As the year comes to a close, and you’re doing your business planning for 2020, it’s important to reflect back on the year.
By doing this, you can learn what went well and makes sense to keep doing, and what didn’t go so well and you can let go of.
I’m going to take you through a 2019 financial review for your business, so grab a beverage, put those fuzzy socks on, pull up your profit and loss statement, and let’s dive in.
A quick side note before diving in – if you’re just not a numbers person, if this is feeling overwhelming, or if you’d rather have someone do this for you, you can outsource this! Book a 2020 Financial Strategy Session with me here.
As you look at your profit loss sheet and review your revenue – which is the total amount of sales generated in your business – here are some questions you can ask yourself to begin reflecting:
-How much money did your business make in 2019?
-Where did that money come from? Was it products, services, or a mix? How much did you earn from your different sources?
-What revenue streams are really working for you? Why?
-Are there any revenue streams that aren’t really working for you? Why?
You can think of these last 2 questions both financially and in terms of time, energy, and how you feel about different offerings.
The biggest thing is to take time to reflect on the money you made and write down your biggest takeaways and learnings.
Expense and investment review:
During this section of your financial review, you’re going to take a deep dive into everything you spend money on in your business. I like to break it down into 3 categories.
1. Fixed expenses – money you’d spend in your business no matter how many customers you have. This may be things like software, subscriptions, insurance, your VA, etc. This is the amount you’re spending to run your business every month.
Something to think about here – are you fulling utilizing all of these expenses? Maybe you signed up for that membership and barely use it, or you have a team member who isn’t really working out.
2. Variable expenses – money you spend in your business to produce and sell your products and services. This may be contractors, ad spend, affiliate commissions, or the cost of materials. This amount fluctuates based on your sales.
How much does each revenue stream cost to produce? Consider the time and energy spent as well.
For example, did you spend way too much money on ads on your last launch for the amount of sales you got? Maybe you paid out a lot to your affiliates but they’re not producing at the levels you expected
3. Investments in your business – money you spend to grow your business. This could be going to that conference, hiring a coach, or buying a course. Things that help you learn something new or get you to the next level faster.
Out of all the investments you made, were those good investments? What value did they bring to you? The value could be financial, educational, new connections, or a mindset shift.
What did you learn about how you’re investing in your business?
Last but certainly not least, your profit! My personal favorite. Your profit is your revenue – expenses.
You can look at your profit from two perspectives here:
1. Your total profit: This is your total revenue – expenses.
You can discover your profit margin to see what % of your revenue you get to keep as profit.
Figure this out by dividing: profit/revenue.
2. Profit per revenue stream: revenue of a particular product or service – expenses associated with producing that product or service.
Some things to think about…
-Which revenue stream was the most profitable?
-Which revenue stream was the least profitable?
What learnings or takeaways do you have about your profit?
Now that you’ve looked through your numbers and gathered a bunch of information about what happened in your business in 2019, it’s time to reflect.
-What went well?
-What didn’t go well?
-What do you want to do more of?
-What can you let go of?
-You may discover a particular launch strategy is bringing in good revenue but the profit isn’t where you want it to be.
-Maybe you’re spending a lot on your team and they’re not bringing the value to your business that you expected.
-Maybe your team is doing great and your business would be better served by growing your team.
-There could be a revenue stream that is draining you energetically, taking up a bunch of your time, and not worth the money it’s bringing in.
-Maybe it’s expensive to run your business, and you’d like to be able to bring more money into your household.
-It could be that you’re ready to go even bigger and make a big jump in revenue.
And that’s what a 2019 financial review looks like!
If you’re reading this and thinking, okay Kristy, I get it, but I still don’t want to do it.
I’ve got you! You can stay in your zone of genius and work with me to do the heavy lifting with the numbers for you. Book a 90-minute Financial Strategy Session with me here.
We’ll go through all of this PLUS set your goals for 2020 and create your strategic financial plan.