In this episode of the Dropout Multi-Millionaire Podcast, we pull back the curtain on the often-glamorized world of entrepreneurship, delving into eye-opening statistics about business success and failure. While highlighting the critical importance of understanding business math for sustained growth, we’ll also focus on four fundamental questions that serve as a compass for your business. Tune in for a reality check on entrepreneurship and gain valuable insights to propel your business forward!
And we are back with the Dropout Multi-Millionaire podcast. I am your host, Brian Will. And today we're going to talk about why starting your own business may not be the answer to wealth creation. Now, I know everybody's heard online, you listen to all the gurus. If you want to get rich, you want to get wealthy, you want to make money, your best opportunity is to start your own business.
Well, today we're going to talk about why that may not. Be the right answer. And by the way, stay tuned at the end of this episode. I'm going to give you a discount code to get a free copy of my intro masterclass in the psychology of sales and negotiation. It's a one hour summary course. I'm giving it away for free to you today, just for listening.
So let's start today's podcast with this statement. Business is tough. Most businesses fail. In fact, we know that 20 percent fail the first year, 30 percent the second year, and over half of them will fail in the first three years. And by the way, I own a chain of restaurants. Restaurants fail at twice that rate. Okay, most businesses fail.
And most of the ones that don't fail, by the way, I'm gonna give you some statistics here in a minute, they don't make any money. So why am I telling you this? Why am I being so damn negative about business? I mean, I'm a business owner. I build businesses. I coach businesses. And the answer is that most people only want to tell you the good stuff.
They want to make it sound sexy. You're going to be an entrepreneur. You're going to be a CEO. It's all going to be good. You're going to make a lot of money. But they forget to tell you the bad part. They forget to tell you the challenges you're going to have. Okay. And so today I want to walk you through some of those challenges and some of those statistics so that you have an honest, uh, understanding of what it's like to own your own business.
All right. So here we go. In America, roughly 5 million new businesses start every year. In fact, there are 33 million small businesses in America today, and that is a lot of businesses. And because we have such a big pool, we also have a lot of good data. So, we know, for instance, that 99. 9 percent of all businesses in this country Small business.
I actually didn't realize that when I read it, but here's another, here's another number for you. 80 percent of those have no employees. 80 percent of all businesses have no employees they're one man shops or consultants. Now how about this? We know the average salary. If you have a job in this country, the average salary is 54, 000.
However, the average small business with no employees, remember that's 80 percent of all small business. That's the average business. with no employees only does about 47, 000 in revenue, not income. That's gross revenue. 54, 000 average salary, 80 percent of all small businesses, 47, 000 in gross revenue. By the way, that means they ain't making no money.
The other 20 percent of those businesses employ about 50 percent of all the workers in this country. Half of the people in the U S. Work for a small business. In fact, 65 percent of all new jobs created every year are created by small business. We know that by the way, here we go again, only 40 percent of all small businesses, which are by the way, 99.
9 percent of all businesses, 40 percent of small businesses are profitable. That means 60 percent or not. That's a crazy number. 60 percent of all small businesses. Don't make any money. We also know that only 6 percent of all businesses in this country, only 6 percent will ever do over a million dollars a year in revenue.
So if you start your own business in America, you have a 6 percent chance of doing over a million dollars in revenue. 6%. The average small business owner in this country Looking at all of them makes about 60, 000 a year. Now this is someone who has invested their life savings. They're out there killing themselves 40, hours a week.
They're taking financial risk and they average about 60, 000 a year. By the way, you remember that average salary if you just go get a job is 54, 000 with no risk, Only 14 percent of small business owners Make over a hundred thousand dollars a year. So if you start your own small business, you have a 14 percent chance of making over a hundred thousand dollars a year.
And only 1 percent Remember all those people that tell you you're going to get rich starting your own business? Only 1 percent of people that start their own business make over a million dollars a year in profit. Only 1. So here's the deal. Why am I telling you this? I'm telling you this because I want you to understand that business is tough, but if you have a business, by the way, and you have employees and you are doing over 1 million in revenue, that means you're already in the top 6 percent of all businesses nationwide.
You, my friend are a badass in business. If you're in that top 6%, however, but you're not making what we would consider a lot of money, or you are not creating the wealth that you thought you were going to when you started, or if you're out there killing yourself working 40, 50, 60, 70, 80 hours a week just to maintain what you're doing, maybe it's time you step up your game.
Maybe it's time to bring someone in who can help you scale, become more efficient, and make more money. Maybe it's time you try to move from the top 6 percent to the top 1%. And start creating the wealth you dreamed of when you started this venture. Making money, or more money, is not hard, but it's also not easy.
It's really both. There's an art and a science, by the way. The easy part is that creating wealth and making more money in your business is a math problem. And this is something nobody's gonna tell you. I've never heard another financial coach or consultant tell you this. But creating wealth, making money, and building your business is a math problem.
Okay? It's all about the numbers. The hard part of building your business is the understanding of that math. Following that math, instead of your ego, instead of your feelings, instead of your general lack of understanding about what you're doing, it's following the math. Okay? Here's the secret. If you are not where you want to be, and you're not getting any closer, and you don't understand the math, the truth is, it's because you just don't know how.
And you need some help. So that's a lot of negative. How about some positive, right? How exactly do you level up? How do you learn the math? And it all starts with what I call the four questions. These are the big ones. I ask anybody that comes to me that wants to do consulting these four questions, and so I'm going to give them to you today.
Okay? Now, the answer to these questions will be different for every single business that I ask it to, but the questions are always the same. And so here they are. Who are you in your business? And who are you not? In my book, we talk about the entrepreneur, the manager, CEO, the salesperson, or the technician.
That's four different people. The problem with most small business owners is they think they can be all of them. And unfortunately they can't even more. Unfortunately, they're probably trying to be the wrong one. Okay. Just because you start a business doesn't mean you're a CEO or a manager. If you're trying to be the wrong one, or you don't understand who you are in your own business, and you're not willing to bring in the people to help you.
Your growth will be stunted. Second question. Why should anybody buy your product? And why should they buy it from you? This is a critical question. If you don't have this answer, you're nothing but a commodity and you'll never grow. Okay. Why should they buy your product and why should they buy it from you?
Number three, we're going to get into some of that math, a tough part. Remember, what are your historical core metric trends? What do they look like? And what do they tell you about your future? What do your historical core metric trends look like? And what do they tell you about your future? That's a big one That's one of the training tracks we do in our coaching programs. If you are not using pattern recognition on your historical core metrics Then you are absolutely guessing at what decisions to make in your business and most of those will probably be wrong Okay, that's a big one And that's math.
Number four. And again, back to math. Have you built your goal proforma? Your goal proforma. And what does it look like? What steps is it telling you to take to get where you want to go? And if you haven't built this goal setting tool, I'm going to tell you right now, your growth is a crapshoot. Once again, you're guessing with no basis in fact.
So one and two, three and four, and three and four are the math ones. Now, if you can't answer these questions, and your business is not where you want it to be, then you might want to look at getting some help, okay? If you're ready to step up your game, if you want to grow this thing and make a lot of money, you need to bring in a consultant or a coach that knows how to do those things, that understands the math and can show you how it works. If you want to move from that top 6 percent to that top 1%, you need to find somebody who has been there and done that. They can come in and show you how. Okay. And by the way, shameless plug, that is what I do in my coaching and consulting practice. I help businesses grow, become more efficient and make more money.
I helped them learn the math behind scaling revenue and profits. Personally, I've built multiple companies into the eight figures of revenue with evaluations and the nine figures consulted for companies with billions of dollars in revenue, trained thousands of salespeople who sold billions of dollars in sales.
I've been there, done that. I do this today for other small businesses. This is what I do and I can help you. If you're ready, make the decision and let's go.