Why We Share Our Income Reports & Why You Should Be Making Your Own P&L
Episode 042: Show Notes
On today’s episode, we are super pumped to talk to you about why we share our income reports. In the interest of being transparent, we have decided to walk through the process and the reasons behind it. So, in case you guys didn’t know, we have two income reports floating around the blogosphere right now, showing you exactly how much money we make. Now, we are not saying you should just be flashing dollar bills around — that’s not what we’re doing here. However, when we saw that they showcased how we made our money and where it actually came from, we realized that our income reports could be super a valuable and helpful tool for you guys.
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In the first income report, we showed the first eight months of 2016 and how we went from zero to over $103,000. It helped us to really see the breakdown of where the money came from and understand where we should focus our energy to grow the business. A lot of people are just not sure how these online businesses work and there are so many claims running rampant on the internet. So if you are looking for some clarity around income reports, jump straight into this episode!
The Term “Passive” Does Not Really Mean “Passive”
In the passive income world, there is often a big misconception that “passive” means doing nothing. Believe us, this is not the case. We worked really, really hard to build our business and set it up in a way in which it could earn passive income. Now, you might have money come in while you sleep, which is great, but you’re going to have to do a ton of work to set that up! There are still ups and downs in income and it is definitely not always easy. But the systems we set in place last year continue to pay off now, which is awesome! We built a lot of assets last year that we continue to be able to sell today, which has made this year so much easier.
Looking Past the Fear of Judgement and Sharing Our Income
Sharing our income report is a very vulnerable place for us to be, and it has not always been easy. However, in an attempt to help others understand how to build their own businesses in a similar way, it is crucial that we put the information out there. Every move we make or decision we take is open to being judged, and sometimes this puts a lot of pressure on us to “out-perform” our previous months. Through this, we have to continue to remind ourselves that it is not a perfect system, and it is not made to be steady, necessarily. Although it is normal to have highs and lows from month to month, we are not going to lie and say it that we aren’t sometimes frustrated by this, which is why we are laying it all out on the table so that you can learn from our journey.
Revenue and Income Goals are All Relative
For us, we set out a goal to take on Pat Flynn’s advice of working towards earning a little bit of money every single day. We clearly remember the day that we actually hit our goal, and although it might have only been about $2 per day, we still felt so grateful and proud that our hard work was slowly starting to manifest in our business. We even got to the point where we were able to bring on others within the company to help it grow, and we always wanted to be super transparent about this. Once we brought more people onto the team, it diluted our average sales again, but how much we earn is all relative to where we are! Although in California we would probably be poor, our business allows us the freedom to work from home in pajamas all day, which is exactly how we want it. So make sure you aren’t putting extra pressure on yourself to be striving towards someone else’s goals; your success is all relative and should be in line with your own business goals.
The Top Reasons to Do Your Own Income Report
Creating an income report gives us a chance to have those critical conversations every single month about our business and how it is performing. We want to encourage each and everyone one of you to make your own income report and look at the data and the numbers that it spits out. Now, you do not have to share this with the whole world, but it can definitely give you the insight into your business that you need to move forward. It can show you where you should be focusing the majority of your time and exactly which business segments are bringing in the most profit. The profit and loss statement can help you to keep track of exactly what your expenses look like each month, and how you should be earning to stay profitable.
What is Math, and Why Do I Need a Business Account?
When it comes to your business finances and doing the math, first of all, you’d best be having your own business account that is separate from your personal bank account. If it is not separate, we are calling you out! Keep in mind, you do NOT have to be paying for a business checking account — it should be free. Once you have a separate account, your bank should give you a statement every month and because you have a statement, you can see all your charges and income. Now, we recommend not leaving the statement as is, but adapting it into your own format. This way you can also check on additional revenue sources, such as PayPal, to make sure that everything is properly accounted for. Don’t let yourself get overwhelmed by the math; find the right resources and tools to help you feel empowered by your business numbers instead of stuck and scared by them, and see how things change.
Quote This
To be a responsible business person, I think it really makes sense to be profitable every month.
Highlights
Find out why making passive income doesn’t necessarily mean working “passively”. [0:04:27.6]
Learn how we overcame the fear of judgment in order to share our income opening to help others. [0:07:35.6]
Understand how income goals are all relative and super specific to your own business capacity. [0:13:18.7]
Hear the top reasons why it is critical for you to do an income report for your business. [0:18:58.4]
Find out where to start, how to navigate the math, and why you need a separate business bank account. [0:27:08.1]
#TalkStrategyToMe [0:37:27.5]
Get a separate business bank account.
Pull the information from your account and put it into an Excel spreadsheet or enter it into QuickBooks.
Analyze the data from your income report on a monthly basis.
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
Creating passive income, Sharing our income report, Setting income goals, Creating business income reports, Doing your business math, Opening a business bank account
