You’ve likely encountered the term “7 figures” floating around online, especially on platforms like LinkedIn, often associated with phrases like “7-figure business” or “7-figure earner.” It sounds impressive, but what does “7 figures” actually mean in real terms, and why does context matter so much when people use this phrase? Let’s break down the meaning of “7 figures” and explore its various interpretations in the world of finance and business.
Decoding “Figures”: It’s All About the Digits
At its core, the term “figures” simply refers to digits in a number. So, when someone mentions “7 figures,” they are talking about a number that consists of seven digits. Numerically, this encompasses any amount ranging from 1,000,000 to 9,999,999. This is the million-dollar range.
To put it in perspective, here’s a quick breakdown of what different “figure” counts represent:
- 6 figures: $100,000 – $999,999 (Approaching a million, often denoted as 100k+)
- 7 figures: $1,000,000 – $9,999,999 (Millions)
- 8 figures: $10,000,000 – $99,999,999 (Tens of millions)
- 9 figures: $100,000,000 – $999,999,999 (Hundreds of millions)
- 10 figures: $1,000,000,000 – $9,999,999,999 (Billions)
While the numerical definition is straightforward, the phrase “7 figure [something]” becomes more nuanced depending on what that “something” is. It’s crucial to understand the context to truly grasp what’s being communicated, especially when encountering these terms in self-promotion or online boasting.
7 Figures: Context is King
When someone proudly declares themselves or their venture as “7 figures,” it’s essential to dig deeper and understand what aspect they are referring to. The “7 figures” could represent vastly different financial realities depending on the context. Let’s explore the common scenarios:
7 Figure Salary: The Realm of High Earners
Certain professions are known for offering compensation packages that reach the seven-figure mark. These are typically fields demanding specialized expertise, extensive education, significant responsibility, or a high degree of risk.
Here are some examples of professions where seven-figure salaries are possible:
- Chief Executive Officers (CEOs) of Major Corporations: Leading large companies often comes with substantial financial rewards. CEO compensation packages, including base salaries, bonuses, stock options, and other incentives, frequently reach or exceed seven figures.
- Professional Athletes: Elite athletes in popular sports like basketball, football, soccer, and golf can command seven-figure incomes, particularly through contracts, endorsements, and winnings.
- High-Profile Entertainers and Influencers: Successful actors, musicians, and social media influencers can also achieve seven-figure earnings through acting roles, music royalties, brand endorsements, sponsorships, and various online ventures.
It’s important to remember that a 7 figure gross salary doesn’t equate to 7 figure take-home pay. High earners face significant tax burdens, which can substantially reduce their net income. While a seven-figure salary is undoubtedly a substantial achievement, understanding the difference between gross and net income is crucial.
7 Figure Business Owners and Entrepreneurs: Revenue, Profit, or Valuation?
Entrepreneurs and business owners frequently use the “7 figure” label, but its meaning can be ambiguous. It could refer to several different financial metrics:
7 Figure Revenue: This refers to the total amount of money a business generates from sales. While reaching 7 figures in revenue is a milestone, it’s essential to remember that revenue doesn’t equal profit. A business can generate $1 million in revenue but still be unprofitable if its expenses are higher. As the saying goes, “Revenue is vanity, profit is sanity, and cash is reality.” A company with $1,000,000 in revenue and $1,200,000 in costs is in a far different position than one with $1,000,000 in revenue and only $200,000 in costs.
7 Figure Profit: Profit represents the money remaining after deducting business expenses from revenue. A 7 figure profit is a more robust indicator of financial success than revenue alone. However, even “profit” can be further broken down:
- Gross Profit: Revenue minus the direct costs of goods sold or services provided.
- Net Profit: Profit after all operating expenses, interest, taxes, depreciation, and amortization are deducted.
- EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization): Often used to assess a company’s operating performance, EBITDA essentially represents profit before considering financing and accounting decisions. For most businesses, it’s the profit remaining after all operating costs, excluding interest and taxes.
7 Figure Valuation: This is perhaps the most subjective interpretation of “7 figures” in the business context. A 7 figure business valuation is an estimated worth of the company, often based on a multiple of its earnings (like EBITDA). A business with a relatively modest profit, say $100,000 EBITDA, could be valued at 7 figures if a high enough multiple is applied (e.g., a 10x multiple would result in a $1 million valuation). However, valuations are often based on assumptions and market conditions, and a valuation is not the same as liquid cash. Realizing a 7 figure valuation typically requires a sale or investment event, and the actual value is only truly determined when someone is willing to pay that price.
7 Figure Property Investor: Income, Value, or Equity?
In the realm of real estate, “7 figures” can also take on different meanings when used by property investors:
7 Figure Income: In property investment, a 7 figure income usually refers to annual rental income generated from a portfolio of properties. Achieving 7 figures in rental income implies a substantial property portfolio generating significant cash flow.
7 Figure Property Value: This refers to the market value of a property, typically determined by an appraisal or market analysis. Owning a 7 figure property means possessing real estate worth $1 million or more. However, it’s crucial to consider how the property was acquired. A $1 million property purchased entirely with cash represents a different financial picture than a $1 million property with a $900,000 mortgage.
7 Figure Equity: Property equity represents the value of the property minus any outstanding debt (like a mortgage). 7 figure equity signifies that the investor owns at least $1 million worth of property value outright, after accounting for any loans. This is often considered a more accurate measure of wealth in property investment than simply property value.
The Bottom Line: Don’t Get Lost in the Figures, Seek Clarity
When you encounter the phrase “7 figure this” or “7 figure that,” remember to consider the context carefully. It’s not about dismissing someone’s achievements but rather about understanding the true meaning behind the numbers. Don’t hesitate to ask for clarification when needed – is it revenue, profit, valuation, income, property value, or equity?
Ultimately, avoid getting too caught up in the “7 figure” hype, especially prevalent on social media. Focus on your own financial journey and goals. Be informed, be critical, and remember that behind every “7 figure” claim, there’s a story that context will help you understand. And always remember, don’t believe everything you see online without proper context and due diligence!
