It probably hasn’t escaped those of you who frequent LinkedIn and other social media sites that the phrase “7 figures” is often used in conjunction with a noun to result in a phrase such as “7 figure coach”, “7 figure business owner” etc. Now this may well sound impressive, but what does “7 figures” actually mean?
Defining What “7 Figures” Means
Getting back to basics, in numerical terms a figure refers to a digit. Therefore, “7 figures” refers to a number that has seven digits. This means any amount from 1,000,000 to 9,999,999.
Others versions of this might be:
- 6 figures: 100,000 – 999,999 (100k)
- 7 figures: 1,000,000 – 9,999,999 (1 million)
- 8 figures: 10,000,000 – 99,999,999 (10 million)
- 9 figures: 100,000,000 – 999,999,999 (1oo million)
- 10 figures: 1,000,000,000 – 9,999,999,999 (billion)
But when someone refers to themselves as a “7 figure something”, that could mean one of a few different things – and that’s where you may want to be diligent and understand the context.
7 Figure What?
7 Figure Salary – High-Income Professions
Certain professions are known to offer seven-figure salaries, particularly in fields that require specialised skills, significant education, or a high level of risk and responsibility.
Examples include:
- CEOs of Major Corporations: Chief Executive Officers of large companies often earn seven-figure salaries, especially when bonuses, stock options, and other incentives are included.
- Professional Athletes: Top athletes in sports like football, and golf frequently earn seven figures.
- Entertainers and Influencers: Successful actors, musicians, and social media influencers can also earn seven figures through endorsements, sponsorships and royalties.
It is important to remember that there will be a not insignificant tax burden on these high-earners meaning that whilst their gross income is ‘7 figures’ (and is not to be sniffed at!), that may not correspond to actual ‘take home’ pay.
7 Figure Business Owners and Entrepreneurs
Entrepreneurs may sometimes refer to themselves as “7 figure” business owners, entrepreneurs etc.
Whilst some may be referring to their revenue, others may be referring to a perceived equity value or perhaps cash in the bank.
For example:
7 Figure Revenue:
This is the total amount of sales generated.
As the old saying goes “revenue is vanity, profit is sanity and cash is reality”. A business turning over £1,000,000 in revenue with costs of £1,200,000 isn’t the same as one who makes £1,000,000 in revenue with just £200,000 costs.
7 Figure Profit:
A 7 figure profit could be gross (revenue – direct cost of sales), or perhaps net profit (profit after all costs, including taxation).
You may also come across the term ‘EBITDA’ (Earnings Before Interest, Tax, Depreciation and Amortisation), for most businesses this is basically the profit after all operating costs have been removed, excluding interest on any finance and corporation tax.
7 Figure Valuation:
A 7 figure valuation is something to perhaps take with a very significant pinch of salt in my view.
A business doing just £10,000 profit could be “worth” 7-figures with the right multiple applied (this is where you multiply the EBITDA by a number – this number can vary significantly by industry, niche, customer base etc).
Some valuations can be quite subjective and would in any event require careful planning and execution to realise. It is important to remember that something is only ever worth what another person is prepared to pay for it.
7 Figure Property Investor
Another common “7 figure” reference you may see floating around on social media is that of property investors. It is important to get to the bottom of what they are referring to when it comes to “7 figures”.
This could be:
7 Figure Income:
A 7 figure rental income would typically refer to the total amount of rent received in relation to any given portfolio.
7 Figure Property Value:
This is the value of a property (normally based on a valuation report).
A 7 figure property may have been purchased in cash, or may have been leveraged (with a mortgage). A property worth £1,000,000 with a £1,000,000 mortgage is not the same as a property purchased with cash for £1,000,000!
7 Figure Equity:
A 7 figure equity value would normally refer to the valuation of the property portfolio minus the total debt (mortgage).
This is effectively the bit owned by the individual or company, rather than the bit owned by the bank.
Final Thoughts
When people talk about “7 figure this” and “7 figure that”, it is important to remember the context. Not to put anyone down or underestimate their achievements, but to understand what they really mean.
Ultimately, you shouldn’t let talk of this nature distract you from your own journey… And, don’t believe everything you see on social media without the proper context!
