Here we are in this crazy online world, filled with a million to-dos in order to “make it”. Danielle LaPorte says we need to allow our desired feelings to help us chart our goals while Gary Vee says we should just hustle till it’s ours. Then there’s the whole Pinterest and Instagram and “to Facebook group or to not Facebook group” vs IGTV and hooowww the hell do you keep up with all of it?
The worst part? You can literally do all the things and get all the clients and STILL not actually turn a profit!
Anyone been in this space before? Spending more than you’re actually making or maybe having big ass months but just not understanding where the money runs to in those slower months?
Surprise, it actually happens to most online biz owners. Not many people actually get to learn about finances – we’re all just expected to know this ish. Oh, but don’t forget, it’s taboo and weird to talk about the real stuff. Nobody wants to hear it unless it’s your marketing post talking about your $10K months ?
At the end, all it does is make you feel like you’re not a *real* CEO.
But guess what boo, YOU ARE, don’t you worry about it.
All you need is to understand these 5 main things and you’re well on your way to feeling it too.
1. How much profit you actually want to bring home this month
We’re gonna start this out a little woo woo, but trust me. This one is real important.
Whatever you want to call it, God, the Universe, your Highest Self, whatever, there is a higher source power out there looking to push you towards your goals, even if it’s just your own intentions to yourself. When you define something like a desired profit number, that’s like the target and your source power is your bow that helps you shoot your arrows directly at it.
But like a real bow and arrow, if you’re not aiming at an actual target, you’ll hit whatever you manage to hit and it’s like ?
This is the most important step to taking home a profit because you can set up your action plan needed to get there. If you’re not sure how to do that, check out this post to get you there.
In my badass tracker, I added a “Money Focus” box because every month you should be focusing your sights on something specific every month.
This continuously keeps your actions and strategies aligned with what’s MOST important – there are a million things you can do, you get to decide what you will do.
2. Revenues vs Cash Flows
When you read one of those posts on Facebook that’s like “Look at me! I just had a $25K month!” and you’re like “Yay! Killin the game boo!” (cus I know we all cheer each other on in the online space). What we don’t talk about is whether or not that’s revenue or cash. Having a $25k REVENUE month doesn’t mean you can actually pay all your bills this month.
What? How can someone make $25k and still not be able to pay bills?
I know, crazy, right? Welcome to money moves 101.
When we make sales, we don’t always get paid in full, up front. We also might have outstanding contracts that are still being signed. TOTALLY still counts as sales (and in some cases, the IRS definitely considers that a sale) but taking care of your cash flows is what allows your business to pay the bills and allows you to re-invest in your continued growth.
So some people might have a giant month and turn around and invest in that higher value coach because you *know* that money is coming in.
However, understanding your cash is important because this difference frequently determines whether or not a business can actually survive – running out of cash can be a terrifying thing. When cash flows are off, you get backed up and behind on bills and then when you get paid, you actually end up just playing catch up and it becomes a chase for the next dollar. Yuck!
Since that’s something I actively want to help people avoid, I structured my tracker on a cash-basis system so you’re recording your income when you get paid, not when the sale happens.
This is designed to help you to project out your income and expenses based on the money moving in and out of your account. This also allows you to track your profit on a monthly basis. If you’re ever negative one month, you can make an adjustment before it’s too late.
3. Investments vs Expenses
If I told you to give me a dollar and I’d immediately give you $2 back, would you be interested in that deal? I hope so because that’s a great return on your money! Let me ask you though:
Do you know where those deals are happening in your business? For every dollar you spend on advertising, how many dollars do you get back in new clients? When you invested in that new coach, do you know how much growth it actually brought your business dollar for dollar?
This is very important to determine for your business because this is the difference between an investment vs an expense.
An investment is something that brings you more money in than you put out.
An expense is something that you get exactly what you paid for.
In order to make your wisest investments, you have to know what your expected return is. If you buy a new course for $2,000, how many dollars do you expect your business to earn based on the new knowledge? Would you accept for you to earn $3,000 extra? Or would you need something more, like $5,000? For a walkthrough to determine this, stay tuned for another post over here.
In my tracker, I have space for your investments so you can see those numbers laid out for yourself. When you have that coaching payment in your tracker, you should be able to see a clear increase in your profit over the following months.
4. Highest Margin sources (and how to create more from there)
Most online biz owners have multiple sources of income. We’re all here creating different programs, courses and offers to serve our audience at our greatest capacity while generating income. As an example, for myself, I have my 1:1 consulting program, I have bookkeeping services for small businesses, I own a cell phone repair store (random, I know lol) and partner with a few finance apps, like Divvy and Qoins. I can tell you how much each of these sources brings in monthly revenue, as well as what my expenses and time spent on each space is.
Continuing with my example, I don’t make much money partnering with finance apps. I do it because I enjoy it, fully support them and think literally everyone should be using them to make money more fun.
Why does this matter?
Could you imagine if I was spending more of my time doing promotion for these apps than I do for my 1:1 consulting? Or what if I was spending more money on advertising for the cell phone store when it wasn’t growing in revenue?
Going back to investments, since I take the time to know exactly how much my profit margins are for each stream of income, I know how to make decisions to maximize that revenue. I can double down on the best marketing and efforts because I know it’ll produce the biggest results.
5. Expense Tracking
You knew this one was coming, right? Here’s the thing: Income is your #1 focus and needs to be all the time. It changes the game on a way bigger level than cutting expenses ever could because at some point you can’t cut anything else.
You should never reach a point where you can stop earning more!
However, if all you do is earn and spend, you still won’t make it. You do need to track your expenses because a small leak can sink a great ship. I know, nobody wants to get out their bank statements every month but this is really one of the most empowering habits you can get into.
This is your opportunity to make sure you only spend money on the things that bring you value.
Maybe the activity itself sounds boring, but nothing’s boring about adding value to your business. With that said, one of the top questions I’m asked is “what business expenses can I deduct?” So I added all of those to the tracker to make it crazy easy to accomplish this step!
So if you want a profit this month, which of these are you planning to deep dive into to increase your growth? Let me know in the comments below!
PS if you need a way easier way to keep track of all of these things, check out my #1 client resource here!
Yes agree about Number 1, you need a detailed goal defined not just an objective. That way you know if your actions are efficiently helping to meet that goal or your just spinning your wheels.
Oh yes, and it also lets you know how to correct your path instead of just thinking the goal is wrong! Thanks for reading and for your input!
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