The Financial Reality of Running an Online Business

Logistics company breakdown - the financial reality : revenue vs actual take-home vs hours. When did you realize the math didn’t work? What would “good math” have looked like?

If you’re part of the large group of traditionally employed adults that aspire to be online business owners, it’s worth thinking out the financial reality of pursuing such a venture.

The truth is, in terms of income, at the beginning of all ventures you’re better off actually getting a job when you break down your earnings per hour, even in best case scenarios.

However, if you pull things off correctly and stay patient and steady, having your own business can work out tremendously in your favor.

This rarely goes perfectly the first time around. Here’s my experience with my first online business. Even though it was a success in many ways, I still didn’t manage the math correctly. Let’s dive in with some lessons I learned.

Every passionate entrepreneur starts with a dream to cause impact beyond simply making money. In a way, they are like an artist that simply wants to share their unique creations with the world.

The balance that each entrepreneur must strike is between keeping their mission and making the math work. No one can sustainably run a business that fails to support their life, so it’s important to think about revenue, profits, and hours committed.

For a long time, we must take resources to water the seed and help it grow all the way up to the point of bearing fruit.

We don’t know how long it’ll take to finally produce fruit, but we must have sufficient runway to put consistent effort to get the tree to that point. Additionally, all of this work must come with a care and pure intention, which are intangible but essential ingredients to the long term livelihood of the fruit tree. This is the mission that caused you to start your company in the first place.

All of this means that you must put a lot of work in the beginning that works out to be very little per hour, if anything at all. However, once your “fruit tree” of an online business is established with processes up and running and customers flowing in, your dollars earned per hour put in skew significantly higher as your tasks lean more towards maintenance and higher level decision making. This is just like a farmer who doesn’t need to do much more than simply harvesting what his tree is producing once it has become large enough.

The biggest issue that all entrepreneurs run into is balancing labor and freedom. Whether it’s in the early stages of trying to get their business work, or if it’s in the later stages of actually scaling, an entrepreneur has the choice to work as much or as little as they want.

Many entrepreneurs look at their business and find themselves in a trap that they dislike, in some cases even if they’re making a significant amount of freedom.

It’s important then also to consider this dilemma before even starting a business. Every entrepreneur builds a business because they want to design a better life, and this includes having happiness and balance.

While a work/life balance in terms of hour and pay can vary wildly, what I’ve learned is that we also have to consider other metrics that can’t be tracked on the spreadsheets.

Purpose, impact, personal fulfillment and satisfaction are just some of these factors. These are often more important and sadly overlooked by most entrepreneurs who are just used to dealing with numbers and financial projections. After all, it’s you who’s going to live with your own business, no matter how much you end up delegating.

So, if you’re at the beginning stages of building your business, make sure to do your best to consider maximizing fulfillment in addition to or even in place of profits. In the end, if you pull this off, you’ll find yourself in the rare realm of entrepreneurs who are making money and are truly personally fulfilled while doing so.

Very few have figured this out, and this is my current dilemma with my new business, but after learning from direct experience the first round, I think I’m on a better path this time.