What Does it Mean to Have a Million-Dollar Business?
What Does it Mean to Have a Million-Dollar Business?
So if you're someone that follows different business channels or leaders and you want to learn about growing your business, you've probably heard people say things like this before. They've probably said, oh, I've built a six-figure business or a seven-figure business or I've built a million-dollar business. What does that even mean? They're trying to use it to get you to listen to them and give authority. But what actually is a million-dollar business and what is a million-dollar music school? Does it actually exist? Are there any in the world? Could you build one? We're going to cover some of those topics. I'm going to talk to you about that information that people spout off to try and impress you. And let's talk about what it really means and whether you should be impressed or not.
The reason I'm making this video is I just see all the time when I scroll through Facebook or Instagram, people promoting different business products and they're saying, I've built a seven-figure business or I own a million-dollar business. I just thought, you know, there's a lot of people trying to justify their authority through that. And sometimes that is a really amazing, incredible thing and worth taking note of. Sometimes it's not. But the most important thing is that when people do that, they're not actually telling you what they mean by a million-dollar business. So I want to give you four different definitions they could mean and to help you become a bit more savvy about how you think about business, what is a million-dollar business, what's a million-dollar music school, does it exist, could you build one. And this is just going to help you be a bit more street smart so you don't get sucked in by vanity metrics.
Definition #1: Total Revenue
Number one, they might mean that they've actually just done a million dollars of revenue since they started their business to today, they've done a million dollars revenue. And you know, that's cool. That's a nice milestone. That was a fun one to celebrate when we passed it. You may have even already passed it and not even checked. So you can go back to your accounting software, you know, find the first date that you started generating, find today, you know, set the parameters there, see how much it says that you've brought in, if you've had it tracked since the beginning. Maybe you've passed a million dollars, you just didn't know about it. That's not the most impressive number, right? Someone could be teaching music for 20 years, just earning, you know, $50,000 a year. And they could say, yeah, I've got a million-dollar business, if that's their definition. Not very exciting or anything to write a blog about.
Definition #2: Revenue Per Year
Number two, they could mean that they have generated a million dollars revenue per year. That's a pretty cool milestone. I think that's like pretty impressive if you generate a million dollars a year. What's more impressive is if you have profit on that, because you can generate a million dollars and spend a million dollars, which is not that impressive. But I remember when we passed a million dollars a year, that was a really exciting milestone. And it did take us a long time, because we're in a low-priced industry, so you're doing music lessons. It's not like you're building a house, where it costs you $300,000, $400,000 to build a house, and you've just got to build a couple each year, and you've done over a million dollars of revenue. And so that is not going to be impressive for their industry. For music lessons, it is. And so that could be what people mean. They've done a million dollars of revenue per year.
Definition #3: Net Profit Per Year
Number three, they could just mean that they actually generate a million dollars profit per year. And so after all the expenses are paid, including their own salary, they've actually generated a million dollars profit. Maybe that's what people mean sometimes, and maybe that's what they mean by a seven figure business or a million dollar business. That I never got to. That would be great if I could earn a million dollars profit a year. Honestly, I never got there. If you ever hear me say I've got a million dollar business, I don't mean that. So again, will the people that you're listening to tell you that? You got to ask. I do have friends that have million dollar businesses, even my own mastermind, Scott. He's got like a base school teaching people base online, Scott's base lessons, and he's got like 28,000 students or something insane. And so the million dollars profit a year, that happened ages ago for him. So it is possible to do it with music, but again, is that what people mean when they say they have a million dollar business?
Definition #4: Business Valuation
Number four, people might mean that they could sell their business for a million dollars. I remember asking my accountant, I said, what do you think when someone says a million dollar business? He says, oh, it's a business that could be sold for a million dollars. Now that's just one accountant of many, but that's, that was the first thing he went to. He didn't think, oh, it's a million dollars revenue total or per year. He said, oh, it means you can sell your business for a million dollars. If you sold it tomorrow, you'd have a million bucks in the bank. Maybe that's what people mean when they say that.
So those are the four different definitions of a million-dollar business. When you hear people say, oh, I've got a million dollar business or I've built a six-figure business or a seven-figure business, ask them what they mean and be aware that they're probably not talking about number three and four, which are the real impressive ones. Number two, I think it's impressive. I pass that, but it's not like I could sell my music school for a million dollars. So watch out for people. Be savvy, be street smart, don't get sucked in by vanity metrics and ultimately focus on building your business.
If you want to learn more about growing your music teaching business, making more money, and impacting more people through music, join the #BAMSQUAD! We have resources, tools, and a program that can help you build a profitable music school. Check out buildamusicschool.com for more information and to join the #BAMSQUAD today!
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