An Important Report to Run as You Plan For 2023Dec 29, 2022
This is always my favorite time in my business as I love reflecting back at the year before and evaluating what I can do better or different to make the next year even better!
One of the reports I run for my business at the end of each year is a breakdown of income percentages. This is the most important factor for me when considering the direction of my business in the year to come, as I can quickly and easily see the areas that are worth my efforts.
If you are not already running and studying this report each year, let me show you why it is so beneficial. Let's view a sample income breakdown:
Having my income broken down into percentages on an easy to view pie chart, is an important tool for me as I set annual goals, focus areas, and marketing plans for my business.
However, percentages, while they matter greatly, aren't the only thing to take into consideration. The dollar amount correlated to that percentage is a very important factor as well. For example, using the sample pie chart above, Affiliate Income is only 10% of the total income; however, let's say the dollar amount of that 10% is $50,000 ... It may be worth continuing to incorporate affiliate income if it something this business owner enjoys and doesn't take too much time away from the larger income-drivers.
However, let’s say that 10% represented only $1,000 of the total income, and brand partnerships required a considerable amount of time. That’s when it’s time to reevaluate if it is smart to continue investing time into an area of your business that may not be worth it.
If it’s taking significant time and/or resources away from your main money-makers, it may be time to let go.
This is why it’s important that you set up your bookkeeping in a way to categorize each revenue of your income in order to see exactly what’s working and what’s not. For example, if my business was 100% photography focused without various streams of income, my categories might look more like this:
Let’s say I run this same report on these sales and find that my boudoir sessions are making up 6% of my income, totaling $4,000. However, I’m investing a good amount of my time and resources marketing these sessions, paying for a studio, investing in client wardrobes, etc. It’s then I need to decide if boudoir sessions are something that is worth my focus moving forward, or if that time and resources would be of better use in another area of my business.
This approach will either lead you to drop a service/product or re-evaluate your marketing efforts in the upcoming year to allow for greater profit margins.
Don’t continue to invest your time and/or resources into something that continually isn’t showing a return of that investment.
This same report and approach should be done for your expenses each year as well! If you are continuing to spend money in a certain area that isn't contributing to your overall goals, then it's time to revaluate that expense in 2023!