There’s a difficult conversation that doesn’t get talked about enough among solopreneurs and small business owners: What does success actually look like?

When you start a business, you’re chasing growth. You’re working toward milestones. First, it’s a sale – any sale. Then, maybe it’s $1,000 in monthly revenue, then $10,000, then $100,000 a year, on and on. Each level creeps you closer to a sense of stability, at least you hope. Anything that moves you closer to that sense that you’ve “made it,” or at least that things should start to feel easier.

But then you get to your next benchmark and something feels off.

One of the most common things I hear, whether from clients or in conversation, is, “I make $200K… why do I feel broke?”

At first glance, it sounds like a spending problem. And sometimes it is. But for solopreneurs and small business owners, that’s usually not the core issue.

More often, it’s a misunderstanding of what that $200K actually represents.

Revenue Isn’t Income

When a business owner says they “make $200K,” the first question I ask is simple:

Is that revenue, or is that profit?

Often, they’re referring to revenue. That’s where the disconnect first began.

Revenue is what your business brings in. Profit is what’s left after everything else is accounted for. Those are two very different numbers. If you’re mentally spending against revenue, things are going to feel tight very quickly.

Where the Money Actually Goes

Let’s walk through a simple example.

Say your business generates $200,000 in revenue.

From there, you have expenses. These could be software, rent, marketing, contractors, among other things. Let’s assume those expenses total $40,000.

Just like that and you’re down to $160,000.

Next comes self-employment tax. For many business owners, that’s 15.3% for Social Security and Medicare. That alone brings your number down to about $135,000, and that’s before accounting for federal and state income taxes.

So while you may think you “made” $200K, the amount that actually supports your life is significantly less.

And that’s where the feeling of being broke starts to make more sense.

The Real Number You Need Is Higher Than You Think

If your goal is to net $200,000, i.e., it’s what you actually want to live on, you need to generate much more in revenue.

Using the same example, with $40,000 in expenses and factoring in self-employment tax, you would need to make closer to $270,000 to $275,000 in revenue just to approach that number. And again, that’s before accounting for income taxes.

This is the reality of the “eat what you earn” lifestyle. Income comes in, but without structure, it’s easy to assume it’s all available, when it’s not.

How to Fix the Disconnect

The solution isn’t solely to earn more. It’s to get clearer about the math behind your business.

Start with your target.

What number do you actually want to live on? Not revenue, but profit. The number that supports your lifestyle.

From there, work backward:

• Factor in your expenses
• Account for self-employment tax
• Estimate income taxes

Now you have a more realistic revenue target.

Then, connect that to how you earn.

If you charge hourly, project-based, or per client, break that number down. For example, if you want to generate $275,000 and bill $300 per hour, that’s roughly 20 hours per week over 48 working weeks. Increase your rate to $400, and suddenly that drops to around 14–15 hours per week.

Same goal. Very different workload.

Your Profit and Loss Statement Is the Truth

One of the biggest issues I see is that business owners don’t consistently track their numbers.

Your profit and loss statement (P&L) is the clearest picture of your business. It tells you what’s coming in, what’s going out, and what’s actually left.

Without it, you’re operating on feel or your mental math, and that calculation usually defaults to revenue. It can also be more pessimistic or optimistic, depending on your personality traits.

Make it a habit to review your P&L monthly or at least quarterly. It keeps you grounded in reality and allows you to adjust before small issues become big ones.

Start Thinking in Profit, Not Revenue

This is the shift that changes everything.

Revenue is exciting. It’s easy to measure. It feels like progress.

Profit is quieter but it’s what actually matters.

When you start thinking in terms of profit, your decisions change. Pricing changes. Expense decisions become more intentional. Growth becomes more sustainable.

You stop chasing numbers that look good and start building numbers that actually work.