Editor’s Note: This is a guest post by Nathalie Lussier.
When you’re a solopreneur, you have unlimited opportunities and unlimited tasks to do. How do you distinguish between potential projects, partnerships, and outreach opportunities? You might try to buckle down and attempt them all, but if you’ve ever tried to chow down on an entire batch of chocolate chip cookies in one sitting you realize quickly that the sugar crash is not worth it. Take it from a recovering cookie-a-holic, I know.
One of the most profound discoveries I made along my journey as an entrepreneur was seeing where my income came from. It’s easy to lump all of your sources of income into a category like “clients” or “products”, but unless you really sit down and look you won’t have a clear idea of what to spend your time on.
Here’s what I suggest you do, and I promise that by taking a look at where the money is coming from you’ll better be able to decide where to focus your time.
- Write down by category where all your business income is coming from. That might be products, coaching, services, sponsorships, advertising, affiliate sales, depending on your online business model.
- Now find out what percentage each of these categories contributes to your total for the year.
- If you have a little more time, write down your expenses for each of these categories too. You might find that you’re hiring more staff to deliver on certain products or services, or that certain offerings aren’t as profitable as they appear.
- Now it’s time to look at your average todo list. Do the things you focus on regularly reflect where the money is coming from?
After doing this exercise, I was able to see which parts of my business were the most profitable for me. It’s tempting to just focus on the projects that excite you the most, but this sobering exercise can help you see that although it’s good to focus on projects that make you happy, you need to pay attention to the ones that are the most profitable for your business too.
This exercise will also help you see if there are any places that you might be able to delegate some of your work out to others who can do a better job than you can. For instance, you might realize that the product sales part of your business is not bringing in as much revenue as you had hoped, but that you spend most of your time providing customer service for these products.
By hiring someone to manage the customer service end of things, it would free you up to provide more value to your coaching or consulting clients, for example. Or you might be able to spend more focused time creating marketing campaigns for these products, to help improve the number of sales you make (without worrying about how much customer service you’ll need to provide after the slew of sales).
I’m a huge fan of leading by example, and since I want to see you take action and do this exercise, I’m going to share my numbers with you. Every business will have different numbers, and they might fluctuate a lot depending on your business model. Here are mine at the time of this writing:
- 80% Web site design, and marketing launch consulting packages (I could break this down even further)
- 11% Affiliate products
- 9% Information product sales
I’d love to see your numbers in the comments below!
Nathalie Lussier is an online business triple threat who runs a web design and online marketing firm. She loves writing about the advantages of being a woman entrepreneur in today’s world, and she helps people get techy with their businesses every week through fun how-to videos. Follow her @NathLussier.
Ricardo Bueno says
It’s very revealing to sit down and write out these numbers. And important too because if you’re a creative like me, it’s too darn easy to get distracted working on one thing, then another and another. When really, you should be focusing on the things that drive business, first.
@Ricardo Bueno Absolutely! It’s amazing how easily we fall in love with new ideas, when usually the ones we’ve already got are still working. 😉
Great ideas. I track my numbers closely, but am breaking things down even more. For example, I have fewer clients for one type of service, but they usually invest almost 10x more with me than those choosing other services! Shows me where to spend my time.
@laurasimms That’s so cool Laura – I think numbers are so telling… and sometimes selling more of one thing doesn’t necessarily mean it’s better, like in your example where people invest more in your other service. 🙂
Great article. I included it in my latest issue of Freelancing Weekly (http://freelancingweekly.com/issue-10) a once weekly, free newsletter of curated tips, articles and resources for Freelancers.
@jschoolcraft Thanks for letting us know, that’s awesome! 🙂
This is really vital to do–and to look at regularly. What generates revenue RIGHT NOW may not be what generates revenue in 3 or 6 or 9 months. But that doesn’t mean it won’t generate revenue again in 12 months. Plus looking at revenue in context over time is helpful. For example, in raw numbers, our product sales blow away every other revenue stream we have. But those sales all tend to happen in the 2nd half of the year. Raw income from classes is much smaller (maybe 5% of overall sales), but it is income we can count on at certain times of the year AND in the 1st quarter, it is a HUGE revenue stream relative to our other sources of income at that time of year.
@LeanneS That is such a great addition Leanne. Timing really does play into this depending on your products and services. I find that some of the things I offer are really kind of seasonal – like people want to redo their web sites during certain periods, and launch during the fall, etc.
@bslmNYC @charliegilkey Will check out. Thanks!
This is not the first time I hear about the importance of monitoring and tracking your results. I think this goes hand in hand with the 80/20 principle. What a timeless wisdom!
@tohami It really is timeless isn’t it? 🙂