How I Created a $1.3M Business with 90% Profit Margins

What if I told you that making a million dollars in your business is not the hard part, but it’s keeping it that’s the hard part? Well, if you’ve built a successful business but you’ve gotten used to your profits disappearing into endless costs and overhead, this article is for you. It might challenge a lot of what you think you know about growing and scaling an online business.

About Me

In case you don’t know me, my name is Patrick P Hall. I’m the founder of Getthismagazine.com, a multi-million dollar online education business. I’m also a mentor and adviser to other online education entrepreneurs.

The Profit Problem

In my business, Story Learning, as it grew, I got used to something that absolutely sucked: money coming in through the door and then flowing right back out again. This never used to happen. In the early days, when I was a humble solo entrepreneur, I would just keep all of it. But then somebody said to me, “You have to hire a team.” I thought, “Wait, I do?” And so I did. And it was the best thing I ever did.

There is a cult corner of the internet that glorifies solopreneurship, as if hiring is a dirty word. It’s not. They just haven’t learned how to do it properly. So I hired, and the business grew. So did revenue, and so did profit, and I was a very happy bunny.

The Plateau

Fast forward a few years, and inevitably, what happens is the growth tends to start slowing down. Things start to plateau. Your team has grown again, but for the first time, your bottom line hasn’t. It happens to every business eventually. For the first time, you start looking at the year’s P&L, your eye skips right down to the bottom because nobody’s got time for all that boring stuff in the middle, and you realize that, oops, you spent most of the money that you make. And that’s business, I suppose.

No doubt, that is most business. In fact, look outside your online bubble for just a minute, and you realize that most of the business world operates with net margins that give the average online indie builder a heart attack. 5% is common, 15% is common, 25% plus is relatively rare. But low margins don’t matter so much if you can continue to scale without eroding profitability. 5% of $1 billion in turnover is a lot of money, after all.

The Scaling Issue

The issue for online education businesses and creator businesses is that most likely, you cannot continue to scale with your current model. But the point here is not about scale. The point is a different one. If you knew that your business had a natural upper limit, then it would make a lot of sense to start asking, “Do I really need to be spending all the money that I’m making?”

Let’s say that you’re doing 2 million in annual revenue, but your expenses are 1.5 million, leaving you with a net profit of 500k. Now, is that good, or is that bad? The answer is, it depends. Obviously, I prefer a different question: At what point did that level of spend become normal? Because in all likelihood, you could probably be operating that very same business at a 50% margin or higher if you wanted to.

The Spending Trap

Yes, I know that in the past, you had to spend to grow. You had to hire the team to do the thing and do the marketing and all that stuff. But when did it become normal to spend 1.5 million a year? Is it still necessary to spend 1.5 million a year in order to make 2 million? Unless you have a pure ad-based model, it hardly ever is.

What happens is we just get used to it. We get used to the team. We get used to all those monthly subscriptions. We get used to our annual retreat. We get used to putting stuff on the credit card. But how often do you take the time to step back and ask, “How much would it actually cost to run this business if it came down to it?”

Learning from Crisis

Now, this might sound like fantasy land, but there are a lot of SEO-based businesses who have had to slash their entire cost base recently in order to stay afloat. It’s a really tough situation, but you have to ask, would it not have been prudent to keep costs lower before a crisis ensues?

The point here is not to say don’t spend any money. We all have to spend money. Spending money wisely is the best thing you could ever do as an entrepreneur. The point is to be intentional and disciplined about how you spend it and to be constantly reviewing and pressure testing your cost base. Entrepreneurs tend to be far too loose with the checkbook. You see, great at making money, also really great at spending it.

A Lean Approach

For example, when I started this brand, my business newsletter, I made one very specific decision: not to build a team and to keep all of the money I make. Radical, right? But this is what enabled me to make just over a million last year and keep almost all of it. Except this wasn’t done from a place of, “I don’t like managing people.” It was done from a place of, “I don’t want any more overhead to manage because I don’t want the pressure of having to maintain that.” There’s a link to the blog post where I explain how those numbers break down if you’re interested.

Most entrepreneurs are just not intentional in this way. Instead, they just sleepwalk into building overhead, team, infrastructure, marketing because that’s just what all the bros at their mastermind tell them that they should be doing. So this time around in my own entrepreneurial journey, I decided not to do that. Exit the equation altogether, and I intentionally built very, very lean.

You Have Choices

Now, none of this is to say that there is a right or wrong. But what this has taught me is that you have choices. Everything you build is a choice. The way that you do it, well, it’s up to you. If you have a particular revenue goal, if you have a particular wealth goal, often you can do it in two years, or you can do it in 10 years. It just comes down to how much money you spend and how much money you keep.

The most important thing to realize is that you don’t have to follow the crowd. Spoiler alert: the crowd, more often than not, is not that smart, and you are allowed to make choices that selfishly benefit you, including undoing years of stuff that somehow just accumulated inside your business.

A Thought Experiment

At the very least, it’s an interesting and very useful thought experiment: How can I keep more of the money I’m making inside my business? Think on it. You might be surprised what you discover.

But alternatively, if you just want to learn what’s working in online education right now so you can scale your business even further and make even more money, then you should check out the simple blueprint I put together at the end of a very special mastermind.