How to Analyze your Business
Right, so I said we have to eliminate stuff so that we don't have all these extra tests. How do you decide what you eliminate? How do you decide what to make a priority? So I really encourage you, you need to get out your books, you need to download your sales records, you really need to crunch the numbers. A lot of us, with our businesses, get lulled into just doing what we always do, right? I wake up in the morning, I check my emails, I write an article, I do whatever I do, and we haven't actually looked at the guts of our business and figured out, 'Is this important for me to be doing?' And there is no better time in your life than right now to do this. So this ultra-efficient mode we wanna move in to, especially for the short time period, or for the maintenance mode period, might mean shedding some of the explorative, or creative parts of your business because we just wanna get the meat of what works. And this may stress some of you out, but you may miss out on some opportunities. ...
Alright, you might not be able to fly to some photo shoot in Paris the week after your baby's born because now, we're looking at our life as a whole. We're trying to figure out what's best for the long term, what's best for my stress level. I will tell you how I took my leave, and I'll show you some examples. I may have pushed it too hard. My daughter went on 30 flights before her first year, because I took time off from my business and we were just like man, we're gonna travel. Might hit it too hard. So I turned down some opportunities, but our eye is on a happy, peaceful, well-balanced life where we don't feel like the balls are about to drop every second. You're always gonna be juggling, but you don't wanna feel like you're about to get rained down on every stage of your life. So here we are. Worksheets: income and expenses. We want to do more of what's making us money, so haul out your sales records. It's so boring, I know. Unless you're running an accounting business, this is like your dreaded stage of life, huh? So pull out your financial records. What product makes the most profit per item? So this might not be the item you sell the most of. But if you make handbags, and you have one top-notch, luxury item that you are able to make a really good profit on, I want you to write that down. And so for everything that we do that's really working well, we wanna think, 'Hmm, can I do more of that? 'Can I harness that item and do that more often?' Because remember, from now on, we're only going to have less time available in our day, so we really wanna capture these things that are working fantastically. What product sells the most? So you may not make a huge profit per item, but what item is just rolling out the door, selling the most? That's a really good thing to keep in mind. What's your top referrer? So I mean, do you get the most visits from Google Ads? Are you getting clicks over from Pinterest? These are things that you wanna know, because when we talk about delegating tasks, and putting money where it really works, these may be places where you wanna take out ads. Or, these may be groups you wanna target. You really wanna get all of your stats out, and really look at what's working well so that we can just do more of it. That's the easiest way to grow your business, is do more of what's working really well. Where do you get the most sales? If you're like me, you run an Etsy shop as well as your own website, maybe as well as some other third-party sites. Where are you getting the most sales from? Because that very well may be where you focus most of your energy. What image, usually a product image, gains the most social media engagement? So this is an interesting one to look at. It may be this fantasy product that you sell. It may be something you don't really sell at all. But that's something to keep an eye on, because sometimes it might be for a bag, I'm using a bag as an example, that you have hired a model for. And so if that's why you're selling... That product image is getting so many likes, maybe when you're thinking about 'What can I do that's most efficient,' it might be to hire a model for the rest of your product photos. So now you can sell more product with doing less work. We're making smart choices here. So you wanna compile all of this and really think about what's selling well and why. So is there something that really appeals to retail shops? Something doing well on the internet? And think about it, because these are the things we wanna capitalize on and do better, so we can make the same amount of money in less time. Now, you also wanna look at where you're spending money, because if you earn two dollars and spend one dollar, it's the same as earning one dollar and spending nothing. So another way to increase the amount of income you're getting in is to decrease your expenses. What are your three biggest expenses in your business? Maybe you are maintaining a studio. Maybe you are buying tons of materials. I know a lot of craft business who buy their materials retail to start out, and they never make the jump over to purchasing their products wholesale even though now they're buying in quantities that they really could. So think about these expenses and say, 'Can I slim them down? 'Can I streamline my product a little bit?' What are your monthly costs for operating? These may also include commuting costs as well, and those are things we wanna think about. Does one product require really high risk, or inventory cost to make? So let's say you make this great bag that uses a special kind of leather, but you have to buy a 20-yard bolt. And that really expensive bolt just sitting in the back of your closet, even though you don't use it very much. That's a super high inventory cost that you have to take on to make just one of these products. So that could be something that you're thinking, 'Oh, maybe I could cut back there.' Alright, so brainstorm. How can you cut costs? Are you comfortable with the level of money that you're keeping sitting around in inventory? Can you think of similar products you could sell that would lessen your burden? These are just sample questions. You really wanna spend a lot of time, not this two minutes that we just did, a lot of time thinking about what path your business is on, and how you can optimize the income, and how you can optimize the expenses. Well, lessen the expenses. So, we wanna do more of what's making us money. So I'm using a bag maker as an example. I wanna talk about two completely different ways you could streamline production and make the same amount of money in your business, but two completely different operating things... Operating mechanisms. So let's say you make bags and you're about to have a baby. And so you're thinking well, 'I did custom orders and I did ready-to-order... 'ready-to-purchase orders. 'How do I manage all of this craziness that's happening?' So one possible path that's a completely reasonable path is saying 'You know what? 'I know I can get in two hours to sew every night. 'All I'm gonna offer is that same black handbag, 'over and over again. 'It's in my shop, it's ready to ship. 'I'm just gonna spend my time cranking out this product 'that sells really well, and keep my shop stocked 'because I know I can get in that hour or two a night.' And if you know it's a good-selling product, you can keep it rolling and be really comfortable with where you're at in your business, right? And that's a super good model for someone who, especially if you, like me, on no sleep feel a little bit brain-dead, and you're just like, just keep sewing this same old bag that I'm doing. Another kind of person maybe just really feels passionate about doing creative work. And they're like, 'I am not spending the three hours free I have a day 'sewing the same old bag.' So maybe that person shuts down their standard, ready-to-order business and says, 'I'm only taking custom orders. 'When you take a custom order from me, 'it's gonna cost a fortune, 'and it's gonna be four weeks before you get the product.' But because this is a high-end product, you can charge a lot more. And your creative soul feels really inspired by doing only one bag a month that you're charge big price for. But you love doing it, you're still getting paid a great amount of money, and your time is a lot more flexible, right? You can work on it all day one Saturday when maybe your partner is able to watch the baby. So these are two completely different ways to streamline your business. Neither of these people is doing absolutely everything. They're picking one path that they've shown examples previously that have really worked for their business, and they're moving forward with it. Another example of a place where there's a lot of flexibility in terms of how you turn your business... It terms of how you turn your business, is someone who's a photographer. So let's say you were doing some photography, some commercial photography, but now you're starting to think about how you're gonna manage your time. And you sorta realize, 'You know, my spouse is home on weekends. 'If I could switch over to gigs where I'm gone 'all day Saturday, that would actually work 'a lot better with our life.' And so maybe you start doing more weddings, even though that's not something you've done... Wanted to focus on in your career. That may actually just work really well for your life. And if you get the balls in motion before you have the baby, that pivot can be really seamless. Another example is maybe you have a spouse who's a teacher, and they're free in the summers. And so you say like, 'Hot dog, I'm doing senior portraits all summer long.' And so you can change your business a little bit. It doesn't have to look like, 'Ahh freaking out, ditching what I do.' You're re-shifting the focus of your business, doing what you know works, but in a way that's more compatible with your schedule. So it's all about keeping up business momentum. All of the examples I just showed you are people who were cutting back, but keeping the momentum going in a very streamlined way. And so, depending on when your baby arrives, this will look very different for different people. So, for example, say you're a tax preparer, and your baby's due in April. That's bad timing. You would absolutely not want to just tell all of your customers, 'See you later, I'm taking this April out.' Because the business momentum involved... Many of your customers, once they've gone to this other tax preparer, there's a lot of momentum there. Now the next year, who are they gonna go to? Well maybe it's the person who already has all of their records from the previous year, right? So that's a case where even just taking off a month, a poorly-timed month, is really detrimental to your business momentum. So one idea could be that she tells all of her customers, 'Hey, I need to take April out. 'I'm automatically gonna file your extension until June, 'and I'm filing all of your taxes in June.' Most people would be... I could care less if my tax preparer did that. Another option this person could have would be to hire a junior filer to help them. And maybe they wouldn't come out earning a whole lotta money. Maybe they're paying Ms. Junior Filer basically everything they're earning. But they're keeping that momentum within their business so that the next year, they're not further behind. Because remember that this is all about keeping your income at the level we want for the next 20 years. It's not just about this year. Alright, so that's a concept that I think is super important. So let's turn to talking about all of those things... Take the information we learned from analyzing your business and now talk about how to make your plan work. So hopefully at the end of this section, you'll feel in command of the details that will guide your leave period, including some great tips for efficiency and how to work ahead so that you can create, and make the most advantage of this downtime, and this really special time in your life.