This is the next installment in an ongoing series where I talk about my history in business starting all the way back when I was a child to now in my mid-forties. Feel free to read parts zero, one, two, three, four, five, six, seven, and eight if you haven’t yet to get some context.
We last left off in the late 90s when I was really struggling financially, almost on the brink of bankruptcy, trying to support my new family as a young man. Terrified of going out of business, I worked even harder…
I was working as hard as I could, trying to market as hard as I could, trying to get as many clients as I could and trying to get as much business as I could from the clients I already had; I was working between 60 and 75 hours per week trying desperately to put food on the table for my new family.
It was scary, but after doing this for all of 1998 by early 1999 I started to see more money come in. I started getting higher quality clients for my computer consulting company, meaning larger and more organized companies.
It was a slow progression, but by the summer I was making around $5,000 to $7,000 per month and that was in 1990s dollars. My financial situation was still a mess; I was late paying my bills and taxes on an almost regular basis and my bookkeeping skills were dreadful. I was still stressed. However, I didn’t feel “poor” anymore. I felt like I was really making things happen and felt a little more successful.
I was finally able to afford a small office outside of the home again, just a single office that was a sublease from a guy I had met in my business adventures. Doing business at home with a wife and two small kids was a nightmare. I needed to be more productive, so an office was needed even though the rent expense was scary.
This time I was smart enough to get an office that was only five minutes away located in the same small town as my house, rather than an office in distant downtown Portland with a 50+ minute commute and horrible parking.
Once I had this office, my productivity increased (unsurprisingly). I started focusing not only on marketing and customer service, but also on maximizing the income from existing clients. Instead of just running around and fixing problems, I started looking into my clients’ computer systems for real ways to improve them, then advised them of my findings. I became a real consultant, rather than just a “computer guy.”
This worked and my income went up again.
I also jacked up my prices. A lot. I didn’t lose a single client when I did this. My income went up again.
I started doing more direct mail advertising. Unlike the disastrous attempts I had prior, this time it worked, and I started getting even more clients.
I started doing radio ads. These were very expensive, and it scared the shit out of me, but I used every marketing technique I had learned to craft the ads, and they worked. The first round of ads cost me over $3,000, a terrifying amount of money for me at the time. Regardless, from that I gained four new companies as clients, one of which would go on to pay me thousands of dollars a month for many years. Fantastic ROI.
Some companies that I was working for as a subcontractor asked if I could work for them directly, meaning if I would bill them directly. Ethics demanded that I go to my subcontract company to get permission to do this. To my shock, when I did this, my subcontract companies agreed to give me all the business, with rare exception. As I’ve talked about in prior installments, these companies were focused on either computer hardware or building websites. I was focused instead on on-site support, something these companies hated. They were happy to eject the business, provided I kept working for them as needed on other accounts.
So, my income went up again.
By the end of the year I moved into a larger office and hired one of my brothers to help me out. I also hired a professional bookkeeper to manage my books (something I should have done at least a year or two prior) and got more serious about working with an accountant to keep current with my taxes.
In early 2000 I was working late at the office (as I usually did) and decided to run a few reports, just on a whim. I ran a year-to-date profit and loss using my old QuickBooks software. When the report popped up on the screen, I stared dumbfounded at the number near the top of the report.
The number I always paid attention to in a P&L was gross profit. Gross revenue was a meaningless number to me, since I had cost of goods and other expenses to factor in, so gross revenue was never an indicator of what I was actually making. Net profit was also not very useful to me, since there were expenses in my businesses that were there for legal tax reasons and other accounting reasons, so that wasn’t a clear picture of my actual income either.
Many years later I would work with a team of accountants to create complex spreadsheets that would calculate precisely and exactly what my real income was, but back then I didn’t have the understanding, the staff, or the organizational skills to do anything like this. So instead, on P&L reports I would always look at gross profit. This was the money I was making after subcontractor expenses, cost of goods and other hard costs. It was what I considered my real income and all of my income goals and focus were based on this number every month.
This month, I couldn’t believe what I was seeing. The year-to-date figure at the top of the page, the money I had actually made for myself, was $102,342.
I had made one hundred thousand dollars in a year.
I didn’t quite believe it. I went through and double-checked the figures. They were right. I now had a six-figure income.
I screamed with joy and danced around my office. Literally. My ten-year goal of making a six-figure income that I had set back when I was 18 years old had finally been hit. I was even an entire year early! I was only 27 years old and it was less than three and a half years since I had started my full-time business. Only a year ago I was barely able to pay my bills, and now here I was, a man with a six-figure income.
I seriously couldn’t believe it, but I was still overjoyed.
Financially, I was still a mess. My bookkeeping was still in chaos, my taxes were still late, my debt was still growing, I was spending too much money in my lifestyle than was appropriate, and I had very little money in savings or investments. But I was now making six figures. I had crossed an important milestone, not only in my business and my income, but mentally as well.
Once I was done being silly, I sat down and immediately set some new business and financial goals. I wasn’t out of the woods yet, and I would have some other problems appear in my life shortly, but at least now I was into a new stage of my financial life, something I had been working for and fantasizing about for my entire adult life up until that point.
To be continued…