December 2020 Profit Report: Planning for A Loss, But Then THIS Happened
Episode 506: Show Notes
2020 feels a bit like a lifetime ago, even though we are only a few weeks into January. Even though we projected and gave you some ideas of where we might land, we are still so surprised with how last year ended up going for us. For all of us, 2020 will be a standout year for good and bad reasons. For us, it was ridiculous how our business year ended up. When big things happen in the world, you don’t know how they’re going to impact you, your partner, your family, your business, the climate, and the people buying your product. Everything.
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Being in charge of how you make money is sometimes scary when you can’t control all of those scenarios. So, we are so thankful that we had the time and space in January 2020 to set the expectations of what we wanted to do, and more importantly, what we didn’t want to do for the year. This really helped because when shit hit the fan (and continued to hit the fan throughout the year), we were really focused on securing our foundation. And, in December 2020, this is what caught us.
Lifestyle Over Profit: Why Taking December off Matters to Us
We have tried really hard to build a business that we can rely on and that is there for us. We built it with a family-first mentality. So, things like family and time away have always been priorities. It took us a couple of years to get to the point where we could step away but in recent years, we have been pretty adamant about taking December off. Of course, things are always going to spill over. So, inevitably, there are a few planning days, a couple of podcasts to be recorded, but for the most part, it is time away with family. Abagail needed December off more than ever. She had just bought her new house, was in the middle of renovating, and she had no space to think about work. Basically, she needed to unpack her life. Emylee had just come off of Black Friday and Small Business Saturday, where she had been staying up late, packing orders, and just being in a different space with her earring business.
So, we had a team meeting, where we regrouped and decided what move to make next. Our December numbers are the byproduct of creating stability in our business and laying solid foundations. We built this shit so that it wouldn’t just bail on us. Even though this is probably what most people want for their business, they are afraid to admit it, because everything else seems more fun. For the longest time, this was us. We said we wanted a stable business with recurring revenue, yet we were doing so many things that directly opposed this goal! In our space now, we have seen the trend where sexy revenue goals are no longer the end-all be-all. It is fine to be a strategically lazy entrepreneur, as we like to call it. All we want is for you to be able to work less and make more. But this is only possible if you lay the foundations real deep. Each December looks different, but the last two weeks are totally off for us. We have a few team meetings, record some podcast episodes, and throw a half-day planning session into the mix, and that’s us for the month!
Fostering a Budget-First Mindset
When we started talking about budgeting and goal-setting, we had literally no idea where to look. Did these numbers fall out of the sky? Were we chasing anything our hearts desired? Surely, there had to be some sort of baseline! There had to be an industry standard. Over time, we certainly did learn things like typical conversion rates and email open rates (which are shockingly low). It was not easy to find all these metrics, and we don’t think people are talking about it loudly enough, so we want to be those people who help you. You can create a budget and work toward your revenue goals. As wild as this may seem, this is the first year we are coming from a budget-first mentality. If you are running a business now, you already have expenses, so record them to see what you are spending. That's a great place to start. Abagail does our budget planning for each quarter and gets pretty granular, accounting for every expense we can anticipate. We have upped our savings because there were some seriously unexpected things we have had to pay for, but that’s perfectly fine.
A Breakdown of Our December Numbers
What does taking December off actually mean for our business? It is not like we make no money in December, but we go into the month prioritizing time off over making a boatload of cash. We accept that either we break even or perhaps make a loss. We are more than okay with this because of what stepping back gives us: time with our families, which is far greater than any profit goal could ever be. We also feel refreshed and come into the new year rejuvenated and ready to hit the ground running. In December, we have no launches. If we pitch anything, it is on evergreen. Last year, we sent out some emails that we set up and delegated before, so it actually was not a worry for us at all. We are at the point now where we trust our ads team so much that anything they recommend, we are totally on board with. So, turning off our Strategy Academy funnel, even though it resulted in fewer sales, was a decision that was so much better for our business overall. We were making so much more in other areas of our business that it just made sense to put a pause on it for a little bit. That being said, Strategy Academy still made-up 21 percent of our business. None of this would have been possible without our Shop though. Trello is still chugging along, but we definitely can tweak the course to be more in line with some platform changes. What really helped our sales was turning our Trello freebie back on, and it ultimately contributed to 11 percent of our business. Our Shop, which was the most underrated thing we had, was the absolute belle of the ball. Years ago, Abagail pitched the shop to Emylee as it is now, but her skeptical self just shut it down. And even though it was a bit crushing, it was what needed to happen. As a trained designer, Abagail always thinks about the early days, where she was creating every graphic from scratch and painstakingly trying to explain to Emylee how to use templates. So, she understands just how necessary these templates are for both designer and non-designer types. What is absolutely wild is that the shop contributed to 64 percent of our revenue. Yes, you read this right: 64 percent!
Expecting A Loss, Gaining More than We Planned
In both December 2018 and 2019, we experienced a loss, so in 2020, Abagail thought to at least aim to break even. But guess what? We had an 18 percent profit! To say we double and triple checked is an understatement, but it totally happened. All this and Emylee made her best marshmallows yet. Even though it’s hard to put a number on it, we definitely didn’t put more than 15 hours of work in for December, so our results were absolutely shocking. At the end of 2019, when we started this profit report journey, we shifted gears and decided to save and put more money back into the business, rather than continually pursuing sexy revenue goals that actually don’t get our business anywhere. So, we aimed for a 30 percent monthly profit. Some months we hit it, others we exceeded, and there were some months where we just didn’t quite get it. For our projections going into the year, we decided we would like to hit 32 percent revenue. While we made more revenue and profit, the percentage was lower because we had some large Q4 expenses. So, we made more dollars overall, but we still landed on 30 percent profit for the year, which we are super proud of. Remember, the Shop did not exist in 2019. It is just over a year old. So, for us to reach 30 percent profit is actually pretty unbelievable. The Shop, taking individual sales and the membership into account, contributed to 44 percent of our business. Considering it started at zero, this is very impressive. We would not be shocked if by the end of 2021, the figure is closer to 80 percent.
Running A Business Intuitively
For so long, we convinced ourselves that we were the type of people that liked to have a slew of products, but we are actually so happy with how simple things are now. We just thought that more would be better. Our previous efforts of simplification were super focused on product hierarchy, where every product led to the next. This meant we were creating products for the sake of the funnel, but we actually didn’t really like this system that much. So, our Shop was us just following our hearts, doing something fun that we loved, and creating things we knew people needed because we needed what we were making. It is such an interesting place to come from because it just feels right. If you don’t want to do upsells or down sells, then don’t do it! There is definitely something to be said for running an intuitive business, where you follow your gut and what it’s telling you. So much of what we have achieved has just been tuning out the noise and following what is true for us. This is such a different place from where we have been in previous years, where we have just been following other people’s decisions and valuing them over our own in terms of what’s best for our business. Even though running your business intuitively comes with the privilege of security, there are ways to run your business with enough creative space that allows you to flourish and try fun things. For Emylee, this is what she does in her earring business. Make no mistake, she still has to do boring stuff like the books, but when it comes to the creative aspects, there is nothing that holds her back, and she uses some of this freedom, although not to the same extent, with the Shop. What all of this ultimately ties back to is the strong foundation we have laid. None of the simplicity, flexibility, or freedom would have been possible without the work and systems we have put in.
Quote This
There’s more benefit than you might realize to getting off that hamster wheel of constantly figuring out the next best thing and it’s really great.
Highlights
Lifestyle Over Profit: Why Taking December off Matters to Us. [0:03:45.1]
Fostering a Budget-First Mindset. [0:09:03.1]
A Breakdown of Our December Numbers. [0:13:50.1]
Expecting a Loss, Gaining More than We Planned. [0:29:09.1]
Running A Business Intuitively. [0:37:19.1]
ON TODAY’S SHOW
Abagail & Emylee
The Strategy Hour Podcast
We help overwhelmed and creative entrepreneurs break down their Oprah-sized dreams to create a functioning command center to tame the chaos of their business. Basically, we think you’re totally bomb diggity, we’re about to uplevel the shiz out of your business.
KEY TOPICS
December, Profit, Lifestyle, Priorities, Foundations, Budget, Projections, Goal-setting
