Updated October 4, 2019
In February 2014, my husband created a spreadsheet to track the gross revenue in my online business. We aren’t one of those couples who works together. He enjoys his full-time job and I want to keep the business on the periphery of our lives, not in the middle, so his spreadsheet is a sweet and simple way for him to enter my world.
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He’s maintained the spreadsheet ever since, faithfully entering the numbers each month. It’s so much more colorful than a boring Profit & Loss statement.
Here’s how it looked in 2014:
And here’s how it looks so far in 2019. Note the nosediving light blue line.
As you can see, gross revenue increased year over year from 2014 to 2018, but after January of this year, it dropped to the level it was a few years ago and hasn’t recovered.
So why am I sharing this? Well, it’s not the first time something like this has happened. Note July 2015’s (minor-in-hindsight) income slide, a reflection of lost traffic a few months prior:
I wrote the original version of this post at that point. Your comments then (see below) made me realize many of you find this sort of discussion helpful. My goal is to be helpful. Now that I’ve experienced another downturn, I hope it will be helpful again.
It can feel like everyone online is experiencing nothing but success all the time. It’s not true, but hearing the wins and rarely the losses has a way of piling up into discouragement.
So, welcome to my losing 2019. 🙂
Before we dive in, I’d like to say 2 things.
First, I’m no stranger to unwise business decisions involving money. The example that immediately comes to mind happened in 2005. I convinced my husband we should “invest” $5000 (that’s a nice way of saying “debt by credit card”) to build a site where businesses could find VAs. It might as well have been $50,000 given our financial situation at the time. The site was built but the business never got off the ground. The debt stuck around though.
Interestingly enough, that $5000 in 2005 was part of what led us to Dave Ramsey in 2006, which helped us become debt free, which turned me into a money nerd, which turned me into a weirdo with my business finances, which leads us to 2019, which leads us to this post.
Second, that -5K experience and others like it over the years are why I run my business the way I run it today. I’ve settled into a minimalist business model, meaning, I keep things lean and streamlined. That’s because I want freedom, not an empire. Not everyone wants the same. That’s what makes life interesting!
I’m pointing this out because I wish I had learned this lesson sooner — the importance of knowing my end goal. Maybe I can save you a few years of aimless money wandering?
At the time of the $5000 situation, all I knew was I wanted to start an online business and people told me paying someone $5000 was how to do it. I didn’t know there was another way.
Moral of the story: don’t do what people tell you to do because they sound like they know what they’re talking about, or because everyone else is following them. Instead, follow the people who spend their days the way you want to spend yours.
Alright, let’s talk about this whole unpleasant downturn I currently find myself in, shall we?
What do I think of it?
Not a fan of course. It makes me blue. In the famous words of Dr. Seuss, “I do not like it Sam-I-am.”
Am I panicking?
No. I’m sad, but not panicking.
Why am I not panicking?
Because I don’t feel the financial pinch. Yet anyway.
Why don’t I feel the financial pinch?
Because my operating expenses have never gone above this yellow line:
Most years my expenses have been well below. Without a lot of overhead, it’s relatively easy to squish that line down far and fast when needed.
This is a huge benefit of a minimalist online business. Despite the significant income drop this year, I’m still able to cover my expenses.
What’s included in that yellow line?
Everything from hosting fees to a PO Box to the occasional new laptop to paying others (accountant, attorney, designers, etc.).
What about reinvesting?
I’m not sure what the difference is between “reinvesting“ and just plain spending money except that it sounds more acceptable? Like me and my “invest $5000” instead of “go $5000 into debt”?
In any case, I have reinvested very little in the business over the years. I know. What kind of business owner am I?
I’m not after huge scale or hockey-stick growth. I’m content with slow and steady(ish) business growth, because what I’m really after is maximum time with my growing family.
How do I keep my expenses low?
I’m frugal by nature. I’m not afraid to spend money, but I don’t spend just to spend either. Generally, I find a tool or system that works and stick with it. Check my tools page for things I do spend money on.
C’mon Amy, you can’t not care
Oh I care. I care a lot. Obviously my goal is to get my income level back to where it was. Higher preferably.
But here’s what I’ve learned: I can’t make that happen. No amount of hustle, grit or not quitting will automagically make it be. There is no formula. Ultimate control is an illusion. There are no guarantees, even if you follow someone else’s successful path exactly. There are simply too many factors and variables outside of our control, especially online.
I’ve been at this a long time. There are cycles in blogging and online business. Downturns aren’t surprising. Nor are new things. There’s no use fretting over the ups and downs.
So do I melt into a puddle and throw in the towel?
No. Although if I want to quit because I’ve had a good run and I’m done, I will. I’m not a fan of the advice that says winners never quit. Sometimes winners quit to do better things.
I may not be able to guarantee repeated success, but I can certainly work toward it. Let me explain how I push through.
What to do in a downturn
Are you in a downturn too? I hope not, but if you are, here’s my advice.
Check the basics then move on. If you notice a nosedive, check the usual things for obvious problems or glitches, like Google Analytics, the mechanics of your site, SEO, Search Console, etc. If you don’t see anything obvious, move on. Don’t obsess. (I list this first because I’m generally bad at it.)
Coach yourself. A lot of the battle is in your mind. Most things in life are fixable and can be repaired, replaced, revamped or redone. This is especially true online. Despite how it feels, this is not the end of the world.
Cut your losses. If you have to reduce expenses, downsize, or let people go, do it as soon as you know you should. Be honest, with yourself and others too. In Profit First, Mike Michalowicz says this:
Most business owners try to grow their way out of their problems, hinging salvation on the next big sale or customer or investor, but the result is simply a bigger monster.Mike Michalowicz
Don’t panic. Feeling out of control is overwhelming. Overwhelm can lead to panic. Panic can make you frantic. Frantic people often do things that are rash, reactionary, not in line with their values or even destructive. I read a Facebook Group post from someone recently who was “desperate for sales” now that she had a team to pay. My heart ached for her. To avoid panic and desperation, prepare for the downturn (see the next section).
Use your brain. You’re scared and that makes sense. Take a step back. Now look for a way forward. You are smart.
Pivot. Don’t waste valuable time wishing for what was. In online business, whatever worked before is unlikely to work the same again. Guess what? You no longer have to hold your breath, fearing you will jinx what’s working because…it’s no longer working! So ask new questions. Reframe. Get rid of what you don’t love. Be creative. Imagine a blank slate. Try new things. Pivot!
Sidenote: Does cutting off sources of income in a downturn (i.e. retiring my product and dropping a lucrative affiliate program) seem like opposite world? I get that. But that’s another advantage of keeping things lean. Without huge overhead, I can pivot into what I want to do, not pivot into what I have to do to stay afloat.
How to prepare for an unexpected downturn
Maybe you’re not in a slump currently. Maybe you’re having a great year like my 2018. (Oh I hope so!) Here are some things to do to prepare for that unexpected downturn.
Expect it. Your downturn is coming. I knew it was coming for me, I just didn’t know when. You’ll have one too. No one is immune — not you, not me, not that guru who looks unstoppable. The only thing to know for sure is that things will change. Normal businesses do not experience growth year after year indefinitely. That’s not how it works.
Consistent incoming cash flow is hard to sustain. A great quarter can trick you into believing your business is on a permanent upswing, and you start spending like this is the new normal. But drought periods come quickly and unexpectedly, causing a major gap in cash flow. And cutting back on expenses is nearly impossible because our business (and personal) lifestyle is locked in at our new level.Mike Michalowicz
Run a nimble business. What do I mean? Be thoughtful about the things you start. Consider the costs. Keep things streamlined. Here are 7 questions I ask myself before adding to my business plate.
Keep expenses low. I’ve been reading income reports from other bloggers and studying expense lists. A lot of bloggers spend a lot of money on a lot of tools, services and other things. I recommend 3-5 tools to start a blog and make money. Add things as you truly need them, not because someone somewhere said it works for them.
Stay ahead of the game. Anticipate where things might go next by observing what’s slowing down now. One of my biggest risks, although it’s obvious now, was replacing regular blog posts with the Useletter in 2013. At the time, people were producing multiple pieces of content every day. I was basically quitting altogether. I wondered if I was making a huge mistake. Thankfully, email marketing became a thing. I didn’t know it would become a thing, I just knew publishing a lot of blog posts wasn’t working for me anymore so I did what made sense next.
Plug money leaks. In personal finance, it’s often suggested to lower your expenses by asking your utility company for a lower rate or ditching cable. I don’t often hear similar suggestions in business. Every few months I look at where my money is going and decide if I can downscale or get rid of anything. Just this week I paused a service I don’t need at the moment.
Pull out will-needs and extras before anything else. I’m a money nerd. I track every penny for fun. My budgeting software is set up to apply a set of rules at the click of a button. Every time money comes in, whether it’s $1.43 or $529.71, it automatically gets split between envelopes (I love envelopes). For example, 30% goes into the taxes envelope, 20% to retirement, 5% becomes cushion, etc. The money gets distributed and I forget about it, unless or until I need it.
Recently I read Profit First by Mike Michalowicz whom I’ve quoted multiple times above. I like his book. My application is simpler, but my basic approach is the same. Which leads me to…
Embrace constraint. Those percentages up there are real. You might be thinking, “Amy, are you saying you operate on less than 50% of what you bring in?” Yes. Doing so has forced me to be creative and frugal. It has also prevented me from getting in over my head, or being surprised by tax bills. Scratch that. I’m always surprised by tax bills. I’m just grateful for my tax envelope when I have to pay up!
Don’t quit your day job (or prematurely retire your spouse). Contrary to popular belief and according to at least one study, entrepreneurs are not generally risk takers. In the Momentum podcast, episode 461, minute 4:45, Alex Charfen says it well:
The stories you hear from stages about legendary people who burned all the boats are legendary…because they rarely happen. Side hustles and steady income are good when you’re ideating and creating and building because it takes an enormous amount of pressure off.Alex Charfen
I absolutely agree. Building and running a business without the stress of “how am I going to pay the bills” is about a million times better than the opposite.
Ask hard questions. What percentage of your income lost would financially sink you? How will you operate on the other side of that? Do you have enough room so you won’t be forced into less-than-ideal business decisions just to stay afloat? How are your relationships? Your health? It’s much better to get these things in order before the downturn hits.
As I mentioned at the start, all this reflects my personal experience. Regardless of how you choose to set up the money in your business, I hope this gives you at least a few things to consider.
Here are some other articles about getting started with minimalist online business: