November Profit Report: Would You Take a Short Term Loss for a 5X ROI?
Episode 392: Show Notes
Welcome to the November profit report! All businesses experience ups and downs – we do too – and sometimes what at first seems like a minor thing turns out to have a big impact on profitability. You all know by now that we’re all about profit here at Boss Project and we’ve spent too much time focused on the top line that we missed many of the intricacies going on in the background of our business. We’ve been showing you how to stabilize your profit and our own goal is to get to that 30% mark, but we also understand that there are many moving parts – things that are beyond our control – that ultimately determine your profit. For starters, it’s imperative for you to know exactly what comes in and goes out of your business every single month and to be truly aware: you can’t fix something if you didn’t know it was broken! Three factors impacted us negatively in November, two of them were actually preventable, but now we know and we won’t make those same mistakes again.
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When we talk about being aware, you have to know your awareness not only drives your decision-making, but it makes you alter your focus on the flip side. It’s not necessarily that you need to decrease your costs, but it’s about looking carefully at what the root problem is. Something might even seem like an issue when it really isn’t. That’s why you never make decisions on a whim: decisions should be made after digging deeper to find the underlying problem. When you have this kind of information, you might look at your results differently. Join us again today as we take you through the highs and lows of November 2019!
Summit Sales and Strategy Academy
In November, we did our fourth online summit and while we saw 10% of our total revenue in October was from the summit, that number jumped to 48% in November. We wondered how this number would increase from October – which is when we started selling the summit – to November when the launch took place, and we are super happy with the 38% increase! The summit took most of our energy and focus, but there was still background income from other channels too. So, while we were occupied with this project, the other income streams were on autopilot. In November, Strategy Academy held steady at 39%, but we still think there’s room for growth there. We’re also sure that as the payment plans begin to stack and more people sign up, we’ll start to see an increase in revenue from this program over time. There also seems to be a synergy between our different offerings where they complement and help one another along, so we’re trusting for more of that in 2020. We want to continue showing our students how they all slot in and really highlight that fact. Our Trello course continues to deliver with minimal input, and the reason why we don’t give as much attention to this program is that it’s a $29 product while our signature course is a high-priced product.
The High or Low Pricing Debate
Some people have a different philosophy, however, and do super well focusing on low-priced products, but that only works if you have high conversion rates, a massive audience, and through-the-roof engagement. So, if you have such a high volume following, you can make good money on low priced products, but this does not make sense for our business. We would strongly disagree with those who say it’s easier to sell and be profitable with products that sell at a low price than trying to sell high-end products. The moment you fall in love with a product, even if it’s premium, you are willing to save for it or go the extra mile to get it. This is where the product-based business is tough because you have to sell a ton of low-priced products to cover your costs like shipping and labels. On the other hand, when you start by selling a service, you have none of the cost that goes along with a physical product.
How Trello For Business Performed Over November
Our $29 course, Trello for Business, made up 34% of our overall revenue in November – and it keeps amazing us! People are loving this course and if you haven’t checked it out, please do. If you want to learn how to organize your business and your life, sign up for the Trello for Business program. We also just put out a free board, so if you want to try it before you buy it, you can go to bossproject.com/freeboard and get a taste of it. So, the summit, Strategy Academy and Trello for Business were the biggest sources of income for November and going forward, these things will continue to lead the pack. But, there is a surprise in store and one of the three elements might be replaced by another! But more about that at a later stage.
A Short-Term Loss For A Long-Term Gain
You might think we’re crazy, but our cost of goods sold was 78% of our revenue, 72% of which was advertising – which is double the month before! Before you decide never to listen to us again, we got a 5X return on investment in our advertising in November. Unfortunately, it’s on Strategy Academy which is spread out over 12 months, so it will take us 12 months to get the whole 5X, but that’s why we’ve spoken about opportunity cost: are you willing to take a short-term loss over a long-term gain? Many businesses play into this and some can afford to do it while others can’t. It’s important to consider all the options because it all depends on your personality and the state of your business. We talked before about being aware of your break-even points, your stacking points, and how much you are going to “lose” before it breaks even or before you gain. You have to remember that deciding to “overspend” initially is always going to be a gamble because there are no guarantees you will get a return on your investment, but it’s a chance that is often necessary to take. What really helps is having both the risk-takers and the more careful, conservative people on your team so you can strike a balance.
The Two Totally Preventable Mishaps in November
The second reason why our November was a bit wonky was 100% preventable. We missed an invoice from one of our regular contractors in October and thus had to pay two invoices in November. This obviously impacted our profit, and so 42% of our revenue went to contractors. Remember, our goal is 20%. If we had not had the double payment, our overall payment toward contractors would still have been high at 30%, which would have made sense since our ad spend was higher, we had summit stuff, people were working more. The other thing that took a huge bite out of our profit was the fact that we decided to switch our payment processor. We still use Stripe and PayPal but all of our courses are on Teachable. Still, we’ve been running payments through our own processors (Stripe and Paypal), but they are beta testing a new thing called Teachable Payments, and this did not work for us. The worst thing was that we had to switch PayPal over to their processor, and now every PayPal transaction has a 30-day hold period, and so we didn’t see that revenue in our business. Twenty-five percent of all payments to our company go through PayPal, so you can imagine the impact that had. It looked like our revenue dropped dramatically when in reality it was just in a holding cell. So, there was a loss in November, but it was related to the three things outlined above. Sometimes the unexpected happens!
Quote This
As soon as you fall in love with something and see the value in something, even if it’s premium, that to me is easier to sell.
Highlights
Summit Sales and Strategy Academy. [0:05:18.1]
The High or Low Pricing Debate. [0:13:48.1]
How Trello For Business Performed Over November. [0:23:55.1]
A Short-Term Loss For A Long-Term Gain. [0:27:09.1]
The Two Totally Preventable Mishaps in November. [0:33:05.2]
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 report, Summit, Strategy Academy, Trello for Business, Pricing, Payment processors, Awareness
