July 2021 Profit Report: Our Business Model is a MaaS & Why Yours Might Be Too
Episode 566: Show Notes
We are back here with another fan favorite: profit reports! Let's talk about all the things we did in July and how much money our products made. We love the profit reports because they are such a great opportunity to break down what’s been successful in our business. They also give us a chance to reflect on the things we did, the things we worked on, what we would do differently, and how it would ultimately affect the bottom line because that’s what this is all about. It's not revenue or how much income we generated; it’s about the profit we make in our business.
For a while now, Abagail has been talking about using percentages to divide up your profits, and recently, she had a question about a line item. So, she asked our bookkeeping company what some of their recommendations are. They work with hundreds of online businesses in the space we are in, and they have an understanding of the breakdown of things. What made her so happy is that the things we have been working so hard on are the top amounts we should be searching for. This isn’t arbitrary and doesn’t just apply to our business; it’s applicable across the board! And we take a lot of pride in setting our business up in this way.
That is also why we share these as percentages because the amount can throw people off if their businesses are not in the same arena or do not have the same goals. But there are percentages that literal professionals recommend businesses are at in terms of profit, or team, or education, or advertising. So, knowing when you’re in that ballpark is really, really reassuring as you continue to make a decision.
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Why July Was Such a Busy Month
July was possibly the busiest month we’ve had in multiple years. When you run your own business, there will always be different seasons, and in Q1, we set some long-term strategies in place. Accordingly, we decided it was time to pick up a notch, which is why July was so hectic. Taking action is the thing that is going to move the needle, so we were intentional about putting our heads down. Week after week, the universe has tested to make sure we know what we want. It has been bizarre being in this season, and on top of everything, we updated our membership offering for The Creative Template Shop. Before we rolled it all out, we did so much behind-the-scenes work to ensure it would be smooth when we implemented it. We believe in getting paid while you are launching something, so think about how you can have a beta version of your product or service that a small group of people can pay for. Not only were we putting in place some of the biggest changes we have ever made, but we also had the biggest promotion for our affiliate partner as well.
Launching the Challenge
Just to remind you every business will have seasons. We have gone through phases where we have done too much, others when we have not done enough, and others where we have just gone with the flow. What's different about this season of growth is that we have been intentional about it. This does not mean that it is not easy all the time, but we know that it won't be like this forever. We know the work we do now will set us up for long-term success. So, we ran our famous 5 Days to Launch challenge that has helped tens of thousands of small business owners. Part of this was teaching participants about Dubsado, which helps with streamlining; it's the product we wish we had when we started. So, alongside our challenge, we ran Dubsado's three times a year sale, and even though it was intense, it went really well! We realized the value of having the same product that you continue to refine and make better. Our challenge has been around for so long, but we have continually updated it to meet people where they are. Businesses have cycles, and there are times when people come and go, but we still get shocked at how many new people are finding our content each month! This is crazy because the way people consume media has changed.
Our Expenses for July
The interesting thing with affiliates is that you spend money now in the hopes of getting paid later. When we promote our own products, we usually get cash in the door right then and there. So, what were our expenses for this month? We spent more money on ads in July knowing we were promoting the challenge, even though it’s totally free because we knew we were promoting our Dubsado affiliate. We only get paid for that in August. So, knowing this, we spent more in July. Ideally, the cost of goods sold number should be around 30%, with 25 – 26% being actual marketing costs. But this month, it was 40% for us, which breaks down into 35% ads, 4% fees, 0.5% affiliates. We know it will be lower again in August. Next up, is Emylee’s computer upgrade. She had her previous desktop for 10 years, and over the past one-and-a-half years, Abagail has heard her complain about how slow it had become. So, now we both have new computers, all bought by the company, which is pretty incredible! This does mean we have higher expenses, but you have to think about your hardware in your business from time to time. Usually, our hardware and software expenses are around 1-2%, but this month it was 15% because along with our computers, we also bought the best headphones. For a company our size, these expenses are typically low because we are thrifty. Finally, our team expenses are interesting because our business straddles business categories; we are going to say we’re a MaaS (membership acting as a service). For a long time, we have felt like 25% was a number we are comfortable with, and we are proud to say we have gotten it down to 28%.
How Much Did We Bring in in July?
The shop is moving and grooving, and we could not be happier. We remember a time when we had so many offers, and it was so hard to keep track of. So, having a flagship offering, which brings in 50% of our revenue. The Shop, which includes the membership and the one-off templates brought in 61% this month. And would you guess that Strategy Academy and Affiliate were next at 17% and 16% respectively? It's been interesting watching our SA go from our main offering to just a part of our business over time. We still love it, and it’s getting an amazing facelift in the next bit. If you have been thinking about SA, get a hold of us. We want you to create consistent revenue, and SA is the way for you to get there. Affiliates have been at different amounts at various stages of the business. So, if you have been paying attention, you will have seen that our higher-than-normal expenses cut into our profits, which puts it at 6% for July. Our goal is to get to 25% -30%, and while this seems far off, we can get there. Without being cryptic, we are going to have expenses because of all the changes we are going to be making. We are so proud of ourselves because we have achieved so many milestones, and we know we are just getting started. Yes, we haven’t had a seven-figure year, but we are about long-term impact and building a sustainable business that supports the lives we want to live. If this is the first episode you are listening to, please DM us to tell us!
Quote This
The biggest difference between you seeing the results you want in your business and getting stuck and staying stuck is action.
Highlights
Why July Was Such a Busy Month. [0:04:42.1]
Launching the Challenge. [0:12:47.1]
Our Expenses for July. [0:26:28.1]
How Much Did We Bring in in July? [0:41:18.1]
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
Expenses, Profit, Hardware, July, Busy, Seasons, Challenge, Affiliate, Changes
