I saw a post on Threads the other day and a lady was expressing her frustration about all the revenue screenshots.

"But what does it even mean?!" she exclaimed.

I understand her frustration intimately, as someone who had to uncover what it meant myself, and often finds herself helping clients understand what they mean when they say,

"I want to hit $10K,"

"I want to make $1 million,"

"I want to hit $50K months."

This language is everywhere, and yet.... do we understand the implications of what it means to earn these random numbers?

Today I want to give you a little hack for social media. Every number someone spouts, just lop off 70% of it and that's the reality of the take home.

Here's the reasoning:

There are three ways to interpret a financial: revenue, profit, income.

• Revenue is how much the business earned in a given amount of time.
• Profit is how much money the business earned after all the expenses are paid.
• Income is how much the CEO or owner was paid after expenses and taxes.

When we talk about revenue, the numbers always look bigger. Outside of a few exceptions to the rule (like Jessi Jean), most people, when they start to earn more revenue, their expenses rise as well.

This is just the law of growth.

In order to reach more people, you spend more on ads, or you spend more on content creation, or software, of affiliates, or you hire more employees.

Revenue is growing, but the expense line is growing as well.

Look around at your favorite guru who is talking about million-dollar months, and you will most often see that at least 50% of that revenue is going towards various expenses.

For an online business, a 50% profit margin is considered extremely healthy.

Whenever someone talks about 30K, 50K, 100K months, I want you to start by doing simple division.

Take that number and divide it in half. When someone says their revenue is 50K, that means their profit is 25K. When they say it's 100K, profit is 50K.

From here on in, every time you see a revenue screenshot, divide it in half and assume that, even with a healthy business, half is what they are actually getting, which is the second number.... profit.

In many cases, businesses are actually not as healthy as they look. They're spending 60%, 70%, even 80% on expenses, and the profit is even lower.

Now let's talk income. For United States businesses, if they are in the highest income tax bracket, then the federal tax income rate is about 37.4%.

Before you come for me and talk about all the tax savings loopholes, remember... these tax loopholes are designed around plummeting your profit to zero so you don't have to pay.

A healthy business with a 50% profit margin is still going to be taxed on that 50%.

And if you say, "Oh, well, just spend more, spend more so that you don't have any profit," then that $100K months is actually not even $50K profit. It's zero profit, and I'm not sure you want that either. 🤣

Anyway, back on track.

37% tax rate is what you want to put aside, and it could be more if you live in a state that has state income tax as well. (And we won't even start with being taxed in multiple states as an online business 🤪).

100K months, 50K profit, 31K income.

The math isn't quite as simple as dividing in half, but for the sake of your mental health on Instagram, you can see that (as a general rule) 30% of top-line revenue is usually what the income is in a healthy business.

$100K screenshot? $30K in your pocket.

Still amazing.

Not as glitzy.

Hope that helps.

xx Julie