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How I Pivoted My Entire Digital Product Business in 2020

Episode 04: How I Pivoted My Entire Digital Product Business in 2020

2020 was a crazy year. It was undoubtedly filled with ups and downs for all of us!

Today I am recapping the good and the bad of the craziest year I’ve ever lived through. Needless to say, the plans I had at the end of 2019 were obliterated by the time March 2020 rolled around as I am sure you can probably relate to.

My family was incredibly fortunate during this difficult time. I have an online business, so while there was uncertainty about whether people would continue to buy products, I knew my income wouldn’t disappear overnight. That didn’t leave me immune from struggles though! 

2020 was the year I realized I was no longer happy with the direction of my business, so I completely blew up the 4 years of hard work I had created around Pinterest to pivot my business in a brand new direction. 

In today's episode we discuss...

  • How I pushed myself past wanting to give up
  • A financial breakdown of my 2020 year
  • The biggest business lessons I learned in 2020
  • How I decided to pivot my business
  • The immense importance of understanding your numbers if you want to scale

I really hope that you enjoyed my 2020 recap and are walking away with some big takeaways that will help you grow your own business in 2021!

Be sure to listen in next week to hear about my 2021 goals and what’s ahead for the New Year.

Talk soon,

Monica

Grab my Yearly Review Toolbox!

These are the exact tools I use to review my business and plan for the future each and every year!

The Toolbox includes…

  • Year in Review Snapshot: Recap the past year’s financials and major objectives with this Google Sheets spreadsheet.
  • Company Overview & Vision Slides: Tell the story of your company and create a high-level plan for the next year.
  • Quarterly Planning Trello & Asana Boards: Make a more detailed plan for each quarter of the new year.
  • 15+ Pages of SOP Templates: Start standardizing and organizing major functions of your business so you can scale with ease.
  • Monthly Goal Tracker: Keep a pulse on your business’s financials and your major business objectives with this Google Sheets spreadsheet.

Resources Mentioned:

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You are listening to the Empowered Business podcast, I’m your host, Monica Froese, a mom of two and your secret weapon to creating a six figure digital product business.

[00:00:16]
I’m on a mission to help one thousand women make one hundred thousand dollars a year. That’s right. One hundred million dollars towards financial independence for women. As an online business expert, I am teaching you everything I know right here week after week so you can join us on the journey to one hundred million dollars.

[00:00:35]
Sound good. Then let’s jump in.

[00:00:47]
Welcome back to the Empowered Business podcast. I’m so excited for today’s episode because today I am recapping the good and the bad of the craziest year I’ve ever lived through. That’s right. Twenty twenty. In episode three, I took you through the first three and a half years I made money from digital products from mid twenty sixteen through twenty nineteen. And today I’m going to recap twenty twenty. And as you can imagine, twenty twenty was a crazy year, I’m pretty sure for everyone on the planet. A global pandemic. Political unrest in the United States may stay at home orders. Schools closed. It’s like nothing I’ve ever seen in my lifetime. And I’m sure you’ve never seen it in your lifetime either. Needless to say, the plans I laid at the end of twenty nineteen were obliterated by the time March twenty twenty rolled around and the world economy started to close. My family was incredibly fortunate. During this time I have an online business. So while there was uncertainty about whether people would continue to buy products, I knew my income wouldn’t go away overnight. My husband works in security tech, so his company was exploding with everyone scrambling to secure their information now that people started working from home. I also have a full time nanny for my toddler. So when my oldest got pulled out of school, she handled making sure that her homework was done and it took the pressure off of my workday for a lot of reasons.

[00:02:08]
I was very fortunate and I recognize that, of course, everyone had their own struggles in twenty twenty and I am not immune from that. One of my struggles was coming to the realization that I was no longer happy with my business. I felt really selfish for feeling that way, and it took me a long time to work through my feelings and decide what to do about it. Twenty twenty ended up being the year that I blew everything up. I had created around Pinterest marketing, which was almost four years of my hard work, and I pivoted my entire business. It was scary as heck, but it turned out to be the best decision I could have ever made. And it also allowed me to grow significantly as a person. One thing I always say is that nothing will stretch. You like running your own business. The work I’ve had to do on my own mindset and the shifts that I’ve had to make along the way within myself have been incredibly difficult, humbling and inspiring all at the same time. So let’s talk about twenty twenty and exactly what happened in twenty twenty. We grew 11 percent year over year in revenue. Now this is not quite close to the four hundred percent or a one hundred percent growth we had over the last two years. And it’s definitely not what I had planned.

 
[00:03:17]
Going into twenty twenty. My original goal was to grow thirty percent year over year in revenue. This was already pretty tame considering the year before we had doubled. Somewhere in the back of my mind, I knew I needed to pivot away from teaching Pinterest, but I hadn’t quite figured out what that meant yet. So I set what I believed at the time at the end of twenty nineteen to be a realistic goal. Now our profit margin in twenty twenty. After all, expenses, including my payroll in my employees payroll was seventeen point two five percent. Now this is much lower than I would have liked it to be. In twenty nineteen our profit margin was twenty seven percent and my plan for twenty twenty was to end at thirty percent profit margin. Now the good news is our profit could have been higher, but I decided to invest a significant amount at the end of twenty twenty into new systems. A podcast
manager and a high end mastermind flash group coaching. In essence, I made the strategic decision to not hit my profit goals in conjunction with talking to my CPA. We decided that it was better for me to pay some expenses up front in twenty twenty to lower our tax burden. So these are fun conversations you get to have as you build your business and make more money. Now keep in mind what I pay myself on. Payroll was included before that profit percentage.

 
[00:04:35]
What I pay myself is what I earn for working inside of my business. The profit at the end of the day is my reward for taking the risk and starting my own business. The end profit is taxed and then I need to make a decision whether to take it as a distribution into our family finances or leave it in the business for cash flow. Cash flow is important because I never want to go into debt in the business and I have employees to look after. You cannot pay employees with a credit card like you kind of contractor. It requires cold, hard cash in the bank. So I do keep a decent amount of cash on hand because of this. I’m not upset by where we ended up because twenty twenty proved to be a very pivotal year and I learned so many important lessons that will carry me through the next few years of my business. Today, I want to break down all of those lessons. My hope is that by sharing the ups and downs I’ve gone through over the years that I can save you from some of the mistakes I’ve made. And if nothing else, I hope it is inspiring to know that I’m not any different from you. I make mistakes and not everything is glamorous behind the scenes. But that’s OK because I wouldn’t trade my business for corporate America again, even if you paid me a million dollars, because now I know I can generate a million dollars on my own, which is.

 
[00:05:46]
Are more empowering to me than any inheritance or working to build someone else’s dream. In fact, I say all the time, if someone said you could win the lottery and get a million dollars or you could make a million dollars in a year, I would hands down, say I would make a million dollars in a year because I can replicate that. There is a reason why people who win the lottery generally go broke and then they have no way to earn it back. I would much rather control my own destiny and that is what my business has allowed me to do. So let’s break down what happened in twenty twenty. If you are interested in how I do my year in reviews, I’ve finally gotten my act together and included a template for it in my ultimate CEO business planning spreadsheet. I’ll put a link in the show notes if you’re interested and want to check it out. Over the last few years, so many of my students and my community members have asked me to put together a spreadsheet of how I manage my business because I love spreadsheets, so I did it. So if you’re interested, check the show notes and go ahead and grab a copy for yourself. All right. Let’s jump in the revenue recap for 2020.

 
[00:06:47]
So, as I said, we had 11 percent year over year growth from twenty nineteen. So twenty twenty revenue breakdown looks like this for affiliate marketing. It made up seven point two percent of our revenue, which was down from 10 percent in twenty nineteen. Now, as a reminder, affiliate marketing is when you get paid to recommend other people’s products and services and receive commission. In exchange, our digital products made up ninety two point eight percent of our revenue, and that was up from 90 percent in 2013. So in essence, our revenue distribution and how we make money very similar to twenty nineteen. Now let’s talk about expenses. And let me just preface this by saying that a lot of people who are getting started running a business really struggle with the fact that they have to invest to make money. There is no such thing as making money without spending money. This is just a fact. This is how the economy works. And I would challenge you that if the thought of spending money makes you cringe, then let’s work through that because you cannot run a business without spending money. In fact, my sister, who is a physical therapist, started her own online business during the pandemic and I was working with her on it. And I was going through my profit and loss statement, which is a statement that every business owner should have. It’s something your bookkeeper or your CPA can generate for you.

[00:08:05]
And she was looking at my expenses and it was making her a little nervous. We were raised in a family that was all about saving money and it was frowned upon to spend money. So I was a little bit of a black sheep because I’m a spender. I like to spend money. But I recognized very early on in my life that in order to not go broke, I had to learn how to make my own money and I had to learn how to make a lot of it because I didn’t want to save it. My sister, she really took to heart the saving money. So the idea of spending money to make money makes her nervous. And she was looking at my profit and loss statement and asking me a bunch of really great questions about why do you spend this much here and why do you spend this much there? And I kept having to remind her that there, of course, are always ways I can optimize and spend less, but I cannot do this on my own. So that leads me to the very first expense category, which is payroll. Now, this includes what I pay myself in the business. Remember the work I do inside the business I get compensated for and also what I pay my employees. So I had two full time employees for part of the year and now I am back to just myself and Hailie, which if you don’t know Hailie yet, you will come to know her.

 
[00:09:14]
She is my operations manager. She’s amazing. So our payroll made up thirty one point four, eight percent of our total revenue, and that was up from twenty point four, six percent in twenty nineteen. This is because I hired my second full time employee prematurely and I am going to talk more about this later on. But now my goal is to keep payroll around twenty five percent. And I know exactly how much we have to make before I can hire another full-time employee. The second category I want to talk about is advertising. And for us that means Facebook and Pinterest. Yet we spent seventeen point four nine percent of our total revenue on advertising and that was up from eleven point five percent in twenty eighteen. Now my goal for twenty twenty one is to keep our advertising around 13 percent of total revenue, which is actually quite low from what I’ve heard from other people in the industry. And at some point I’ll talk about how I project out my expenses because I’m still working on getting better at this. But I am very, very much dedicated at this point to making sure that I don’t overspend in the business, which I’ve done it. I’ve done that on payroll. I’ve done that on advertising. And so I’m working really hard on that.

 
[00:10:18]
In twenty twenty one. The next category is contractors. These are things like our copyrighter that we hire for one off projects, our web designer for one off projects, our podcast manager. These are not people I pay on what we call in the United States, a W-2 wage. They’re not employees. They’re contractors. They own their own business. We pay them for a specific skill. So I spent four point five percent of our revenue on that, and that was down from six point seventy seven percent in twenty nineteen, which makes sense since. I had start to spend more money on actual employees. It makes sense that my contracting budget would go down. The next category is affiliates who recommend my courses. I have a lot to say about that topic. It could be a whole separate episode because it’s really a great marketing tool for getting in front of new audiences. We’ll talk about that later on at some point. But for now, I’ll tell you that pain affiliates made up three point forty nine percent of my total revenue, and that was down from six point four, seven percent in 2013. So basically what I’m telling you is I chose to spend more money on paid advertising to acquire new leads in twenty twenty than I did working with other people to get in front of their audiences. Again, I have a lot to say about that, but we’ll stay tuned for a future episode travel.

 
[00:11:26]
Well, no surprise here. Travel went way down because nobody was traveling come March twenty twenty. So we spent one point seventy two percent and that was down from five point three seven percent in twenty nineteen job education in twenty twenty seven point four nine percent. It was up from four point nine five percent in twenty eighteen. The main reason was I invested twenty thousand dollars into a high end group coaching program. Going back to the whole idea of just spend money to make money. Part of that is getting in the right room with people who are ahead of you that you can learn from. And that’s why I’m willing to invest in very strategic programs. In the last category I’ll talk about is software. OK, this is what keeps the engine ticking. You cannot not pay for software in an online business. You need an email service provider. You need a website. So we spent four point two eight percent on that and that was right in line with twenty eighteen where we were just at four percent. So let’s talk about what happened in twenty twenty and why I decided to retire my four popular Pinterest courses and pivot my entire business. I wrote an entire blog post about this that I will put in the show notes. But for context, let me read to you a little bit of what I said in there.
[00:12:34]
I sent this email to my list in early October, twenty twenty. And the first thing I talked about was a lesson in profitability. And I said in twenty nineteen my business was super profitable. I was taking home more money both in payroll and profit from the business than I had ever made in my life. It was truly and continues to be beyond my wildest dreams. However, I was also burning the candle at both ends and had zero support in twenty nineteen, which means it wasn’t a scalable business. Bringing on Haley, who was my first full time employee, freed me up from working more than I should. But it didn’t solve the bigger issue in my business, which was that every month we started off with zero dollars in revenue. And here’s why I tell you about the beast I created that was never satiated. As my revenue grew, so did my expenses. Expenses became fixed, guaranteed every single month, but my revenue was not. So in order for me to continue making the same dollar amount month after month, I had to be actively selling almost all of the time. Now, this wouldn’t have been the case if I had stuck to my focus of digital product funnels, but instead I put my focus on a program that required a lot of me to make it work. My signature program from 2017 until late twenty twenty was about Pinterest advertising, a platform that changes all the time and that I have no control over, coupled with the fact that advertising is a complicated topic that requires a ton of support for my students.

 
[00:14:03]
It was a non scalable solution coming into twenty twenty. I had a support Facebook group that went with the course that some students had been in for over three years. It had only paid me once, three years ago. I was still providing very technical, ongoing support to these students, not only in the Facebook group but also via monthly live calls. Also, I was providing continuous program updates. So here’s where it got complicated. The support group was costing me money every single month, both in time and resources, in order to keep supporting current students that were not paying me any additional money, I had to keep selling at the same time. So I entered this vicious cycle of launching, of course, updating, supporting, and it all resulted in a cycle of burnout. And at some point it became clear that the cost of constant updates and ongoing support was actually costing us more than what the live launches were worth. The launches were still profitable on paper, but not worth the amount of time that it was taking from me. So I made the difficult decision in mid twenty twenty to turn the support group into a paid support group. Now, I wish I could tell you that that fixed things, but it didn’t.

 
[00:15:10]
The support group was not going to make enough money to support the expenses that had started to pile up over
the previous eight months. I was back to facing the reality of what I knew an entire year prior. The only way to build a scalable business is with recurring revenue guaranteed revenue to support the fixed expenses, guaranteed revenue that you can rely on every single month. Now that I came to terms with the fact that running a business based on someone else’s platform was not a recipe for a long term success, I had no choice but to buckle down and decide exact. What I was going to do to pivot, so now let’s talk about what worked in twenty twenty. Number one, a brand new product suite called Empowered Business. Over the summer of twenty twenty, I gradually started to feel a shift within myself. I acknowledged that I was no longer happy in my business. I was no longer excited to show up to work every morning. And if you know me, you’d know that I love to work. Since the day I started this business, I would practically skip into my office each morning or my bedroom because that’s where my office was. I started to think that if I didn’t love it anymore, then what is the point? I’d rather close up shop than continue to feel burned out and not in love with what I’m doing.

 
[00:16:26]
However, my motto in life is I don’t do failure. My feelings of quitting were quickly forgotten and out came my trusty Post-it notes. It was time to dream about the business that I really wanted. That started by going back to the original intent of why I started this business to begin with, to help moms achieve freedom on their own terms. This was the purpose of redefining mom. I had to ask myself, how does what I’m currently doing impact more women? Is it really the catalyst for bringing about the change that I wanted to see in the world? And through this process, I came up with a new mission. I want to help one thousand women make one hundred thousand dollars. They’re selling their knowledge and skills via digital products. This would result in one hundred million dollars in the hands of women and ultimately leads to my vision of empowering women to create financial freedom. Their six figure digital product businesses. Digital products are my real love and what I believe to be the best way to grow and scale your online business. So what I did was develop a completely new product suite called Empowered Business under the Empowered Business Brand. There are three core products that we either offer right now or will be offering in the near future. I launched the first product of this suite in October of twenty twenty and I called it the Empowered Business Box.

 
[00:17:45]
The Empowered Business Box is our digital product template membership that gives you new tools every month to enhance your digital products and increase revenue. It’s a done for you digital product template membership with recurring revenue for the business, recurring revenue. The second product is the Empowered Business Lab and that just launched in January of twenty twenty one. This is our signature program. It’s a complete solution for validating, building, selling and amplifying your digital products using a repeatable and scalable system. This will be our main focus in twenty, twenty one and we are in the founding round right now and it will open again in April of twenty twenty one as a twelve month program. And the third new product that we will have is called the Empowered Business Club, and this will launch in late twenty, twenty one. It’s going to be our next level group coaching program and it’s going to be a pretty intensive experience designed to help digital product, greater scale path, the one hundred thousand dollar a year mark. So the next thing that worked in twenty twenty number two, recurring revenue is queen. And can I just say, I originally said recurring revenue is king. And I thought, no, no, we’re Queen’s. So recurring revenue is queen. As I mentioned, one of the biggest hurdles I faced in this business was not having guaranteed recurring revenue every single month.

 
[00:19:02]
And we fixed that when we launched the Empowered Business Box. The membership launched in October was a huge success and we had over two hundred and fifty students join in. The first month completely blew me away. Now, the third thing that worked in twenty twenty was I finally launched Monica Fros Dotcom and the Monica Pro
Shop. Since twenty eighteen, I’ve wanted to launch my own brand website as a central hub for all of my teachings about online business. I really want it redefining mom to go back to its core mission of helping moms who run businesses. And I want it Monica Fros to be the hub where I could brand myself as an expert. I finally launched the Monarch Froese brand in September twenty twenty, along with a new cohesive shopping experience under the Monarch Photoshop. I love digital product sales funnels. In fact, that’s exactly why my signature program, The Empowered Business Lab, is all about how to create a profitable digital product sales funnel machine. However, I now have a pretty big community and the shop, which is a storefront, allows people to buy multiple products at once for me without having to check out more than one time. So in a future episode, I’m going to talk about the differences between a sales funnel and a storefront and why I think in your digital product journey you’d need both. But I recommend starting with sales funnels, which is what I’ve done, and then developing your storefront.

 
[00:20:20]
So I’m really happy that twenty twenty I finally got to realize my goal of having a storefront. Now, the fourth thing that worked in twenty twenty was I built a brand new house during the pandemic. Honestly, this is my biggest accomplishment to date. If you’ve been following me for a while, you know that I used to work out of a tiny corner in my bedroom in a very small house. My dream was to be able to build a house with my own office and in. Twenty twenty, I was able to realize that dream because of this business, I documented the entire journey on Instagram and you can check it out under my story highlights. If you go to Instagram dotcom for redefining mom, there’s a story highlight called New Office. And it makes me so emotional when I watch it, because you can see where I worked for the first four years of my business and how far I’ve come since then. And I feel like it’s just really shows all the blood, sweat and tears that I’ve put into building this from scratch. The fifth thing that worked in twenty
twenty was I paid Hailie one hundred percent of her pay for maternity leave. So my full time employee, Hayley, had her second baby in July. And one of the greatest joys of this business is that I got to support her with one hundred percent of her pay while she took off to care for her baby.

 
[00:21:33]
In the United States, there is no paid maternity leave. And in Haley’s state, which is Arizona, there is no paid state maternity leave. So as a small business, I have no legal requirement to pay her anything for taking maternity leave. But how how in the world could I be a hypocrite and have an entire business that was founded because of how mad I was at the lack of maternity leave in the United States and then not pay my own employee? I am not going to contribute to that system that says that women should not have the time to take care of themselves and their babies on maternity leave. So while I still believe the government is seriously misguided and not making this a guaranteed right for all working moms, I was thrilled to be able to support Haley in this way. And if nothing else, if my business went away tomorrow, I can tell you that I feel like I accomplished something pretty major, which was I had a problem in twenty thirteen. I was postpartum. I came into this business because I want it to help working moms overcome a lot of hurdles that I felt like I faced, that I didn’t know that nobody talked about. And one of those was maternity leave. And the fact that I’ve come full circle and I was able to support another mom on her maternity leave, made every single struggle I’ve ever had since I started redefining mom worth it.

 
[00:22:47]
OK, so that leads me to the big lessons learned in twenty twenty. And the number one thing was offering years of free support to students who only paid me once was a really bad idea. So I have very strong feelings about how the online course industry works. And two of the main issues I see is lifetime access to content in ongoing free support. Neither is a scalable way to run a business. Now, I will talk more about this in a future episode, but for now, I’ll address the fact that it’s impossible to provide ongoing support to someone who paid you once several years ago. So here’s an example. A student paid me ninety seven dollars in twenty seventeen for my Pinterest advertising course. They have access to the student group and all of the program updates perpetually in twenty twenty they decided, OK, I’m going to buckle down on my ads, maybe for the first time. Maybe they gave up at some point, but now they’re decided they’re going to be fully invested while the course is now one hundred percent better than it was when it launched and it had been constantly updated over those three years. They have questions they want to ask and now have access to me indefinitely for live Q&A and Facebook support.

 
[00:23:53]
All of this costs me my own time and my time for my employees. However, I’ll never get paid again for the ongoing updates and support. It’s a losing model for running a profitable business. I will never offer ongoing support again without an ongoing support fee. And I hope if you learn nothing else from me, that you’ll not offer lifetime support for free. Number two, the number two big lesson I learned in twenty twenty is hiring a second full time employee too soon. It’s a bad idea. So I hired a second full time employee right when the pandemic started in the world started closing down. Yep, that was me hiring when everyone else was panicking. The idea was that she would help untangle me from the day to day so that I could go back to being the company visionary and come up with our big pivot. What ended up happening was that she was the one working on the future while I was stuck executing underactive income because remember, we had no recurring revenue in the business in early. Twenty, twenty. No one, absolutely no one can come in and be the dreamer for your business. That’s your job as the founder and CEO. So my expenses simply got higher again and I was slowly slipping back into burning the candle at both ends. I was executing on launches to feed the expense base I had created and I was never able to give the future even a moment’s thought.

 
[00:25:11]
This led to one of the biggest lessons of the year, which is number three. I am capable of doing hard things. I need it to come up with a way to create recurring revenue so that my business, my family and my employees could stay stable. No one ever said that change is easy. In fact, I think change takes a lot of courage. I do believe that real change occurs when we push outside of our comfort zones and it feels uncomfortable. The first thing I did was I let my second full time employee go to alleviate some of the stress on our expenses. It was the single hardest thing that I’ve had to do in my business to date. It sucked. It sucked really bad. But also I showed myself that I can do hard things. It propelled me to keep moving forward through the limiting beliefs and imposter syndrome that were debilitating my work during mid twenty twenty. And the fourth biggest lesson was understanding your money is critical to success in business. So I spend a lot of time in twenty twenty getting to understand my business finances a lot better. I hired a new bookkeeper in twenty nineteen who help me make projections and get me timely reports each month. I now have a better grasp on when I should hire my next employee. Based on cold, hard data and cash flow projections.

 
[00:26:31]
I cannot stress enough how important it is to understand your numbers if you want to scale to the one million dollar mark year, I mean, I would say even multi six figures. If you’re going to get past one hundred thousand dollars a year, your numbers are going to be critical for your success. I now feel like I am poised to have a fantastic twenty twenty one because knowing my numbers is so crucial and now I feel like I do. This is a lot I really hope that you enjoyed my twenty twenty recap and you were able to take away some big takeaways that will help you grow your own business. This episode got rather long, so I’ve decided that I’m going to pick back up in Episode five to chat all about my 2021 goals and what’s ahead for the New Year. And if you’re interested in joining me in one of our brand new programs, head on over to Empowered Business Podcast to learn all about how you can learn how to create your own digital product business. And please remember to subscribe to the Empowered Business podcast. That way you won’t miss any future episodes. And I’d be thrilled if you’d leave us a review, not only because this podcast is new, but also I hope that you’ve gained some insight through this episode and you can share that with the rest of the podcasting world.

 
[00:27:42]
Ok, I can’t wait to see you back here. Bye for now. Thanks for tuning in to today’s episode of the Empowered Business podcast. If you are ready to get started creating digital products and take your business to the next level, download my free digital product toolbox, head to Monica Froese, dotcom or slash toolbox to grab it. As always, you can find all of the links and information mentioned in this episode at MonicaFroese.com/podcast. See you right here again next week.

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