again, if you're not sure where to start go grab that get paid like a CEO resource and let's start plugging your numbers in. In the next episode we're going to reverse engineer what you need to sell and how many of them you need to sell and at what price point in order to make that revenue goal that you just set happen. And we're actually gonna reverse engineer it to help you figure out how many clients you need to make that work. So this information is is really gonna help you dial in and make sure that what you're putting in into the world actually lines up with what your goals are. Alrighty, friends, keep pushing until next time.
I'll see you next week. Thank you for joining me on this episode of CEO amplify. I appreciate you being part of our thriving community of ambitious business owners. If you enjoy today's episode, I kindly ask you to share this podcast with a friend and take a hot minute to rate and leave a review. It would mean the world to me. Your feedback helps me reach more people and continue providing valuable content. Thanks so much for your support. Keep shining and we'll catch you on the next episode.