ABOUT THIS EPISODE

Author and business journalist Elaine Pofeldt discusses how solo entrepreneurs can break $1 million in revenue before they hire a single employee.
English
United States

TRANSCRIPT

00:00:02this is how success happens with the staff of entrepreneur chats with innovators writers artists chefs and a range of other unique personalities to better understand the traits that make excellence possible socon about it actually database everybody out of like best one of my regrets actually now we should
00:00:21uphold the plug sooner it's amazing when the universe sees you could it how all the sudden all these resources start to come together thanks for joining us and now how success happens thank you for joining us for this episode of how success happens entrepreneur dot coms weekly podcast
00:00:44exploring the entrepreneurial journey I'm Peter Paige an editor for contributed content on entrepreneur and host this week our gas delaying pro felt herself a distinguished editor and talented writer has many accomplishments to our credit but likely none greater than raising four children while she and her husband built
00:01:04their own independent home based businesses that experience has given her great empathy for the challenges facing every ounce but are working to get from their first customer to a business that supports them and their families our discussion today is focused on a lane to recent book the one
00:01:20person million dollar business in which she explores the exciting prospect of building a business large enough to have a prosperous relatively and hurried life but not so large that it takes over your life but first a word from our sponsor here's some advice for anyone who sends emails
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00:03:26H. S. H. dot get ethos E. T. H. O. S. dot com how much Peter it's great to be here journalist you've been covering entrepreneurship for a long time I was in your editor at fortune small business magazine anchor that eleven years and freelance writer contributing any publication
00:03:49on entrepreneurship and careers for cross and really interesting census bureau statistics a few years back for the non employer business either businesses that have no employees other than the owners most of them are so low so there are partnerships your family business on what really stood out for
00:04:10me with that it was dismissed in this category that we're breaking one million in revenue now in Kuwait and me lance writer I know a lot of freelancers and they were bringing in one million in revenues like that and I wrote a blog post looking at what some
00:04:27of the head just categories were like retail manufacturing better I publish the closer we started getting a lot of interest from readers and they said you know we need to know more about this you know what what is he doing in return they doing each commerce where they
00:04:41selling and I couldn't find that out exactly because they'll tell you that NAICS cursed industrial because they won't tell you John is running unique commerce business selling auto parts of it whatever it is the readers and and if you're one of these businesses please let me now and
00:05:04tell me what you're doing people really which for four and a half about five hundred crores mention it went very violent more than anything I've ever written over three hundred thousand page views and people just want to know more so this led me to covering the entrepreneurs for
00:05:23a variety of different publications and agent on the bus either could make a great guy and I thought wow you know that it would be a lot of fun to do that would help the million dollar it one person he one person business is actually the great majority
00:05:38of businesses in the United States cracked there are about twenty eight million small businesses in the US and a twenty five or twenty six million that are not employer business and that of your non employer business is most of them are one person yes they they are on
00:05:58their vast majority very little coverage I know I'm guilty of it myself all the years that I wasn't entrepreneurship greater mostly I would be writing that the scalable entrepreneurs the ones that go after helicon pally and make it big in restructure capital but these one businesses have great
00:06:17stories and they're very happy a lot of them lately wonderful lifestyle I realized there was a story to be told they're looking at people that are doing really well with this because as you as you and I have talked about Peter there's also a hard that you're reading
00:06:32a one person business that they average revenue from the business is about forty seven thousand dollars lower than the US median income I think the US median fifty nine thousand show how people have to cover their own healthcare they'll have a spouse or partner job provides it not
00:06:52cheat and there are other aspects of being self employed they don't give you act on it though so they feel that like you do a contract for somebody for the next year and that's your only crying and it dries up might be working with a number of hours
00:07:07as your next door neighbor who had it W. to jump the cast what you'll get unemployment that suddenly dries up you have to be a lot smarter about your finances than the average person just to survive and so that was why I got so interested need high revenue
00:07:23because I saw that the absence of any real social seeking access to her plate you have to create your own how do you do it basically with money and it says that the whole group of the population completely ignored by government a little bit is changing now researchers
00:07:41and says if you want to hear this you have to be successful or else live in a difficult world we're blowing out of hiring your car is it captures me that that that's why I dug deep with the why did they actually doing to get beyond where people
00:07:57can read the news let's it's so sounds like when you wrote that article and first got questions people were curious about the category of business what their product was that sort of thing %HESITATION however my understanding is what you've identified is that it has less to do with
00:08:19that type of business then the resources that are available you know now I only have been available for the last number of years can you elaborate on that sure I would say that it helped me in certain categories if you want to get to one million because it's
00:08:38a little easier and those categories for more people based on the data show that there are there some areas where just nobody's getting trillion if you're in one of those you probably won't either unless you the ones the ones that have the most people in there I want
00:08:57most acceptable I ruled out things like successful actor actress because those that not everybody can do those things right either broadly acceptable in commerce capturing informational content creation like maybe you're an accountant and get your weapon are informational product unless I guess professional services and creative businesses are
00:09:24getting firms public speaking business consultancy personal services firms that offer expertise like business coaching being a Christian and I won't they felt the normal way that everyone else does and you probably will not get you one million what's different about these entrepreneurs in a year certain blasted by
00:09:48what one person can do without hiring employees and by the way did not against hiring employees in most cases it's just a matter of fact he tripped makes sense financially to have that responsibility and actually necessary ill %HESITATION one of automation five meters that process people they think
00:10:11about you know what's the most efficient way to get and how awful it is tedious have Jill sort of machine it's very eight higher and higher answers there's there's good delegate or in the last three managers have yet self employed people have trouble delegating till I bought it
00:10:30by the way in which your job but they get over it and they use class or work in three manager people per hour there so many of them here and and they'll think you're outsourcing which is a little bit different than using tree ranchers that would be using
00:10:46a back office service like also meant high Amazon year warehouse take work or I'm sorry eyeing his perception promo with the company that helps wacky drinking four million dollars a year he is the one guy working out of the garage active millennial as you very involved with it
00:11:05and then work he did look at you that because he uses the back off the service course rag Fellers called I promote you and it does things like invoicing almost here things I just feel that take away your energy and took me from doing the things that was
00:11:20really basically you to build the business like going and meeting your enterprise client for lunch and finding out what's on their mind how you can be helpful to them those types of things that were really a needle in in these talks are very smart about understanding it sounds
00:11:36as though this is all happening with an ecosystem of US small businesses so the the people you're describing that are achieving the source of revenue targets are utilizing the services it sounds of other similar people that are self employed absolutely and when I talk to her about one
00:11:56person business is I think the initial impression people have these are people that are a solution or they're not part of society or they don't work with other people it's quite the contrary they are actually very social people in a lot of cases you know where their heart
00:12:12is the entrepreneurial ecosystem there outgoing media things like that they work with coaches and what they know they can eventually they're around people that are ahead of them with their business so they can learn and they are very much connected to other freelancers because when you think about
00:12:31it you are an accountant and you need to put up a website does it really make sense for you to learn how to put up a website you might do okay with it maybe you're a little bit artistic or whatever but you can probably make more money in
00:12:45the crime that you have available by sticking with what you're really good at and then having to deal in the works now the first year or two that you're in business you may not have that option if you're a one person didn't I know I didn't really have
00:12:58the option for a couple of years I started my goodness could be a sure thing every single thing because I didn't really have the work load or a regular bookkeeper for instance I did have an account in every single year patch right now I have a book keeper
00:13:12who works for me every month and which does projects for me after political leaders may have to look at your cash flow every year and say you know what is the one thing that I captures this year now that my business grew a little that will free me
00:13:27to focus on the higher paying things that I do are the things that will really we can compatibility and that then I think I think that will allow you to really scale your revenue even if you don't ever higher in protein so really these are these are services
00:13:42that are readily available now if we went back of a number of years say to two thousand or before this sounds like this would have been much more difficult and these resources would not been available definitely it's really changed a lot for the one person in the last
00:14:02ten or fifteen years when you think about it think of how many things you can do it mark phone I I did it again where a did a panel discussion at the Brooklyn public library with a bunch of entrepreneurs and I had a boyfriend of one of the
00:14:16entrepreneurs with live stream eventually face case because they're people that follow the book entering from parts of the world you can't but they want to see it I used to sell books using where I'm communicating with clients in between things you have a question on an article that
00:14:38said if they think back and forth eight such a powerful tool and it's a lot more you can do with it than adding that my milage tracker ever lands with tracking my mileage there there's so much and when you think about the cost of certain things it comes
00:14:54out that much too because you could hear the things that I remember when I first started my business I had a on consulting client and he needed to put up a website for his business it was about a ten person business and I I have to work at
00:15:10hi Hank and I had done a web redesign price down the stage basically it's fifty thousand dollars bid for seventy five thousand dollars and and cost like eleven years ago now it's laughable I mean I have ordered in middle school to help your credibility basically Freddie on legally
00:15:30or somewhere like that are you know my my nine where speech cost me about two hundred fifty dollars is not the best website in the world but it does what it needs to do the cost of technology to allow you to make your profile around the world has
00:15:47come down so much that everybody can be how little meaning multinational and and reach audiences that were just close your before and I'm crying around the world without I don't travel around the world it right now I have four kids I will within the US mostly but I
00:16:05certainly Sir people across borders and I think a lot of people like me that basically our home based businesses and allow her this incredible global reach which is amazing and in terms of getting talent ID that has a unique talent that somewhere else on the planet and with
00:16:25your business I very our first day and the scene where I wrote about an entrepreneur who is in one of our hitting it at your work or your early and he had to resign China and he was hiring local parents that what he found was for certain jobs
00:16:46he needed her how is that without available locally so he started hiring at a much higher rate than he would have to pay people in Guatemala in Canada Switzerland other parts of the world and have been able to go after bigger higher paying project can actually calculated the
00:17:06profit margin for me on his job he found it when you brought in highly specialized interests to do the whole thing over and over again that is profit margins are about fifty percent higher than using people that he had trained that were local which would counter actually is
00:17:24because their salary within their salary to pay would be much lower right it is the kind of training after birth no this one thing really well that's what you can do now thanks to the rat let's revisit something that you brought up at the beginning of our conversation
00:17:44which is %HESITATION million dollars is a a large number %HESITATION sounds like a lot of money that you're pointing out that a person who is %HESITATION has our own businesses the on is their own only employee has many expenses so fairness to the audience you when I discuss
00:18:03a little bit the other day so that million dollars we have to look at that as a gross figure and it sounded like a million or some large number like that was a goal to be reached because there's a lot of bites taken out of that before there's
00:18:18any money in the %HESITATION entrepreneurs pocket Winchell apparate on that really great quake Peter yes it will when someone has a million dollar when Christian business generally what I find the whole range of two hundred thousand to four hundred thousand when all is said and done helped out
00:18:39a lot depends on how much it costs to run the business so if you're doing business that requires inventory like seventy hours a lot of advertising you might not have big profits and that would bring your taxes learn the business in a quite profitable which then brings your
00:18:54that though it was one of the big surprises for people from first year that they break million is what they actually pay in taxes so they need to have a good accountant to make sure that there looking at all the expenses that they actually have their little lax
00:19:10about keeping track of things and then also when they have a tax bill they say a record that what expanding on it it out but that's a point for people to really and that's why the number one million because when you think about the cost of living and
00:19:26yet you and I both live in New York City metro area people that live in San Francisco the parking area there live country that are very expensive live and two hundred thousand dollars take home pay might sound like a lot if you with a lower cost eight that
00:19:42it barely making it in New York City it is hard to raise a family on that amount and I remember speaking with and relocation special he said it was like two hundred twenty five thousand dollars in New York City with eclipse talon in Manhattan New York with equal
00:19:58to seventy five thousand in Manhattan Kansas you know so it's it's it's it's more of a modest lifestyle so if you aim high revenue like what you take home will get you to where you would be if you made a corporate salary as a senior level professionals who
00:20:17can point to keep track of the people I trust that you know that eighty percent of you know this person pay quarterly taxes they pay once a year rate so probably most people in the center high catcher in that eight percent unless they really disappointed that it would
00:20:35happen is people always said they spent the money over the course of the year and they can come back and bite them that comes under attack because you have to really be aware of as of your finance thing else I noticed that the people in the book that
00:20:52although they ran one person businesses lady not beginning but at a certain point they got very smart about the money side of things and if they actually were not good at that they brought in hell because the bottom line is that it is a nonprofit I mean even
00:21:07in non profit even like a business Hey right like you have to know how moving the levers of the business fact your process because if you don't have a profit after awhile then even the revenues are high what difference does it make great you're not taking anything out
00:21:24of it unless you sell it for a certain amount of money that's a very good point understand what you really likely to take home so where you are located is a big factor in other words if you were doing a million dollar business and you lived in many
00:21:42parts of the country that are with the lower cost of living you'd be doing much better for yourself obviously there's really no impediment to doing this in a low cost carrier versus a high cost area is our because a lot of these businesses are location independent a one
00:22:01point very well taking your account would be that if you are in a lower cost area you say you're an accountant rate the hourly rate training in New York City and have all your argument can be different and hadn't planned so if you're thinking about revenue as your
00:22:20goal then it might be harder to get to that level of revenue in a lower class in a professional service our products generally costs the same you know if you go to a target in one part of the country I like Chris for your baby or something like
00:22:37that they're not going to be very different in Christ morale didn't tell what you're selling that's that's something to take into account I don't I don't really recommend them if you want to live somewhere but I would say is the place you want to live it and then
00:22:51we'll take a business that works well for you I wouldn't I wouldn't any excesses if you really want to Michael you take out of the bed you could merge them with it ultra low income people don't make their decisions based on the on the business usually like their
00:23:07kids are in school or a like living in a certain part of the country and the like hiking in the so if you could do a better think in reality probably one small contingent quickly general manager I think that that the other folks in another location independent they
00:23:27basically stay in one location yeah I was actually thinking that the other way around is that if you're already living in a place for the lower cost of living that might be that would be an advantage running a commerce store it could be owl issue during manufacturing because
00:23:45that would be awesome consumer products there there are a growing number of people that are doing it on the east coast hackers outsourced packaging companies and now I'm like I had one woman I wrote about you he calls that she wasn't making errors and she will be bars
00:24:05and filled with supplements and herbs for new moms that when you're seeing your babies and my kids so he should and that means culture people are right after she got there in their in Walmart it was okay so Walmart so maybe not but my kids but I one
00:24:24person after imam she within the following year groups although she has been any totally volunteer will have any business experience wait the car's the women in this group like them we keep on buying and she realized she should make sellable products and she got a co Packer and
00:24:45say look at packaging appropriately to sell them in your you can't just cook something up in your kitchen and then sell it to Walmart for health reasons and things like that so down she went shark tank it's going great with that she broke a million on her own
00:24:59and it's very very possible there's a lake makers role and how we combat that will connect you with the resources needed only half that of course buyer beware you got it check everybody out that a lot of people are doing actually Marian you could move somewhere very inexpensive
00:25:19home and do really well with it what do you tell people when they ask you about making a change into being a self employed having their own business right we believe will shine because right anything you might have a certain vision of what it will be like and
00:25:38then there's the reality happened a lot with things like restaurants people love cooking actually the things and the like running a restaurant is really hard work and you're in a hot kitchen and all kinds of business issues that come up hill the professional services business it could be
00:25:55the exact same thing you do for a company you don't really know what we like until you try it I would say following the example of the entrepreneurs in the book started counting on diet and calculated risk taker there is some risk with starting a business you can
00:26:12put up some of your own money you know people like last one out there who can help planners on Amazon their cultural show with them planner he started his business work while working for bank of America I'm shy he came up to be cleaner French will not want
00:26:30your to do list but how do you move forward with your life biggest goal and hit hard not to see what people responded to that took some of his own money United against nature capitalistic come in when you're at that age of business bringing in I think he
00:26:45said it was the first year with about twelve thousand dollars a year enter in business it may never interest events are Catholic you've got it be willing to take risks with your own money it doesn't have to be a huge amount if people actually want to buy what
00:27:01you're selling because if you know one final it's not a business and you need to find that Disney you're not nor in nineteen you have the wrong product I'm now knows what happened with banning Camille aren't Burke who rent willow an average which is the internet on Amazon
00:27:18they sell records how weird and both very athletic shoes working corporate social immobility within the military arm jumping out of airplanes yesterday very athletic guy and and if they wanted to find something they can pull you together so they try telling running compression bands that you see around
00:27:39the horn jogging liquor alone in it and no one was really crying or saying that they looked at the money they were investing and almost like a college course where even if they lost all the money they would learn something valuable they were committed to becoming entrepreneur she
00:27:56had concluded she did not want to be a corporate worker and she had a side business doing wedding photography but that wasn't what they wanted to do together because he was hurt however for it just wasn't what they wanted to do and they ran a willing average invested
00:28:13in a small lot and I think it's five to seven product and the soul which one sold and then it's the ones that didn't sell well he lowered the crazy his hand fell and then we invested that money in the business meanwhile they double down on the ones
00:28:30that we doing Ralph simply they use it as a learning experience and death they couldn't lost their five thousand dollars but it made them better entrepreneurs and now they have several different business is growing this business a lot and they have another one when they sell out lasts
00:28:48for people that you stand up bass your present like class eight partnered with somebody who had a blood clot from standing at his desk and it involved in cold brew coffee now and they also advised that their entrepreneurship like it going into it mentally for the long haul
00:29:07and being willing to give themselves a little runaway government being able to pull it off if you just say I hate my body jerk or not a corporate person including today and I'm starting a business that's not a good way to start a business because you're going to
00:29:21run out of money most likely in the average American says would have trouble coming up with four hundred dollars for an emergency rate in the well above average your family probably was hanging on your show or you are if you don't have a family and you support and
00:29:38so I put you in a situation where your runway is very short so I would say articulated risk taker you have you do have and some of your own money and I sometimes come across people at events and running in a eight gallon any anything in this area
00:29:54and it's hard to start a business is not willing to spend anything on it but it doesn't mean I'm not a lot of the people in the book and less than five thousand dollars and letters from listeners housing vouchers in the beginning right okay because here at all
00:30:10and actually do it every day is part of the truth committing your money for your time consistent like exercise you know though running ten miles once a year what good does it do you eat you better off warning two miles every day for a year I'm building up
00:30:28a base there I guess in fairness we should point out that out of the tens of millions of one person businesses in the country it's a few tens of thousands or maybe thirty five thirty six thousand that are broken down a million dollars so it's still a %HESITATION
00:30:44formidable goal but is %HESITATION is possible with the tools that are available why don't you I'd tell our audience where can they find your book because I think you're so a lot of interest in it tell you how to reach that you want to say something then research
00:31:03might find encouraging there a lot of businesses that are getting closer this comic will eat so when I wrote the book there were over two hundred fifty eight thousand for spring in five hundred eighty nine nine nine nine nine nine rate and and there were five hundred eighty
00:31:19four thousand and change in the two hundred fifty thousand five hundred and one point eight million six years no one hundred thousand two hundred forty nine thousand is a lot of people that are picking up valuable knowledge that they can fully over time alone didn't get to one
00:31:37million in one year ten year overnight success story so lest he get courage that you can't do it I would be given a chance because if you're already in progress and maybe I figure I heard people say you know I I look at the fifty thousand selling something
00:31:55that people are buying and you can learn yeah you always have the potential that %HESITATION it it doubles that it gets that it gets bigger so really your real goal is first to make a living off of it it is your job and provide for you and your
00:32:10family and then the sky's the limit more or less %HESITATION into how far can grow absolutely anyone would like to chat with me about it I welcome people to write to me I'm only in it under my first and last name which you can get on the show
00:32:26now selling for now well on Twitter think being poked out or they could go to the website for the book it's all written out words not numbers the million dollar one person business dot com and you to contact me back there and they do respond to messages please
00:32:43feel right to me let me know your have to be a million dollar one person business I'd like to know what people are concerned about it entrepreneurs because that helps me to be a better journalist and we do have a %HESITATION an excerpt of the book on entrepreneur
00:32:56dot com so that's a very easy in available place for people to find it right Elaine I want to thank you very much for your time and all the knowledge that you for a share today I really enjoyed the conversation that's our office so we hope you enjoyed
00:33:14it how success happens comes out every week to catch each episode please subscribe to us on iTunes stitcher Google play or wherever you listen to your favorite podcasts like share and leave us reviews so we can always be improving good entrepreneur dot com for more episodes of the
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