How To Quickly Know If You'll Make Six-Figures This Year
The one thing I hear most from my tribe is the desire to earn six-figures with an online business.
Oh, I get it. That was my main goal for many years. It became a mantra in our house. We talked, and talked, AND talked about “someday” when…
It felt like I was standing on the edge of an amazing breakthrough, just about to cross-over into six-figure territory. I could feel it.
At least, I told myself I could feel it. I gave myself daily pep talks. I woke up every morning and thought, “today is the day the switch flips.”
But, here’s the reality of my life back then - I didn’t have a good channel to make six-figures. Let me explain…
At that time, I had an Etsy shop that sold jewelry-making supplies. You know, beads, findings, chain, earring hooks, claps, etc. It was a cute little shop, and it earned about $3k a month. Not bad, but not great.
I had tons of product, that I religiously kept organized and inventoried. At any moment, I could check a spreadsheet and know how much stock I had on hand. I used our upstairs hallway as a warehouse, and had one of those industrial, stainless steel racks that commercial kitchens use. I stored all the inventory on shelves in color-coded baskets.
It was a great system. I was proud of how organized my business was.
Ok, so back to my six-figure goal… I would wake up every morning and grab my phone off the nightstand to check and see if I’d had a flood of orders overnight. Or maybe someone had emailed wanting a HUGE wholesale order. I just knew that at any moment, I could be running a six-figure business.
Then one morning I had a sobering thought. I kept an average of $12k-$15K in inventory on hand in my makeshift hallway warehouse. It suddenly hit me - I wasn’t set up to make six-figures. It just wasn’t going to happen, I was playing too small.
I literally couldn’t wake up to sales amounting to more than $12k-$15k (and it was highly unlikely that would happen anyway). And if it did, then what? My shop would be sold out for a couple weeks until I could restock. Plus, my little Etsy shop wasn’t going to attract a big wholesale order, because I wasn’t ready to handle that type of success.
I was playing in a small pond, and dreaming of ocean results.
So now I’m going to ask you - Can your current business really make six-figures?
We’re going to figure that out right now!
Ready? Grab a notebook and latte. I promise this is going to be worth it.
There’s three main types of products; physical products, services, and digital products. Which one do you currently sell?
1. Physical products
This is anything ‘real’ that gets shipped to a customer (jewelry, clothing, books, rubber stamps, etc). If you’re selling a physical product, it’s especially important that you do the math to make sure you can hit your six-figure goal.
How much inventory do you have on hand?
How big is your average sale?
How much traffic does your shop get each month?
How healthy are your margins?
Example, if you sell a $10 item, and make a profit of $6 (after product costs), you’ll need to ship approximately seventy items a day to make six-figures a year. That’s a big commitment.
Take $100,000 and divide it by your average order price. That's how many orders you need to ship each year. How many does that work out to a week? A day? Can you handle that type of volume, and is it worth it to you? Will you still be able to have the lifestyle you want if you're processing that many orders?
There’s a lot of considerations to look at when you’re selling a physical product. To give you the best idea of where you stand with your business, I strongly recommend you download the free workbook at the end of this article. In it, I break down everything and give you a formula to follow so you can see if your business is ready to hit six-figures. I also give action items you can take right now to get your business on the right track.
Services are defined as trading time and expertise for money. Examples are, an energy healer that does sixty minute sessions on the phone, or a copywriter that charges per page written.
If you sell a service, you need to figure out how much of your time you can offer each month, plus what your average cost is per service.
For example, you’d need to make $8,400 per month to make six-figures ($8,400 X 12 months = $100,800 per year). If you do sixty minute phone sessions for $100, to make $8,400 a month, you’d need to do 84 sixty minute sessions per month, or 21 sessions per week.
That works out to approximately 4-5 sessions every day, Monday through Friday. Can you do that?
Only you will know if that level of work is right for you and the lifestyle you’re trying to build. However, now you know the commitment it will take to build a six-figure business with your services.
3. Digital products
Examples here would be stock photos, online courses, ebooks, etc.
If you’re selling digital products, you’re in a good starting place to make six-figures. Why? Because you can create the product once, then sell it unlimited times.
This is a business where the amount of web traffic (plus the size of your email list), will play a big factor in your success in reaching six-figures.
Let’s do a little math, k?
What’s the price of your digital product? If it’s a membership to a stock photo library, and you charge $30 per month, you’ll need 280 paying customers each month.
(280 customers X $30 = $8,400 per month. $8,400 X 12 months = $100,800 per year)
Let’s try another example. If you sell an online course for $97, you’d need to sell the course to 86 people every month to make six-figures per year.
(86 customers X $97 = $8,342 per month X 12 months = $100,104 per year)
If you sell an online course for $997, you’d need to sell the course to 9 people every month to make six-figures.
(9 customers X $997 = $8,973 per month X 12 months = $107,676 per year)
Think about that for a moment. If you sold an online course for $997, you’d only have to sell it to NINE people each month to have a six-figure business. If you sold it to 90 people each month. You’d have a SEVEN-FIGURE business.
This size of your email list is the most important factor when selling digital products. Let's take a quick look at some numbers...
An average conversion rate is 2%. So for every 100 people on your email list, you can expect that approximately two of them will purchase your product.
Caveat - your list needs to be "warm", AKA every person on the list wants to be there, and you need to use effective copywriting, and promote your product the right amount of times. Please remember, an email list isn't a magic wand you can wave and expect to get sales. However, used correctly, your email list will be your biggest sales tool. OK, now that I've said my piece...
Back to our conversation. So if an average conversion rate is 2%, that means if you have 1,000 subscribers, 20 of them will purchase your digital product.
If it's a $97 product that's $1,940
If it's a $997 product that's $19,940
See where this gets exciting? Aannnd, I'm a huge proponent of automating business operations. So imagine if you set up an automated sales and marketing machine that was always selling your digital product on autopilot. Would you rather it was selling a $97 product, or a $997 product?
There's so much to cool stuff to explore when mapping out the blueprint to hit your six-figure business goals!
I hope you found this info useful, and it gets you thinking about your business and the direction you should take to get to your six-figure goal. I’d like to point out, that it takes just as much work to build a small business as it does to build a big business. So as you prepare to add new products to your business this year, take a step back and see if you’re positioning yourself to hit your income goals. Do you need to tweak your products? Maybe you're ready for a new business model?
If you currently sell a physical product, think of how you can begin to incorporate a digital product into your business (how-to guides, ebooks, digital patterns, recipes, etc).
If you currently offer services, think about ways you can make more money with less time spent (group coaching sessions, re-usable templates, etc).
And, if you currently sell a digital product, how can you make more money with a smaller email list, or less traffic? Maybe you start offering higher priced courses, monthly subscriptions or add-on products.
Wherever you are in your business, stop to figure out if your actions are aligned to your lifestyle goals. If not, it’s never too late to make a change.
Don’t forget to download my free workbook to walk you through the six-figure formula. It’s jam-packed with info, business strategies, examples and ideas to help you reach the next level with your business.
Download it here.
I wish you lots of success!