Last year, my business earned $505,813.50. It feels incredibly awkward for me to say that (as in, pants down walking around downtown kind of awkward).
I’m not really the kind of person that feels comfortable sharing my personal finance information, but I have so many friends and family members who struggle to make ends meet that I created Income School as a way to help people provide better for their families. I know that by being open about my numbers is a way I can help others to stay motivated to get to where they want to be–and helping you is more important than me feeling comfortable.
So there, I said it. In this post I’m going to show you exactly what I did to make it happen.
NOTE from Aug 30, 2016: This is the last income report I ever published. I have decided not to publish further income reports for legal reasons. I keep this one online just so you can hopefully be inspired to know what’s possible with a blog. The only thing I’ll add is that my businesses are continuing to do well and improve since publishing this report.
A few notes before we begin
Obviously, income doesn’t matter if your expenses eat it all up. Last year, I had way too many expenses. I spent the entire last quarter of last year selling off office equipment, cancelling subscriptions, and doing everything I could to cut expenses to the bone.
Last year, my business had expenses nearing $100,000 but well over half of that was spent on employees (which I no longer have, by the way).
After cutting unnecessary expenses to the bone in the fourth quarter of last year, I was quite afraid that my income would go down as a result. The opposite was true. In fact, my business is producing MORE income on FEWER resources now–mostly because of the increased productivity gains earned by simplifying every aspect of my business.
And then there are taxes. In the United States, we pay an unreasonable amount in taxes. In fact, my tax rate on every dollar I earned toward the end of the year was 47.5% (including federal and state). The United States has a progressive tax, so the dollars you earn up to say $50,000 are taxed at one rate, then your next $50,000 are charged at a higher rate, etc. The highest tax bracket (which I’m in) is 40% for federal tax, and the state tax is 7.5%. So unfortunately that means I had to pay about $90,000 in taxes last year.
Not to rant too much, but the practical effect of this progressive tax is that I have very low motivation to go out and earn more money toward the last quarter of the year. By that point every dollar I earn is taxed at nearly 50%, so I put in the same work and only get to keep half of what I earn. If the government were at all serious about creating jobs, it would let me use the $90,000 in taxes on hiring an employee or two. It’s robbery! [Rant completed]
Last note, I won’t be producing monthly income reports like Pat Flynn and John Lee Dumas do. There are a few reasons for that: (1) I don’t like feeling the pressure of needing to improve my income every single month. When I get too focused on that, I end up making bad business decisions. (2) Frankly, I’d like to focus more on how I earn a living, not how much of a living I’m earning. This post is motivational and (hopefully) helpful. Now that you’re here and motivated, I’d like to focus more time on getting things done than dreaming.
Here’s the breakdown of where the $505,813.50 came from
- Online classes – Approximately $267,000.00
- eBooks – Approximately $22,000.00
- Digital Downloads – Approximately $165,000.00
- Affiliate deals – $37,771.05
- Miscellaneous – About $15,000.00 (Including teaching workshops, private coaching, selling articles, etc)
Note: If you listen to podcasts, be sure to subscribe to the Income School Podcast (RSS feed) or the Income School Podcast on iTunes. Listen to episode 12, which is an audio version of this income report and includes many, many more details.
About my online classes
I have spent the last 3 years building up my online photography classes business. I now have 8 online photography classes available.
Here’s how I do my classes: Each class is made up of 30 videos. So students watch a 10-minute video lesson every day for a month. While the videos are available to the students forever, they only have 30 days of instructor access. I give my students UNLIMITED access to me. They can email me, call me, Skype me, send in photos to get a critique, etc.
So while the $267,000 from online classes is amazing, it doesn’t come easy. It means I’ve created 44 HOURS of professionally-produced photography tutorials and I spend UNTOLD hours working individually with my students. Most internet marketers are NOT willing to do that. They just want to create a simple downloadable product and call it a day. I’m putting in the time with each and every student, and while it’s quite taxing, it is also rewarding. And, I could talk about photography all day long, so it’s fine with me 🙂
About my eBooks
This area of my business saw a dramatic drop last year. In previous years I’ve earned up to $80,000 from my eBooks.
The reason for the drop this year is simply because I haven’t even touched them in about 2 years. I created them when I started my business and they have run completely on autopilot since then. The books are about photography which involves a lot of technology–meaning that some of them are getting outdated. Also, some of them are not of very good quality. My beginner book is quite good but some of the others were created in 5 days and thrown onto Amazon and Smashwords before the ink dried.
I should put more efforts into the eBooks side of the business because it is truly passive income. In fact, if I had the stamina to write eBooks all day every day, I could probably earn $505,813.50 just from passive income from eBooks. But the fact of the matter is that I usually feel like breaking something after writing an eBook. Cranking out 55 or 80 pages (my books are quite short) is not my idea of an enjoyable work day.
Still, if I were starting my business today, eBooks would undoubtedly be a part of my strategy. I earned my first dollars online by writing eBooks and it gave me the motivation to do this full time.
About the digital downloads
Professional photographers use special software called Adobe Photoshop Lightroom. It’s similar to Photoshop, but it’s for quick edits and photo organization. I sold a bundle of my Lightroom presets and they were really well received.
This is an area of my business I want to explore more fully. Last year was the first year I added this product to the website and my customers were really happy. In fact, with well over 3,500 purchases, I only had two people request a refund. 2. That is UNHEARD OF in the internet marketing world. People in the internet complain about everything!
Although it only brought in $37k in revenue last year, affiliate marketing is one of my favorite aspects of my business. Photographers are total gearheads (I admit it, I’m one of them).
To help photographers pick the right lens, camera, memory card, tripod, etc, I created a page on my website called “Recommended Gear” where I break through the marketing speak and just recommend the best gear. For each product, I link over to Amazon.com with my special affiliate link. If you aren’t familiar with this program, you can sign up for Amazon Associates here.
What I love about the Amazon Associates program is that they give you 8% of the purchases that people make on Amazon after clicking a link from your website. So you can link them over to buy a lens and if they end up buying a vacuum, you still get the commission on the vacuum. Unfortunately, this percentage is only 4% for items in the electronics section and since I’m writing about photography, almost all of the gear is in the electronics section. Bummer.
Amazon Associates is something that almost any blog could add to their monetization strategy. It’s a piece of cake to get your affiliate links for items, takes 5 minutes to sign up, and your readers don’t feel like you’re selling them on anything. You’re just telling them about a product that you like and showing where they can buy it.
What I learned and what I’m working on now
The lesson I learned from last year is that expenses take a tremendous toll on a business. I had expenses for all kinds of things: WordPress plugins, rent for a nice office space, training websites, I spent over $15,000 on a video system to produce higher quality tutorials, etc. The expenses neared $100,000 and I felt that was “investing back into my business.”
It wasn’t. It was just unnecessary cruft. It was exactly the things that made the business so bloated and complicated that it paralyzed my progress.
For example, I spent $15,000 on a system with cameras mounted all around the room. I could sit at a desk and with the press of a button switch which camera was on me while doing a webinar or video training. It was AWESOME! Awesomely complicated, that is. I spent way too many hours figuring that system out, and when I wanted to record a video it meant I had to go through a long process of firing up the system.
In the end, I got rid of every single piece of that setup when I realized that the “investment” in that setup made it so I was producing half as many videos because they were so complicated to produce.
Another example of a foolish expense was office space. My office was 18 minutes drive from my home–a short commute. But it also took 4.5 minutes to walk from the parking lot up to my suite, another minute to unlock the doors and get set up for the day, and more time getting insurance, writing out rent checks, etc. I did the calculation one day and realized I was spending 9 FULL DAYS per year commuting. When you drive 18 minutes each way every day plus the other few minutes to get into the office, you’re actually wasting a tremendous amount of time.
So, I dumped the office space and now I work from home. When I’m ready for work, I walk from the living room to my home office and start working. Done. 25 minutes later and after a commute, the old version of me would just be sitting down at my desk.
My invitation to you
I wrote this to show you what is possible with a simple blog and a lot of hard work. My business has been a tremendous blessing for my family.
I can show you how to create a blog like mine, and if you learn from my mistakes and do it the right way, it’s surely possible for you to do it in less time than it took me to figure it all out. I want to invite you to start your own site, by following my get started blogging series. It’s about 8 articles that walk you step-by-step through the how to set up a blog that can earn a decent income.