[Q2 2023 Income Report] We Earned $126K in Revenue… and Learned it’s Time to Reintroduce Some Evergreen Products!
In this case study, we’re reviewing our Q2 2023 income report and how this quarter led us to the following conclusion: it’s time to reintroduce some evergreen products!
As with every income report, we’re walking away with new insights that will lead us into a brighter chapter of our business. We’re excited to bring all of you fantastic fellow entrepreneurs along for the ride!
Q2 2023 Snapshot
In the last 90 days—covering April, May, and June—our financial snapshot looks like this…
Sales: $126.1K
Expenses: $86K
Profit: $40K
Profit Margin: 32%
If you’ve followed our income reports for a while (catch up here if you’re new to the party!), you probably have a couple of thoughts about these numbers right from the get-go. For instance, our profit margin is looking mighty fine, and our expenses are near identical to last quarter.
However, in a few short months, there’s also a lot that has changed…
Let’s dive in!
What Changed?
Here’s the headline, folks…
Our sales, profit, and (consequently) profit margin are all lower than Q1 of 2023.
Take a look…
Sales: $194.5K → $126.1K
Profit: $105K → $40K
Profit Margin: 54% → 32%
BUT, before you panic on our behalf, let’s dig into the context here (if you read the case study covering our last income report, you’ll remember: CONTEXT IS QUEEN).
Why the Drop?
First of all, we typically aim for a 30% profit margin, so 32% in Q2 2023 is actually right on the money. In fact, it’s the 54% from last quarter that was abnormal!
This leads us to the first of two reasons for Q2’s low numbers.
1. Q2 Isn’t Low. Q1 Was HIGH!
At the start of 2023, we celebrated a whopping $194.5K in revenue for the first quarter. Just a few months later, we’re looking at $70K LESS! But if we zoom out further, you’ll see there’s more to the story…
- Q4 2022 → $113K
- Q1 2023 → $194K
- Q2 2023 → $126K
In other words, the beginning of 2023 was the real anomaly! Visit our Q1 2023 income report, and you’ll see why…
“We had front-loaded all of these partnership contracts that were coming due for payment at the beginning of the year, AND we had a ton of larger partnerships—some of them extending throughout the entire year—that were signed in that first quarter,” Ellen recaps.
These were strategic decisions for the long-term health of the business, which plays into our main takeaway from Q2… but we’ll get to that.
2. Low Ad Spend = Low Revenue
Another explanation for the drop in revenue this quarter is that we’ve also decreased our advertising spend.
“Q2 was probably one of the lowest advertising spend quarters we’ve had in years,” Ellen shares.
Over these 90 days, we’ve spent less than 5% of our gross revenue on advertising and marketing. For context, in previous years we’ve spent closer to 25% on ads!
In other words, it’s a BIG drop.
“Ads is a huge growth lever for us that I’ve basically just hit pause on,” says Ellen. “We are hindering our revenue growth, because we aren’t spending on ads… but there’s a reason we’ve been doing that.”
Back in Q1 of 2023, our ad spend was also less than 5%. Remember why?
Because we’re building a new revenue stream through brand partnerships.
This decision was based on our recent shift from an education-based business model to a media company. In the past, we’ve advertised our courses. Today, however, we’re focusing our energy on brand partnerships.
But in Q3 and Q4, we’re bringing them back.
“Once we have our new digital offers at the ready,” says Ellen. “We’re going to definitely be cranking that lever up again.”
Takeaway from Q2: Time to Bring Back Evergreen Products!
As we just shared, our shift away from evergreen products and towards brand partnerships aligned perfectly with our larger shift from an education-based online business to a media company.
However, there are two primary reasons why we’re re-introducing some evergreen products during the second half of 2023…
1.) Where are we sending the audience after speaking engagements?
“What I feel like really defines this last quarter was the immense number of speaking engagements,” says Ellen.
In the last three months, we’ve been everywhere.
- Texas
- Washington
- California
- Of course, all over Oregon
“In total, I think I had about seven speaking engagements,” says Ellen. “My schedule was very full.”
While each of these opportunities certainly excited our my-dream-is-to-read-from-a-telaprompter founder (emceeing for Kajabi Hero Live, especially), they haven’t been a huge driver in revenue.
But, we know why…
Most speakers make back their time and energy invested by getting audience members into their ecosystem and selling them a product or program (check out our recent interview with Zafira Rajan to see what we mean).
However, since we’ve been focusing on brand partnerships lately, we haven’t had evergreen products to sell.
“Since we haven’t really been offering much, the revenue opportunity is really limited to the actual speaking fees that I’m being paid,” says Ellen.
Reintroducing some of those digital products will give us something to direct future audiences to, so that speaking engagements can help us bring in more business.
2.) HALF of our revenue came from brand partnerships!
“Diversification” is a sexy word in the world of finance. But in our latest quarter at Cubicle to CEO®, our income was not quite so diverse.
“About 51% of our revenue came directly from brand partnerships,” says Ellen.
“Brand partnerships have been a very reliable income stream for us this year. I just don’t want it to be our only way to generate new income.”
This particular income stream also demands a lot of energy from our team. It requires constant pitching to new brands, and then each partnership is uniquely tailored to that brand.
“Everything is manual with brand partnership,” says Ellen. “There’s not a whole lot of breathing room right now.”
With digital offers, however, that much time and energy isn’t necessary.
“I know we can automate with evergreen products because we’ve done it before,” says Ellen.
With a baseline of X amount of revenue coming in from our core digital offers, our team can relax a bit. In fact, we believe that extra breathing room will help us improve our brand partnerships and continue to scale our business.
“I’m hoping to see higher gross revenues in Q3 and Q4, but also a higher percentage coming in from our digital products,” says Ellen. “Stay tuned for those income reports!”
Like what you hear? We’ve barely scratched the surface…
What we DIDN’T cover in this blog post includes…
- In Q2, Ellen closed the Clubhouse (her co-working space in Oregon) → Listen to the bonus episode for more!
- In Q2, Ellen attended a Wellness Retreat in Laguna Beach → Listen to the bonus episode for more!
- In Q2, Ellen joined a local leadership nonprofit board in Salem, Oregon → Listen to the bonus episode for more!
Thank you to our sponsors:
- Hear how you can maximize your revenue with Frenchie Ferenczi in her private podcast, ‘Strategy Snacks’: https://fckmanifesting.com
