As entrepreneurs, we know numbers say a lot about our business’s success (or lack of), but what do they say about our long-term business goals?
We’ve been publishing income reports on the blog and our podcast for quite some time now, and this final quarter in 2022… may be our weakest all year, in terms of revenue and profit. In fact, at first glance, our YTD numbers in 2022 aren’t particularly impressive either.
…but we kind of did it on purpose.
Running a business is complex, and sometimes you have to take risks to see rewards. So at face value, our 2022 revenue and profit may seem like we’re moving backward, but in reality, the opposite is true.
Let’s dig into why…
Let’s start with the good news…
In October and November of 2022, we saw two of our highest profit margin months. We launched the 8th cohort of our Paid to Create Challenge, renewed some five-figure brand partnerships, and also landed an additional few four-figure partnerships. We generally aim for a pretax profit margin of 30%. During these months—we saw profit margins greater than 40%!
To be clear, this doesn’t mean that our net revenue or our net profit was the highest in terms of dollars. The summer of 2022 has Q4 2022 beat by a long shot! (Listen to the Q3 2022 Income Report here.) HOWEVER, if we’re talking percentages, October and November were quite impressive.
…then, December hit (or should I say tanked).
But, here’s what you need to know (and should always consider when you’re looking at a business’s numbers): “CONTEXT IS QUEEN.” In December 2022, we made some key decisions that directly affected our profit and revenue… in the short-term (AKA fourth quarter of 2022). However, these choices were intentional, because they prioritized larger, long-term business goals.
First of all, we front-loaded expenses for 2023 to reduce our taxable income in 2022. We also postponed invoices our brand partners needed to pay until the new year to increase 2023 revenue. Additionally, we were working hard behind the scenes, pitching, negotiating, and landing new brand partnerships for 2023. In fact, we were able to secure two of our largest partnerships to date! As a result, we entered the new year with nearly six figures in secured contracts!
*Just a moment, while we throw ourselves a ‘lil dance party.*
Now that we’ve shared a little more context on those Q4 2022 numbers, let’s pull back and look at the year (spoiler alert: we have some quality business lessons to share).
YTD Revenue in 2022: $554K
YTD Profit in 2022: $145K
Before we dive into these numbers, let’s take a short walk down memory lane…
Our fearless founder, Ellen Yin, started this business five years ago, officially joining the 50% of startups who survive beyond their first five years (round of applause, we beat the odds!). Initially, she was a freelance social media manager. Later, she launched a boutique marketing agency. After that, her business shifted to selling digital courses and programs. But all the while, our business has grown—and not just little-by-little….
But by leaps and bounds in our first four years.
Revenue Growth (rough numbers)
2018 – $88,000
2019 – $180,000
2020 – $560,000
2021 – $750,000
Then, in 2022, we closed out the year with… (*drumroll*)… $554,000.
No, your eyes are NOT playing tricks on you. Let’s call out the elephant in the room, shall we? That number is, in fact, LOWER than not just 2021’s revenue, but 2020’s as well.
It’s very likely that 2022 could have and would have been the year our business finally reached that oh-so-sexy seven figures in annual revenue number… IF we hadn’t made a couple of significant changes.
Once again, at face value, our numbers don’t look pretty. But just as we did in the final quarter of 2022, let’s look at the CONTEXT.
We made some major business decisions in 2022 that impacted our numbers considerably. First of all, we retired two huge revenue generators, one of which was our signature 12-month mentorship program (which concluded in August of 2022). We also ended a funnel we had kept running for 2020 and 2021 that had started to wane in early 2022. But, in addition to closing out these heavy-hitting programs, we made another monumental decision…
In 2022, we completely shifted our business model.
Instead of focusing solely on digital product sales, Cubicle to CEO® now follows more of a media business model, where we primarily monetize through brand partnerships + ad revenue.
Yes, this move directly impacts our YTD revenue, but it was also a necessary move for the long-term direction of our business, one which provides quality content from successful CEOs and entrepreneurs to you—our audience—for FREE.
In 2022, we spent a lot of time and energy thinking beyond 2022. Instead, we thought about the legacy we’re building at Cubicle to CEO®. As we approach another year, we have three tips to help you also think about your long-term business goals.
“It’s more important to actually understand how numbers influence your decision-making as a CEO… than to copy someone else’s numbers.” –Ellen Yin
Numbers without context are like cookies baked with salt instead of sugar. They may seem like one thing at a glance, but the reality may be the exact opposite once the context has been applied.
This said, whenever you see numbers from a business, take them with a grain of salt (or sugar if we’re sticking with cookies here). If you don’t have the context, you could misunderstand those numbers completely and make assumptions about the state of your own business that are entirely inaccurate.
“Even profit is not the best measure or the only measure of your business’s financial success.” –Ellen Yin
Profit margins are important. We know this. But are they the sole indicator of your business’s success? Absolutely not!
Think about your profit margins the way you think about your credit score. If your score is low, does that mean your financial future is doomed? No way! Perhaps your credit score dipped because you just applied for a mortgage loan or closed accounts you weren’t using. Those aren’t inherently bad decisions. In fact, they are likely actions made toward long-term financial goals!
A low score isn’t necessarily an indicator of poor financial health—it’s a snapshot of this moment in your financial life. In the same way, your profit margin is simply a reflection of your top priorities in your business right now.
“When you have a long-term vision for your business… you have the luxury of making some of those bigger, riskier bets.” –Ellen Yin
It’s easy to make decisions for your business that look good on paper—but are those decisions truly the best for your business?
You can absolutely focus your business efforts on investments and endeavors that make lots of money in a short period of time. But, many of us entrepreneurs don’t want short-term growth alone. We want to build something that will last. We want to establish a legacy through our businesses.
Remember, we retired a MAJOR revenue generator in 2022. That business decision might seem reckless… maybe even a little insane! But the reality is it was a necessary choice for our long-term business goals. On paper, it may seem like our business slowed—even backtracked—in 2022. But behind the scenes, we’re setting ourselves up for even greater growth and longevity.
In 2023, perhaps we’ll finally reach that seven-figure annual revenue—or maybe we won’t. What matters most is that we’re investing in a business model, in new brand partnerships, and in a long-term vision that we are proud to pursue. What about you?
Where will 2023 take you and your business? We’d love to help you get there!
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