Some people say making six figures is easy, and others find it near impossible. This post is my attempt to help you think clearly about how to achieve this benchmark. I did not use A.I. to write this or assist me with these thoughts. It’s funny that I even have to preface this post with that claim, but we live in interesting times and I want to make sure that you know the following post represents my thoughts and the thoughts of those I’ve had the honor of learning from.
The Three Paths
I come in contact with so many people that set $100,000 per year as their first major financial benchmark, but very few people have a clear plan on how to get there. Much less make millions.
My aim is to give you a simple blueprint. There are only three real paths that you can take from zero to 100k per year.
- The employee path
- The business owner path
- The investor path
All of which have their own unique challenges, timelines, and benefits.
The Employee Path
The employee path is the easiest for most people. The problem with this path is that your income potential is usually capped during the negotiation for your salary. Which means that if you are currently far from the six figures mark, then good luck convincing your boss to hand over more money. You typically can’t get a big raise unless you switch companies, roles, locations or sacrifice more time.
You will basically get what you can negotiate for and even that is capped by your industry, competition or the capabilities of the business you work for. A great negotiator probably can’t convince a fast food restaurant to pay 100k to make burgers.
Unfortunately, since this is your one income, you are in no position to negotiate. You are typically powerless in a negotiation and your boss knows it. Unless you either save enough money to survive while you look for another job or you get another job offer while you are currently working for your employer, you shouldn’t negotiate a big salary increase. In fact, the average salary increase is less than 5% see: https://www.investopedia.com/articles/personal-finance/090415/salary-secrets-what-considered-big-raise.asp
Basically, you have a noose around your neck the entire time you are negotiating for a salary increase. This is even worse when you have a family with responsibilities, debt or large monthly expenses.
Some of my business owner friends love employees with large expenses because they have “golden handcuffs”. When an employee has golden handcuffs, they get paid well enough to afford a medium amount of luxury, but get locked into the job. They can’t risk losing their job because another job probably won’t pay them enough and they may lose their level. Some even make over 100k per year, but they are still trapped working sometimes more than 60 hours per week on salary.
If you do achieve a big salary increase that is in the top 5% of the company for your role, then you also increase the risk of being let go if the business faces financial difficulties. Some roles work themselves out of a role.
To get to 100k per year on the employee path, you can
- Be in a high income role or field like medicine, law, management, etc.
- Be at the top 15-20% of a company
- Be in sales and work off commission
- Get lucky (Sometimes this happens, where your job role and salary is an oversight. It usually doesn’t last, but it happens more often in big companies.)
A lot of sales positions can have commissions exceeding 100k per year. Sales also takes much less time to learn than being a specialized engineer or surgeon. When I worked for someone, I specialized with a high income skill, but I was capped. If I had gone into sales, I might not have had the same cap on my income. If I ever had to work for someone again, I would likely try to negotiate an equity percentage based on performance or work as an affiliate partner close to the business, but without the same restrictions as an employee.
Overall, this is a path for people who are not entrepreneurs. I couldn’t continue working for someone else, but I recognize that everyone is different. For some people this is the best path.
The Investor Path
The investor path can be great, but most people are disillusioned when it comes to investing. Passive investments require capital and most people don’t have enough capital to actually invest. You can possibly leverage your high credit score to borrow money to invest or you might win a grant to invest (usually with great restrictions).
To make 100k per year, you would need $500,000 invested with a 20% return on investment.
Probably the easiest path would be to borrow the money to invest in a safer investment category like real estate. Many people make a lot of money flipping homes. You still need some cash-flow and possibly a down payment. If nothing else, you need the money to buy a “no money down” real estate course and the money to live on, while you learn.
The bottom line is that If you don’t have money, then you can’t invest. Saving a little money every month from your paycheck is a losing game because either something bad happens and you need to dip into those savings or you eventually have a stockpile of money when you’re old and realize that you are unable to buy your time back. Having a high income when you are young and can enjoy it is the goal.
There is another problem for most wannabe investors….
If you want higher return investments, then you need risky investments that can have oversized returns. Like crypto, unproven business opportunities or an MLM with a trendy product and traction. I’m not saying that you can’t make 100k per year in this category, but I’m saying that it is not probable when starting from 0. Very few people start day trading and year-1 make 100k profit from scratch. It’s 100% possible, but mentorship usually costs over 10k and this doesn’t pay anything while you are learning. These investments are better to make when you are in a power position. When you have extra time and cash or if you are 16 and bored.
When making investments what a lot of people forget is the probability of the investment actually paying off.
Expected Return = Σ (Returni x Probabilityi)
(where “i” indicates each known return and its respective probability in the series.)
It’s much more complicated than that because you have to factor in the time value of money in the Rate of Return, adjusted for inflation and of course the opportunity cost if the investment doesn’t pay off and cost you a bunch of time. See: https://www.investopedia.com/terms/r/rateofreturn.asp
If I was going to take the investment approach and had no money to invest, I would borrow the starter money to buy and sell things. You can do this on a large scale or on something small. For example, you can buy a couch for $100 and sell it for $200, then move up to equipment, cars, houses, etc. If you get good at flipping your money, you can actively make $100,000 per year. You might even be able to do this without having any money. Real estate wholesalers were able to do this for many years before many of the laws changed.
Buying and selling things is a lot of work and it is basically like working as a sales representative without a solid product and without support. The only difference is that you can eventually sell bigger ticket items which give you better returns. Big ticket items will give you the best opportunity to make 100k/year
The Business Owner Path
Since we are talking about making at least $100,000 in the shortest amount of time, this path stands out in my mind. If you know what you are doing, you can generate 100k per year very fast on this path and then move to 100k per month and 100k per day. The growth potential is relatively unlimited.
For this path there are two types:
- Businesses that require a lot of capital
- Businesses that do not require a lot of capital
You obviously won’t be able to do a business that requires a lot of capital unless you borrow money or partner with someone who has money. You could possibly buy a pre-existing business using a “no money down” strategy it’s not particularly easy for a beginner. So let’s focus on businesses that don’t require a lot of capital and you can start from scratch. Consulting, sales, marketing, and most service based businesses only require time and a few tools. Most of the tools you can either borrow, rent, or purchase after selling the service. Therefore, service based businesses provide a great opportunity.
Why A Service Based Business?
To make a lot of money in a service based business, you have to solve a big problem or solve a little problem for a lot of people. Either way, solving problems is key, which means that you have to be good enough to solve problems.
One of the best investments you can make is in yourself. This statement sounds good and you’ve probably seen it in a quote or on some motivational Instagram page somewhere, but I personally don’t see many people making this investment. The majority of people will never invest in themselves. People always think that they need to invest in material things to get wealthy, but becoming a high income earner because you have a high income skill is fundamentally the best investment you can make.
A High Income Skill = A Skill That Solves Expensive Problems or Generates Valuable Results
Investing in yourself means paying for education, whether with time, money, testing, mentors, etc. If you can obtain a high income skill, you can always charge a high price for your services. You can then start a business without the need for inventory, equipment, etc. I started my business selling websites, marketing services, apps, and advertising. All I really needed for this was a computer with internet. If I didn’t have that, I could get a computer and internet at the local library.
What I needed to obtain this skill was time management, discipline, and the decision to learn everything I could about this industry.
Most people think:
- I’m not creative enough (or cool, capable, smart or whatever attribute you feel you don’t have)
- I don’t have enough time to do it
- What if I’m not smart enough
- What if I invest a little time and don’t get anything in return…that would simply wreck me inside.
- I don’t know anyone
- I don’t have a computer (or some other thing that you think is a requirement)
If you think like this, then unfortunately you probably won’t do anything. Might as well settle for being poor and stop complaining about making more, having more, or doing more.
I imagine it is frustrating to hear because when I tell people this, they cringe, but what do you want? Lies? Fairy Tales? A Lottery?
Not making money doesn’t represent your value as a person, but it represents your economic value. Some of my favorite people make very little money and I imagine they are very wealthy in other areas of their lives, but in this article we are talking about economic value.
There are no shortcuts.
Most things don’t change, unless you change.
Some people say it’s scientific, karma, reaping what is sown, some people say it’s cause and effect, a spiritual principle. Regardless of what you call it, it is true. You must sow a seed to reap a harvest.
I mention these mindset principles because I think making 100k is practically easier than the mental work to get there. There are just a lot of different excuses and ways that people justify their current state. Some people even verbally say they don’t care about money, but they are reading this article (which is entirely about making more money)
The best mindset to have if you want to make more money is represented in your questions below…
Be very honest with each answer. Think about the next few questions.
- Do you want to make more money?
- If you don’t – stop wasting your time reading this.
- Why do you want to make more money?
- Write it down. Write every reason.
- How much money do you want to make? (notice I didn’t say need)
- How much time can you sacrifice to make more money?
- How much time per day
- How many weeks, months, years (For this don’t simply say “as much as it takes” you need to define when you should achieve your goal)
- How much resources (money, etc.) can you give to the process?
- Is that enough or can you do more?
- If it is not enough, then you should choose a different path or learn something new to open up new possibilities for you.
- If you don’t know if it is enough, then you can try, but if you find out that it requires more, then make the decision for what you will do in that situation, now.
- When do you want to start making more money?
- Your answer should be now because why would you wait.
- If you have another start date, put that on the calendar.
- How will I measure my daily success or failure?
- What is my next step?
It’s hard to answer these questions honestly….and if you go through this simple exercise the only next step for you is to start. It will be hard, but it’s worth it.
Plus, don’t forget, it is hard to be poor and extremely difficult to struggle financially. So why not take a moment and think about that.
Life is a struggle.
Is it easy living with hyperinflation? Did COVID-19 not show us all that the world can change quickly. Having a high income skill, multiple streams of income, and diversified cash flowing investments is a must.
We know a proverbial “Winter” is coming. It’s not easy to make less than $100,000 per year and live in America. Especially if you want to have kids, take vacations, spend time helping people, give to charity, and be cultured.
So don’t settle.
If you make less than 100k per year now, then commit to the hard and difficult process of change.
Maybe it isn’t as “hard” as you think. I see too many people imagine difficulty and convince themselves that they did the work, when in reality they didn’t. If someone followed you around with a video camera and recorded everything you did, would you be impressed with your effort specifically towards learning a new skill?
Have you given 48 hours of uninterrupted time to focus on 1 new skill that is capable of making you money?
The fact is, it is not hard to learn how to build websites, do marketing, or provide a high income business service. You can even scoop dog poop as a service and make $100,000 per year, if you put in the work. There are franchises that sell for 100k in this very niche. The biggest excuse I hear is, “I don’t know where to start”, so I’ll give you the start.
The Basics of What You Need:
- A service
- An offer
- A target market
- A mechanism to reach the market
- An agreement
- A way to collect money
- A protocol to fulfill on your offer’s promise
Each of these items is a variable that can determine your success or failure. In this post, I’ll help you get everything you need, but there is something you must know first. You can screw this up if you do not understand the order in which you must acquire each variable.
For example, if you choose an offer before you understand your target market, then it is likely you will choose wrong and waste a lot of time and money.
It is equally important to realize that people spend too much time on each, especially the “offer”. It is best to move fast, test everything and solve each variable with a strategy.
The Service, Offer, and Target Market
These variables combined give us either a winning formula or a waste of time. Since you are new and may only have a couple services that you can offer. It might be best to take this approach of finding a target market that matches with your service. You have access to the internet and a mobile phone, so the limits of location are not as important as they were in years past. Which means you can reach a market, even if they are overseas.
Next, you need an offer that resonates with the target market. This will likely come to you with testing. You won’t really know if an offer works until you test it.
Therefore, testing quick is essential. Especially before you dive deep into the rabbit hole of product development or creating systems around your service.
If your offer doesn’t work, try a different approach. Changing offers is the easiest to change. Secondly, changing your target market is something you can do. It is a lot harder to change a target market, but you can definitely do it. Lastly, you can pick a new service, which will require that you learn something new.
I personally would work to identify an offer that resonates with a target market before developing the service. It’s the easiest way to know that your service and/or product will have “Product Market Fit”
Another Approach
If you don’t want to test something new, then you can take a shortcut to find a good service to offer. The easiest method is to take an inventory of the services you can offer and who might need your services. These are the problems you solve and who you can solve them for. The question is will they “care” about your solution enough to pay you for it.
Now if there are competing products in the market that are being sold and competitors that are doing well. If you know what they offer, how they offer it and who they are targeting, then it is likely you can become a competitor and take some of the market share.
Calculating The TAM, SAM, SOM
- TAM = Total Addressable Market
- TAM represents the total demand for your service.
- SAM = Serviceable Available Market
- Based on your current business model and offer.
- SOM = Service Obtainable Market
- Limited by your personal business limits and how much you can handle.
If there are enough people within your market that are not being served by a competitor, then you will have a good opportunity to succeed. You can find this out with research.
You could survey the market, which is a great idea when getting started. You can also use business intelligence tools and trend reports to see what markets are growing and what products are working well within a market. You could calculate the profit margin. Cost of outreach or advertising. See if there is space in the market for your service.
- Can you save a company money with your service?
- Can you give a better service?
Alternatively, you might have the same target market, same offer, but a completely different service, which provides the same or better results.
You can identify a big underserved market that is in need of your solution based on common assumptions and logic.
For example,
Assumption #1 – Local businesses need new customers and already have an established price they are willing to pay for each customer based on their current marketing channels.
Assumption #2 – Local businesses are willing to pay for new customers. Especially at a discounted rate (they would love to save some money)
Assumption #3 – TikTok Ads can deliver new customers and it is a service I am capable of offering within a reasonable time.
Assumption #4 – I can make money delivering TikTok Ads as a service because local businesses will pay me at least 50% more than what it cost me to deliver the service.
Assumption #5 – Local businesses will use me to get them this result instead of competitors.
There are probably a lot of additional assumptions we can make and ideas we can test, but I think these simple assumptions can be easily tested without even spending any money.
You would simply survey a local business owner (your target niche market) and ask them if this is a solution that they would value and pay for. This process can be done in a “Discovery Call”, which is a stage within a basic sales pipeline.
The local business that is your target customer will be making the same calculation we talked about previously.
Expected Return = Σ (Returni x Probabilityi)
(where “i” indicates each known return and its respective probability in the series.)
They will be wondering if the expected return will be worth it and they will likely have the most difficulty making this decision because they can’t figure out the probability. Which is why “Trust” and “Certainty” is a variable that we must consider optimizing for. Since we don’t have a case study, you will have to overcompensate with logic, sales skill and domain knowledge.
If the business owner believes that you know what you are talking about and you have confidence in your ability, then it is likely they will take the risk and test your hypothesis. Especially since they don’t have much to lose. When they agree to test and agree to the payment of a % of performance, then you have the foundation of a valuable hypothesis worth your time and effort to test. Otherwise, you should find a better service to offer (higher value problem to solve).
Since TikTok is a popular network and many businesses have yet to jump into TikTok Advertising, it is very likely that you will have a positive response to your questions. Sometimes the trend is so good and they are pre-sold by someone else.
For example, “Gary V” suggests a business should do TikTok Ads. X amount of people in your city listen to Gary V, but no one in your city really specializes in TikTok Ads.
This scenario would make it much easier for you to sell and be successful with your service. Big trends like A.I. new social networks, new advertising methods (like OTT ads), etc. have great opportunities for success.
Becoming An Expert
Once you find the target market and service to offer, then you need to get good at delivering your service.
You would need to give yourself at least 48 hours of focus to learn how to do this service. If you have some money, you could buy courses and training. If not, you can go directly to TikTok and read all of their “How To” videos and tutorials.
Read blog posts, watch YouTube videos and write down a complete plan for launching TikTok Ads.
Make sure that you feel like an expert and that you know everything there is to know about TikTok Ads.
The only thing you lack is real experience.
When you feel confident, then you need to work very hard to quickly get your first client.
Making Your First $1,000
If you can sell your service to local businesses when testing whether or not your service is valuable, that is best. However, if you did not survey your target market when solving for product market fit, then you can approach the market with confidence in your offer.
You can tell a local business owner that you are a performance marketer and would like to run TikTok Ads to get new customers. You will manage all of the Ads initially for free, but would like to get paid a percentage of performance (if successful) + you would like a case study at the end of the Ad campaign. You are doing this to prove that TikTok ads can be a great source of new customers and would like to establish a long term working relationship with the business.
This is an easy offer and one that many businesses would love because all they will have to pay for is the cost to run the Ads.
If your work doesn’t result in new customers for the local business, you won’t get paid. It’s a low risk decision with a high probability that it will work. Especially if you can show that you are competent when it comes to TikTok ads and that you know what you are doing. The only way you will come across competent is if you’ve actually done the work of learning. There should be no bluffing to this.
If you get new customers for the business, then you will get a % of the results, which could be a big win for you. Even if it is a small win, it is a positive case study that can be used to justify a higher price in the future.
If you don’t feel confident in this offer you can tell them that you will run their ads in exchange for a good testimonial and case study if it is successful. This is an even easier offer. You are basically giving them free service for the case study and boost in confidence to sell the next customer.
I know from experience that most people won’t make this type of offer. If you are thinking like an employee and you need a return on every minute of your effort, then this will feel depressing for you. What you need to understand if you feel bad is that you are investing in your future business and remember that you already waste a lot of your time….giving a customer free service for a testimonial is a much better transaction than giving your life for a consistently small paycheck.
Use the success from your first offer to build a better sales pitch. Use the new testimonial and case study to sell a higher ticket service. Now you have results to point to and confidence in an offer that you can provide. Now you know the value that you can bring to the table and how much something is worth. A business should now pay you a little better. Businesses spend a lot of money to get a new customer and you can easily grow a business from this basic service. Every new case study and testimonial gives you a better opportunity to sell.
Once you have generated a little cash, you can set up your business. I would start setting this up as quickly as I can, but some people wait until they have a few clients. It’s up to you. Just know everything you do before you set up your business is done as a sole proprietorship and there are additional risks to consider with this structure.
Setting Up A New Business
There are so many little things to think about when setting up a new business, but only a few important things to think about first. Sales is the most important and everything you do should be to help you increase sales. The following list will help you get up and running quick.
- Choose A Business name (make sure that you pick a unique name that is not trademarked)
- You can do a search here -> https://www.uspto.gov/trademarks/search
- Have a logo designed
- You could find a cheap designer that is good enough on Fiverr for $60-$100 or use a design competition service like 99designs. You might even reach out to some friends to see if they can help you out. I believe a good logo is important and worth the money, but when starting out, it won’t matter. You can also change it when you make more money.
- Buy A Good Domain Name (you can buy from GoDaddy under $20)
- Use something simple
- .com is better than other extensions. You basically want to make sure it won’t get confused with another website. Some people will visit the wrong website if it is not easy.
- File for an LLC (https://wyomingllcattorney.com $99 + filing fee)
- Choose a State with a favorable tax situation. Talking to an accountant and attorney is worth its weight in gold.
- Get an EIN number (https://wyomingllcattorney.com $100)
- Check to make sure there aren’t any other compliance requirements in your State.
- Open A Business Bank Account (you can use an online bank or a local bank)
- You obviously need a way to get paid.
- Sign up for a Square or Stripe Account to take payments. (free)
- I have used both in the past and both are good. Don’t spend too much time trying to find the best option out there. The small percentage difference in fees will only matter when you start making good money and you can always change.
- A simple service contract
- You can get sample contracts online. Just google it or have an attorney write one for you.
- Build a simple website
- Use Clickfunnels or Leadpages to get something quick and for under $200
- Get a business phone number
- You could use an app on your phone to add an extra phone number.
- I have used a ton of different services over the years – Sideline, Grasshopper, Twilio, MagicJack, etc.
- Get an email address for business
- Setup a Gmail email for free or use their Gsuite for a small fee.
All of this should take 1 week maximum to complete.
Now Let’s Talk Sales
If you haven’t made your first $1,000 in sales, follow the protocol for that first. Next, we will build a system for consistent sales. During this process, you will want perfection. Some people will fear the next level and try to use perfection as an excuse not to launch. However, you are on a strict timeline. Without sales, your income will suffer.
I once tried to live on all the money I was going to make. I was supposed to be making 30-50k per month for 6 months, but delay after delay kept my sales and business growth at a standstill. Fortunately, my business partners and I were able to rectify this situation before we ran out of cash, but wishful thinking is not productive. Progress comes from making sales.
If you have access to a CRM (Contact Management System), that is very helpful. However, if you don’t then you can use a Google Spreadsheet or Excel document. The goal is to build a sales pipeline or sales funnel. Basically this is a process where you take a person from stage-to-stage through the sales process. You ultimately define the stages and milestones, but there is a basic sales pipeline that many people use and I suggest you use as well.
Keep in mind that your customer journey might look a little different, for example you might have a Demo stage if you sell software or maybe a compliance stage if you sell regulated products, etc.
If you are selling TikTok Ads like in our example, then this is a good example pipeline. Each column in your spreadsheet will have these titles (stages)
- Prospects (these are names, numbers, and businesses that you think could use your service)
- Leads (these are people that have given you a positive indication they might be interested, referrals, etc.)
- Appointment Scheduled (this stage is for when they book a 10-15 minute call to see if they need and qualify for your service)
- Discovery Call / Meeting (this stage is for when people actually show up to the meeting and you will hold a discovery call with them, if they are a good fit, you would schedule a presentation call)
- Presentation Meeting (The pitch. This typically takes 20-45 minutes and is best in person, but Zoom works as well. In this meeting you deliver your sales pitch and handle objections to close the sale)
- Agreement signing (You can use DocuSign or Dropbox sign to have people sign electronically.This is great if your presentation call is via Zoom)
- Invoicing / Payments (I like using Square for this because they have a Square Invoicing app that makes it simple to send invoices on the fly)
- On-boarding (After the lead pays, you need to start the on-boarding process)
These stages make up your sales process and it is something that will help you organize the flow of sales. People will start in the “Prospects” column and then move through each stage in the sales process. If you track this properly, you can measure your conversion rates and at a glance be able to predict your future sales based on past performance. The best way to visually represent this is with a CRM software.
Example pipeline:
A good CRM with marketing automation like OctoFactor.com far outweighs the cost. You can attach notes to each contact record, set values to opportunities and report on performance. It can do 1,000 different things that can be optimized for better sales. It’s easy to get lost in the sea of possibility when working with a CRM. I once worked with a company for 10 months on perfecting a CRM. All of the work was valuable, but didn’t make any sales. It was a waste of time. So be careful! A CRM is a tool, but is should not be something that you spend all of your time perfecting.
The Grunt Work
Once you have a good idea of the sales process, it’s time to start your outreach process.This is not fun for most people. In fact, I think most people give up at this stage. Picking a name for your business and being all creative with logo design is exciting. This work here sucks and is exactly why you need to do it consistently every day.
Basically, you want to just establish rules for yourself and hold yourself accountable.
- Rule #1 I will make at least 20 cold calls per day
- Don’t listen to all the B.S. about cold calls not working…. They work! As long as people will pick up a phone, they will work. In fact, almost every marketing channel works. You simply need to make sure that the channel is profitable.
- No matter what, pick up the phone and call 20 local businesses.
- You can google a prospects website and find contact info or you can look in a directory. Go to the local library and get access to one of the business databases. Whatever it takes, simply call 20 businesses and try to earn their business.
- If you are terrible at cold calling, you will get better after a few hundred calls.
- You are going to fail at this in the beginning. You will probably feel ashamed, sad, depressed, and overall sick to your stomach, but lean into it. Just know that it gets easier and when it becomes easy and you start to get a high rate of return, you will know that you have conquered this skill.
- Rule #2 I will make at least 30 social outreaches per day.
- Which means, Meta (Facebook), LinkedIn messages, Instagram messages, etc.don’t include the follow up messages in your count. Only count new outreaches.
- You may have to split this up so that you won’t get flagged by any specific social network, but being active on these platforms will help you drum up appointments.
- Also remove any unprofessional items from your social media profiles. No local business cares that you worked mowing lawns at 16 (unless of course you mow lawns as a service)
- Rule #3 I will send at least 50 cold emails per day.
- Use a software like Hunter.io to find email addresses and Gmass to send emails with a great deliverability.
- If you can’t do this, fill out website contact forms. If you don’t get a great return for this, then after 2 weeks, make more cold calls. I typically got 20-30% open rate on emails, and over 3% response rate. You may get more or less depending on your industry.
- Rule #4 I will follow up with everyone that has a positive reaction to my outreach.
- This means, likes, comments, answers the phone, etc.
- It also means at least 1 follow up per day until you get either a confirmed “Yes” or “No” to the appointment for a discovery meeting.
The Expected Results
If you follow the sales process rules every day, you should get at least a 50% contact rate, which is 50 conversations. You may not get a 50% on the first contact, but if you call people once per day for 5 days and then once per week for an additional 4 weeks….you should get a higher contact rate.
You can then get 2 appointments per day from this effort. Your numbers might be different depending on industry, time zone, etc, but this is very low numbers. I have experienced up to 70% contact rate on cold contacts. It just depends on a bunch of variables. You want to make sure your phone number doesn’t show up as spam. If it does, then get a new phone number or go with a service that helps you do the verification process so that it isn’t flagged as spam. There is A.I. software that can do this now very well. It might cost you a couple thousands dollars for the A.I. so calling manually might be best at first.
5 appointments per week should result in 2 sales at a 40% conversion rate. If you do this for 4 weeks, you can have 8 new customers per month.
If you don’t get these numbers, you can work on the pitch. You also might consider solving a bigger problem with a bigger pain point. However, you shouldn’t change anything until you have at least called 500 people and even that is a small sample size for testing.
When you are first getting started, it might be hard to charge a good price for your service, but it is required. Basically, you want to charge around 10% of the value that you bring. For example, if your customer sells oil field equipment and makes $5,000 per sale, then you should charge $500 for every new customer. If your work produces 10 new sales per month, then it is probably worth $5,000 per month. Now of course there are a lot of variables and every business is different, but generally speaking you want to be able to accurately track results and performance so that you can accurately get paid a fair price for your services. Bare minimum, you want to at least make $500 per month per customer. Otherwise, you should consider picking a different niche or a different service.
You can find out the value that you bring to a business by asking them. This is why the “discovery call” exists. You are qualifying whether or not they need and can value your service. It’s important to note that you don’t want to get too greedy either. You want to come to a consensus with the business on what is the most they are willing to spend to get X and then work backwards from that. If you can save the company money and give them good value, they will stay with you for a long time. If you charge a super premium, then you will likely lose them after a few months and have to get new customers. I’m not going to say, one way is better than another, but I’ve always leaned towards long term relationships and have kept clients for years and years.
If you make $500 per customer and you add 8 new customers per month, then you should be able to generate $4,000 in monthly recurring revenue in month 1. Use a system to get good results for each of your customers and make sure you get testimonials and case studies. These will help you sell additional service packages and you should be able to increase your conversion rate. Nevertheless if you sell for 3 months, you should have 24 clients paying you $500 per month, which is $12,000 per month or $144,000 per year.
Now imaging if you charged for a service for more than $500. You can either add a new service, increase your prices based on your performance and value or add additional customers based on your ability to perform for each customer. A large number of local startup companies will spend 15-30% of their revenue on marketing expenses because it is the lifeblood of their business. So keep in mind that $2,000 per month or $4,000 per month is more normal than you think.
After you make your first $100,000
Now you are ready to actually grow and scale your business, which we will talk about in a future post.