26,744 had sales between $1 million and $2.49 million (up from 24,945 in 2010)
That's really not that many. And not that big of a rise considering the recovering economy.
The Rise Of The Million Dollar, One-Person Business
21–30 of 77 posts
Re: The Rise Of The Million Dollar, One-Person Business
#22It's interesting that many of these businesses are basically real estate holding companies. I wonder how many of these businesses are just tax-minimization or financing schemes used by larger companies for things like deferred compensation?
When I hear someone is making a million dollars a year (not 5 million, not half a million) I guess in the following rough order:
a) modest real estate holdings: a block of apartment buildings and a couple commercial properties.
b) a large, successful construction company.
c) operator of roughly a dozen franchise locations.
d) is anyone's guess; outlier software firms, well-compensated financiers, CEO maybe.
I know this doesn't address your question. Modest landholding is a common way to be in the 99.5.
Re: The Rise Of The Million Dollar, One-Person Business
#23This is revenues and NOT profits/ so a real estate holding firm may have high revenues but not large profits because of the mortgage costs ;)
Re: The Rise Of The Million Dollar, One-Person Business
#24Real estate agents or brokers don't have the double taxation that we do right? Meaning they wouldn't have to pay corp/llc and employee tax?
Re: The Rise Of The Million Dollar, One-Person Business
#25The details behind the article show a less appealing reality than what we might hope for. Yeoman capitalism hasn't killed off VC-istan just yet. A lot of these $1M/year businesses are for, say, independent real estate brokers. Yes, there are people who get very rich in that game. There are others who fail horribly. I think we're quite a way from a society where talented people can find their way to, if not $1M per ye…
The "barbell" strategy (avoiding the middle in favor of a linear combination of the extremes) is just such an effective model for society. And the medium risk space is perceived to be a sucker's game that combines the worst of both worlds (huge measurement errors of risk without the chance of outsize returns).
Re: The Rise Of The Million Dollar, One-Person Business
#26Earlier quoted context omitted.
Are they mostly B2B? Or do they sell directly to retail consumers?
Most of the people I know doing this are involved heavily in local commerce. Think real estate, insurance, construction, and skilled labor companies (plumbing, A/C repair, landscaping).
You aren't going to pull down 7 figures on a one-man AC repair business. In that type of business, you are just renting out your time, and nobody is paying $1,000/hr for an AC repairman's time. You can scale it, definitely, and have an army of repairmen working under you and then make tons of money, but then you're no longer talking about a one-man business.
Re: The Rise Of The Million Dollar, One-Person Business
#27The details behind the article show a less appealing reality than what we might hope for. Yeoman capitalism hasn't killed off VC-istan just yet. A lot of these $1M/year businesses are for, say, independent real estate brokers. Yes, there are people who get very rich in that game. There are others who fail horribly. I think we're quite a way from a society where talented people can find their way to, if not $1M per ye…
One of the key's to high incomes is personal spending habits. Spend 105% what you make and your stuck on debts treadmill. Spend less than 70% of what you make and not only do you have a cushion that lasts longer, but you can take a significant pay cut without issue. Now let's say you have a great idea, if your over 25 then scraping together 6 months living expenses pluss a little working capital is easy, by 30 taking 2 years off is not that risky. After that you can start looking into angle type investing. Granted, the risks are still there but being able to take more of them greatly increases your long term chances.
Re: The Rise Of The Million Dollar, One-Person Business
#28Earlier quoted context omitted.
Most of the people I know doing this are involved heavily in local commerce. Think real estate, insurance, construction, and skilled labor companies (plumbing, A/C repair, landscaping).
You aren't going to pull down 7 figures on a one-man AC repair business. In that type of business, you are just renting out your time, and nobody is paying $1,000/hr for an AC repairman's time. You can scale it, definitely, and have an army of repairmen working under you and then make tons of money, but then you're no longer talking about a one-man business.
I don't think grandparent comment was meant to imply 1 person business. (You are correct in your math assumptions). I just think they mean "small business funded organically or built from the ground up". Besides "1 person" can also mean "1 person and subcontractors" so where do you draw the line at "1 person" anyway?
The only thing I would add though is that many of these businesses were not started by the person running them they were passed to a family member who got something that they could expand upon where the risk had already been taken.
Re: The Rise Of The Million Dollar, One-Person Business
#29Earlier quoted context omitted.
Are they mostly B2B? Or do they sell directly to retail consumers?
Most of the people I know doing this are involved heavily in local commerce. Think real estate, insurance, construction, and skilled labor companies (plumbing, A/C repair, landscaping).
One of the things I have noticed is that 'managing' things is a skill unto itself. And some very successful people I know operate by helping people with skills connect with people who need those skills, and then creating a structure where a fair price is paid for the access.
Re: The Rise Of The Million Dollar, One-Person Business
#30One thing I will add to the discussion of someone running a 1 man "type" business (which would include both 1 man and 1 man plus some helpers part time, sub contractors, 1099's whatever) is that while the upside is capped the downside is also clipped.
If you have a 15 to 40 person business with lots of overhead and you have a few bad years you can lose lots of money. Because of that overhead.
But if you are running a small operation out of a small office (or even your house) you might not have a big top end potential but you also aren't going to lose much either.
A bad year might mean breaking even or making very little but your probably not going to lose your shirt (at least in 1 or 2 years if you have built up a reserve).