Running a $500,000 Company with ONE Employee
The goal of any business is to make money, but it isn’t uncommon for costs to increase year after year because of things like inflation, rental price increases, software membership fees, and manufacturing costs — making it difficult to keep earning a profit!
How can you lower your expenses so that your profit margins are higher, and still have enough time to spend doing what you love?
I’m really passionate about working smarter, not harder so that you can both make money AND have more time to spend on the things that really matter to you. So today, I wanted to tell you all about how I run my $500,000 a year company with only ONE employee.
I’ve built this company over just a couple of years, and am so thankful for how much it’s grown. While in the realm of businesses, $500,000 a year is not a very BIG business; it’s pretty successful for being a small company.
Because we run our company leanly and with only one employee, we’re able to keep our expenses really low and have great profit margins, which supports my family really well.
In this article I’ll explain who that ONE employee is, and also share how we keep our expenses as low as we do so that our profit margins are as high as they are — as well as some behind-the-scenes of how much time my company takes me to run.
How do I run my company with only ONE employee?
Now, you’re probably wondering who that one employee is. Well, it’s actually ME! For tax reasons, I’m an employee of my own company — and I am the only employee. There are, however, about half a dozen other independent contractors who help me run my business. I’ve had employees in the past, but really prefer working with contractors for two main reasons:
- It helps keep my expenses low, and
- I appreciate how independent contractors work — they have a great work ethic, and since they also run their own businesses, they are more responsible for the outcomes they produce. This creates a great working relationship.
The number of contractors that I’m working with fluctuates month-to-month, but the people who I work with the most on a regular basis are my:
- Operations Manager who manages the day-to-day activities of my business,
- Virtual Assistant who helps out with any random things that need to get done,
- Customer Service Representative who helps us with emails and messages, and to make sure our customers are as happy and satisfied as possible,
- Content Writers who help me write content, as it’s one of the most time-intensive things my company does,
- Video Producers and Editors who help me get my YouTube videos out to you
- Bookkeeper who helps me keep all my finances organized and my books up to date
Because I’m the only employee, I get to work with talented and motivated people, keep costs and taxes low, and spend less time on the operations side of running a business.
How do I keep my business expenses low?
So, there are a few different things that I do to really keep our expenses as low as possible because, like any business, we constantly have bills to pay. Here are some of the things that I do and recommend:
- Don’t have a physical office space
First, we don’t have a physical office or store location. I run my business from my home office — a spare bedroom converted into a workspace. Even though I can run the business from anywhere in the world, it’s really nice to run it from a place where you have access to all the supplies and equipment you need to produce videos or record podcasts. My contractors work from their own offices as well.
- Only sell digital products
Second, we only sell digital products. This way, we don’t have to spend money to produce, store, sell and ship physical inventory, but instead we sell digital products like online courses and memberships to our membership program.
- Work with contractors
Lastly, working with contractors keeps our expenses low by keeping our tax bill just a bit smaller.
Now, even though our expenses are low, I do want to keep it real and let you know that even a business with low expenses is still fairly expensive to run! Paying for these contractors to help me, paying for equipment that we need to produce the content we share for free, and paying for all sorts of different software that we use to run our business virtually really does add up.
In any given month or year, our expenses can be between 30-50% of our profits. That’s pretty sizeable! However, it’s still far lower than if we were running a physical location and selling physical products. On top of that, we also have to pay taxes, which can cost anywhere between 20-30% of our profits or more.
So as you can see, our profit margins are at around 50%, but it certainly fluctuates a fair amount from year to year.
How much time do I spend running my business?
The last thing I wanted to talk about when running my business was how much time I, as the ONE employee, actually spend running my business.
You might think that if I’m wearing all the hats, that I’m spending 60 – 70 hours a week working like a crazy person! I know a lot of entrepreneurs and business owners run their businesses like that, but I’ve built my business strategically so that I can maximize every hour that I do spend working so that I can get the biggest result in the smallest number of hours as possible. This way, I have more time to spend with my family and be a great mom to my kids. Right now, I personally only spend about 20-25 hours a week running my company, which is pretty good, I think! 😉
I hope this has inspired you to look at a few new ways you can run your business leanly while working smarter as your business grows!
I’d love to hear from you! What are some ways that you’ve saved money in your own business? What are some areas you wish you could save more on? Let me know in the comments below!