January 2021 Profit Report: Hiring and Investing While Maintaining a High Profit Margin
Episode 514: Show Notes
It's 2021, and we are diving into our profit reports. If you are new to this segment of the show, we really like to dive deep into what it takes to run an online business while avoiding comparison and not having to question your every move. So, instead of sharing dollars and cents, we share percentages, and we share strategies. We also dive into sharing behind-the-scenes thoughts and actions so you can see what makes sense for you without having to worry about whether you are in the right place and questioning where you’re at.
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We have a good accompanying episode to this one, where we break down the strategies we are trying to tackle for this quarter, and more specifically, we break down the accompanying expenses to those strategies. So if you want to hear more about them, definitely listen to that episode too. Now, without further ado, let’s dive into today’s profit report.
Why We Love January
The nice part about every January is that each year we get better and better at getting enough ahead so we can not only take a significant amount of time off in December, but when January rolls around, there’s not this huge sense of urgency to get back into a routine. This means we can take the first week or two slow. A lot of us forget New Year’s Eve is in January, and for Emylee, she has her child’s birthday on the 4th so, it’s really nice to be able to ease into the month. We try to have our first meeting in the second week of January, knowing that things are going to be relaxed and we can take it easy and get the lay of the land before getting back to normal. We plan less often now that we have systems and a project manager. We do, however, map out initiatives in December for the upcoming quarter. Historically, this has meant us diving deep into it and working super hard, but this year, we thought about how we can ask for help rather than going at it alone. We have to take some time to brag about our team. We have spoken about our struggles with our team before, but we are proud to say we have found our groove and are now in a position where everyone feels heard and comfortable in their roles. So, this January was truly a reset for a lot of us in our team. It has been absolutely blissful. However, for Abagail, when we have decided to delegate, hiring has been quite stressful and time-consuming, but worth it in the end. It's easy to have meetings for the sake of it, so we have to be intentional and have streamlined the process as much as possible.
Hiring an SEO Expert
In January, there were three very different teams and types of services we interviewed for. When we bring on someone new, we like to have around three people we are comparing. This way, we get to see a range of personalities, price points, and services. It has become more important than ever that we jive well with the people we hire, so this has meant tons of Zoom calls this month. The first department we looked to hire in is SEO, search engine optimization. We have spent some time on this in the past. Luckily, with the huge amount of content we produce, our organic traffic has always been quite high, but we did identify some keywords that we should be ranking higher for. Improving these keyword searches would have a direct impact on our revenue. Thankfully, we already had a great working relationship with our SEO contractor, so we didn’t have to go through a drawn-out hiring process.
Responsibility for New Hires and Tax Strategies
So, who, between us, takes responsibility for a new hire? Sometimes, it’s obvious whose team a new person falls under. Abagail basically has the role of CFO, while Emylee is basically the CMO. This means that anything to do with content or copy or tech setup falls under Emylee’s umbrella of responsibility. Abagail, in addition to being responsible for exciting things like taxes, also plays a backup role in operations. While she used to be the only person in operations, we now have a full-time project manager who mostly oversees this. When we need to hire, we still do it as a team, sit in on all the interviews and make sure there is a consensus. This has created a dramatic change in how we operate because now, we actually stay in our lanes and do what we are best at. This approach has helped us grow so, so much.
The next piece we have been hiring for is a tax strategist. We have a financial advisor, a CPA, and a bookkeeper who we love! But with making more profit last year, we need to see what makes sense for us as we grow. It's not as easy as it sounds because we need someone who understands our business and our personal lives. Initially, Abagail envisioned this person taking over all the financial work, but it turns out that it is better to have a dedicated advisor rather than a jack-of-all-trades. Luckily, because this isn’t a replacement role, but rather an additional one, we have some time to think about it. Even though Emylee would rather not partake in these conversations, she can’t escape them.
Upping Our Social Media Game
We have to say that bringing on three different people in three separate areas of the company would not be happening if we weren’t financially secure in our business. There is no way we could have done this two years ago, so we are very grateful for that. The last area we invested in was social media. Maybe you are asking why we waited so long to hire someone for this role. It is probably because we held a false belief that if our social media appeared a certain way, we would make more money. But, in reality, we have actually made the most money when we have taken our foot off the social media gas. That being said, it does have the ability to lift us from where we are. We don’t know how we have managed to create a team that hates social media, so we admit that it has fallen by the wayside. Thankfully, we are in a place where we can devote more time and energy to it. But is it always worthwhile spending more when you can make more by spending less? There are so many business owners who do social media to look a certain way, but it is vital to understand the ROI of investing in a dedicated person. Ironically, we have spent more time and energy on advertising, so we know what we are willing to spend on a new subscriber because we understand their lifetime value.
January Revenue Figures
Those three investments are all we had time for in January. We didn't have any extra launches; we just had our normal shop drop, emails, and blog content. We were both taking our sweet time. So, let’s finally get into some numbers. If this makes any sense, the shop made less this month than last month but still made the same amount. It was a strategic move to have the shop earn less, so the drop was not a surprise for us. So, the shop brought in 49% of our revenue. Our signature program, Strategy Academy, brought in 30% of our revenue, even though we turned off the funnel for a big chunk of time. It's exciting for the rest of the year, and we can’t wait to see how it unfolds as 2021 progresses. We have learned that there is no such thing as a passive product. Our Trello baby is sitting at around 13% of our revenue, which we are very pleased about. We have talked about how we have an upsell after Trello, but this 11-dollar order bump is 2% of our revenue! Can you believe that? Our affiliate income was around 7% for January. We shifted our internal focus away from our affiliates and sponsorships and turned more towards our products, and while we had thousands of dollars less in these areas than last January, we still made nearly the same amount of income overall with only our own products. This is all without having a launch and only working for TWO WEEKS. We still increased our revenue from December to January by 14%. If you compare the overall numbers from January 2020 with this year, we were down 12.5%, but if you took out the sponsorship dollars, we are actually up 37%. By the time we are recording this, we are halfway through Q1, and we are tracking 70% above this time last year with our products. All of this after the pandemic, having a fully remote team, during an election year.
January Expense Figures
So, what did it cost us to do nothing and make more you might wonder? We never thought we would have this problem, ever, but we have been struggling to spend our budget. Our team has consistently been spending about half of the amount. Our ads were only about 20%, but we plann between 25-35% for it, so it’s significantly lower than we projected. This month’s major line item was the team. Keep in mind that we did make two of the three strategic hires that we talked about. Although this was a significant expense, we went into it with the mentality that these were very big investment areas. We have made pretty significant mistakes in this area before, like hiring before we were ready, not understanding where the return was going to come from, or hiring because we just wanted to get something off our plate rather than because it was going to have an impact on our business. Now, we are super clear on our expectations from these hires. If you took out the two hires we made, we would have hit our full 30% plus profit margin for the month. Just to be clear, aside from being in meetings, we didn’t really do any other work, we made two hires and came back late, yet we still grew our business and reached our goals! In some ways, expenses like social media are risks. Luckily, we are in a stable enough position where we can experiment and cut back if we need to. Yes, we have made so many mistakes along the way. But it has become clearer than ever before that if we can spend less money to make more, we are totally thriving.
Quote This
Is there a point where you won’t spend more because you could make more by making less because your overall expenses are less?
Highlights
Why We Love January. [0:03:24.1]
Hiring an SEO Expert. [0:09:48.1]
Responsibility for New Hires and Tax Strategies. [0:12:30.1]
Upping Our Social Media Game. [0:27:41.1]
January Revenue Figures. [0:34:34.1]
January Expense Figures. [0:43:05.1]
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
Profit, Revenue, Strategy, Hiring, Costs, Working Less, January, Meetings
