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Your Gross Income is Gross

Nothing but net.

I don’t want to hear about your gross income.

I don’t care if it’s ten dollars or ten million dollars.

I don’t want you to send me a screenshot.

I don’t care because the gross is a lie.

There are people with dropshipping websites who “made” a million dollars last year. The fact that they spent $950,000 on PPC ads and other marketing costs is conspicuously absent. $50,000 from a mostly passive online business is nothing to laugh at. So say you made $50k, it’s impressive enough. Don’t whip out alternative facts for that million.

These titans of industry brag about their revenue numbers because $1M a year sells a lot more course subscriptions than $50k a year does. Of course everybody gangsta til the IRS starts asking. Then it’s all “Oh, my LLC actually took a loss this year too.”

Now, I don’t know their business. All I know is that net income is what matters. If someone tells you some ludicrous number and you ask “Is that net?” and they say anything other than “Of course” watch out for them. If you press them and they still won’t tell you the net, keep a hand on your wallet. Either they don’t know their own numbers, which is a concern. Or their net is a tiny fraction of their gross because costs are eating their business alive.

The difference between gross and net income for an employee is usually the taxes withheld from their paycheck. This difference for business entities varies:

  • Different accounting practices
  • Cost of goods sold (COGS)
  • Indirect costs (overhead, sales, marketing)
  • Business expenses (and “business expenses”)
  • Financial chicanery

Tell the internet you made a million dollars, get more customers. Tell the IRS you made nothing, dodge a tax bill. The truth, of course, is somewhere in the middle.

I’m still not OK with these promoted posts on social media talking about how some kid made 17 million dollars in ten minutes with a super simple process, and how that could be you if you would just click here for more information.

But I get it. We’re all here to make money right? We all know that outrageous claims have been getting clicks since before clicks were a thing. We all know that the surefire way to make a lot of money is to pretend we have the secret and charge people a monthly fee to gain access to that secret.

The fact is, I’m just salty because they’re doing better than I am. It doesn’t matter if their net is nowhere near their gross. It doesn’t matter if they’re gaming the system for more subscription customers. It doesn’t matter if their claims are entirely accurate after all. It’s still not right to bend the truth about your revenue, but when has that stopped anyone?

Gross revenue and net income are both important numbers. Gross revenue tells the business owner if they’re selling as many products and services as they could. Net income tells the business owner how much of that money they kept in the end. Prudent managers endeavor to close the gap between the two through process efficiencies. And no matter what, it’s never enough.

Everybody embellishes online. But make sure you aren’t lying to yourself. Many organizations have crumbled because they didn’t have an accurate view of their financial situation.

So keep your gross revenue to yourself, but I'd love to hear about your net income.