Note: This is a post from Adam Baker, founder of Man Vs. Debt.
For the last three years, I’ve been sharing our income report in some manner or another.
It started with a detailed breakdown of our household budget, debt, and where every dollar was being allocated. A year into this community, I began to consider the possibility of monetizing the website. When we made that decision, we started sharing monthly reports on any income generated along the way.
Recently, we’ve gotten away from the monthly reports for several reasons.
First, it’s a ton of work to publish the monthly reports. It takes away from other creative work that might be able to affect a wider percentage of the people who come to the blog in a much deeper way (not everyone benefits from these reports).
Second, there are half a dozen people involved in different ways behind the scenes. Some small, and now, some large. While I don’t mind disclosing my income, should I disclose theirs? I’ve not decided my position on this yet.
However, sharing the report in some way is still an important principle of this community.
Each and every one of you makes this journey possible. As a result, you deserve to know the inner working if you want to (in my opinion). Also, having a profitable community allows us to spread the core values and message in a way that we simply wouldn’t be able to do under any other scenario.
In short, I firmly believe that this *should* be public information. That there’s nothing wrong with it being public information. And the pursuit of a sustainable business ultimately means we help thousands and thousands more people.
Investing, Building, and Testing…
As I talked about throughout 2011, this year was all about investing and building.
I invested tens of thousands of dollars into creating courses and products (like You Vs. Debt), which haven’t yet returned the investment.
I also invested tens of thousands of dollars into building a team. A real, living, breathing team. With people I can trust… people who care about the business and the message themselves.
It’s far cheaper and less stressful to contract everything out – or to outsource recurring tasks to VAs based somewhere in Asia. For some businesses, this is an amazing route, but for mine I didn’t think it was a good fit.
I enjoy working with people, especially people who really do care about the business. And to accomplish our long-term vision, I’ll need to develop these relationships and learn to run a team (something I’m learning comes with lots of practice).
I’ve had several missteps. A couple of the first employees I thought would be a part of the team haven’t worked out in one way or another (much of the time this was my fault!). But I’ve learned an incredible amount and am starting to find the sweet spot.
The team in place today is the strongest, most passionate version we’ve had. I’m pumped.
2011 was also defined by testing.
We tested email services, shopping carts, affiliate systems, productivity systems, different team members, working on the road, working from an office, working as a team in person, working as a team remotely.
We spent a lot of time testing. We spent a TON of money testing.
Some of this was purely for business strategy. But most of it was for me personally.
Personally, I just didn’t know. I didn’t know what system I would enjoy. I didn’t know what environment I worked best in. I didn’t know what project management software I’d actually use.
I didn’t really even know what I wanted to be doing.
I didn’t know what my daily work would look like. I didn’t know what I wanted the hour-by-hour vision of my typical workflow to be.
Obviously, work isn’t going to be exactly replicated from day to day, but you’d be surprised how much your work routine, combined with the systems you use, can dramatically affect your creativity and productivity.
In 2011, we used the shotgun approach. We blasted a bunch of shrapnel and then went to see what actually hit.
I’m not suggesting this as an ultimate business strategy for you. I’m giving you an honest breakdown of what defined our 2011.
2011 By The Numbers…
All numbers are rounded. Income is rounded down. Expenses are rounded up.
This is how we teach people to budget, because it makes it easier to project, analyze, and envision what needs to be done (without needing an accounting degree).
Income from Products ($28,000)
These are the products that I’ve produced, filmed and written and that we sell as part of the community here to help people with specific problems.
Unautomate Your Finances was our very first premium project and isn’t for sale any more. It’s been upgraded and replaced by the much more in-depth and impactful You Vs. Debt 6-week course.
Many online business people have a business model that relies on publishing a NEW product or course on a DIFFERENT topic every 6 months or so. While this may work for some, it’s not at all what our team wants.
We know there are a couple, very specific, and deeply tangible problems our community faces. We need to obliterate debt and we need to ditch our excess clutter and crap.
That’s not changing. Those issues affect almost everyone. There’s no reason for us to release new products from a slightly different angle every 6 months. We’ve got the solution right here.
So instead, we’re focusing on making the You Vs. Debt and Sell Your Crap courses the best available premium resources on those problems. It’s a 10-year product, not a 6-month product. Sure, we’ll improve them every few months – but most of what we do is focusing on how we can get amazing results for the people who get these resources in the future.
In 2011, we planned, shot, and edited You Vs. Debt TWICE. The first time was decent, but it wasn’t mind-blowing for people. We had our pioneers take the course and provide us with feedback needed to improve it.
We then completely went back to the drawing board and came up with a new approach (mostly the same content, just broken down more, and presented much better). We released the first version of this new course in the fall.
The second YvD version clicked! We had more than 100 people go through the course and in just the first few months, they’ve paid off more than $300,000 in combined debt; those that finished the course averaged nearly $1,400 in debt paid off in just those 6 weeks!
We didn’t take the shortest path, but ultimately our time and money invested paid off with amazing results. Our strategy in 2012 is to relaunch You Vs. Debt 3 to 4 times, improving and adding content each time.
We’ll ruthlessly track each and every individual to be able to analyze what makes the people who actually complete and succeed different from those who drop out at one point or another. It’s a huge project, but a worthwhile cause, and what I believe will be an amazing business venture as well.
Sell Your Crap was completely and utterly ignored in 2011. It continues to sell every week, but in the next few months will get an impressive overhaul. We’re strongly considering releasing a shorter, compact version of the “Main Guide” as a Kindle eBook.
This would allow us to move the more specific strategies (and technical tips) for eBay, Craigslist, garage sales, and Amazon to a new video course structure. We’ll be featuring more live examples and case studies than we did with the first version.
In summary, You Vs. Debt will continue to be a flagship product. We’ve found the right setup now and will have several classes in 2012. Sell Your Crap will receive a huge facelift, but will continue to help solve the same important issues.
Income from Side Projects ($35,500)
- Only72.com — $29,000
- Hustle Project — $6,500
Many of you know that my friend Karol Gajda and I run a large sale twice per month over at Only72.com. We bring together online eBooks, courses, and apps and sell them for a short time at a large discount. We organize the sale, build the infrastructure, and take good care of the customers.
The sales really are a fantastic deal (if you are in the market for that training) and generated a large amount of sales. There are a whole host of income and expenses that are associated with just that side business; it would be too confusing to break this all down inside of the MvD income/expenses breakdown.
Once again, we did do more than $200,000 in revenue in 2011 (as we had the year before). After all was said and done, the portion the Man Vs. Debt team saw come in was around $29,000. Some of that will pay some of our expenses listed below, but much of that is profit from hosting the sales.
Overall, Only72 had another great year and two useful sales. I’d be lying if I didn’t tell you I expected it to do even larger numbers, though. Karol and I learned a lot from our most recent sale. As is the theme, we tested several new features and strategies that didn’t work as well as our initial one.
I feel blessed that I can experiment with different strategies and still have success with that side project. We have our own passionate community of people the enjoy those rare sales when they pop up.
The Hustle Project was another side project I took on with my good friend Corbett Barr. It was an attempt to offer something for those of you on the “Do What You Love” part of our journey here.
My favorite part of this whole process was getting to work alongside Corbett. He’s a fantastic guy with brilliant business savvy.
While I really enjoyed the webinars and the community of hustlers, I don’t think the format of bi-monthly webinars is a long-term solution for this particular problem. It would require a much more robust backend for users and several added features to be completely viable. Talking about business is profitable, but not quite where my heart is fully right now.
I want to focus on solving the debt and clutter issues first, before turning my focus to building and growing a business based on a cause you really love.
Income from Affiliated Resources ($8,650)
- Travel Hacking Cartel — $5,200
- Unconventional Guides — $1,600
- Amazon.com — $450
- Thesis (My Theme) — $350
- HostGator — $300
- Nerd Fitness — $300
- PocketSmith — $180
- Aweber — $160
- Benny Lewis — $60
- FireStarter Sessions — $50
For those of you that don’t know, affiliate marketing is a huge source of income for many online websites and communities. What happens is instead of paying for traditional advertising, many product or service creators pay a certain amount of the price to trusted allies who refer sales.
In some cases, it’s extremely small. For example, Amazon pays me 4% of a sale if I link to a book I enjoy and you end up purchasing. In my case, that relationship made me $400 last year (linking books or gear I use, etc…)
In other cases, you may get something like 50-80% of the sale. If you click my recommendation for Chris Guillebeau’s great Unconventional Guide books, I get roughly 50% of that sale (in this particular case).
That said, I do almost no active affiliate marketing.
There was only one post I did in 2011 that was a direct recommendation to check out a specific product or resource that wasn’t my own (Travel Hacking Cartel). As it turns out, that was a pretty good choice as many of our community members here have decided to join and stayed as customers.
In this case (as you’ll see), Courtney and I are also customers of that program. In fact, we don’t affiliate with anything we don’t either use or have used extensively in the past. This is why I’ve never pushed affiliated resources that much.
Some of the other income is from tools I use to run my business. I list them for people, but don’t actively push Man Vs. Debt readers to buy hosting or web themes. This simply isn’t the concern of most of the readers. Those who do want to start websites can find the resources very easily.
However, in 2012, I do think we could actually do a better job of affiliate marketing.
For example, there are many services and products I simply can’t offer, don’t want to offer, or have no freakin’ idea what I’m talking about around.
I’ve been searching for a good online bank account to recommend for two years, but haven’t found one yet. I may try harder to test a few out.
I have no idea what I’m talking about when it comes to investing strategy. I simply haven’t studied (nor do I want to right now) that arena. However, there are some readers and fans on that part of their journey. What should they do? Once again, I could try harder to find a resource I trust and recommend.
Overall, I’m much more concerned with knocking our own solutions and products out of the park. After all, these are the topics I study and talk to people about every single day.
But there’s certainly room, from a business perspective, to increase the type of people we partner with to help a wider variety of people (with problems we can’t help them with ourselves).
We’ll keep our eyes open for genuine matches for this style of marketing.
Sponsorship Income ($20,800)
Most of you know that at the beginning of 2011, we kicked off a 6-month RV tour of the U.S. We had a blast and met thousands of people along the way (by far the most rewarding part)!
Along the way we got to host many meetups, parties, and events in various cities. The intensity of our schedule and the hosting of these gathering was only made possible through a partnership with Adaptu on the tour.
We designed a bright orange wrap for the RV (many of you got to see it live!) and negotiated a very genuine, light-touch way to partner for the road trip.
Adaptu was a fantastic partner to have. Honestly, we couldn’t have asked for anything more. Even when we decided to come off the road (for reasons many of you know), Adaptu understood and allowed us the flexibility to do so. That meant a lot to us.
At the same time, I’m not sure I want to throw my hat into a “sponsorship” ring again. This particular RV tour was a perfect fit, but those kinds of arrangements are few and far between. Working with a large company presents its own challenges – and anything more than the tour itself could have easily caused a conflict of interest.
I don’t mind partnering, affiliating, or developing relationships with companies. Not at all. But there’s a fine line between finding a great match (which we did this time) and compromising your values or message for money reasons.
Consulting Income ($9,800)
Consulting was something I offered more in the beginning of 2011. I worked with some larger companies and some individual entrepreneurs.
Within the first few months I phased this out though (at least actively having it offered). While extremely profitable and enjoyable, it still involves me actively trading my time for money.
I’m much more passionate about scaling our solutions to much bigger problems. And, in retrospect, I get much of the same personal fulfillment from speaking that I do from consulting with clients.
I don’t mind working with one or two people per month. In particular, I enjoy the deep friendship that is formed after working several months with a person. But I don’t foresee this being a public offering again, nor a huge part of our projected 2012 revenue.
Other Income ($1,800)
This include a small amount of freelance writing I did earlier in the year (more than $1,000 of this), as well as some random income such a returned purchases, banking rewards, unclaimed affiliate payments, etc…
TOTAL INCOME — $104,550
Expenses Related to Sales (-$6,650)
- Man Vs. Debt Affiliates — $4,300
- Processing Fees — $1,400
- Refunds — $950
Overall, I’d love these expenses to be MUCH HIGHER in 2012 (these all go up with more sales).
We need to do a much better job of giving our own affiliates the tools to successfully recommend You Vs. Debt and Sell Your Crap. (By comparison, we paid out more than $100,000 this year to Only72.com affiliates.)
We know what needs to be done to help others share our message, we just need to step up and organize this better.
Processing fees are what they are. You pay them and move on.
Refunds are still only happening on a very small percentage of our sales. The far majority of these refunds are for “my personal situation has changed and I need the money” reasons.
Because we offer 100% lifetime guarantees (for any reason), sometimes that does pop back up to backfire on you. But the percentages are so low, and the trust we gain with customers is so high, that it’s not even a question of whether it’s worth it or not.
I wouldn’t feel right if people weren’t allowed to get refunded at any point for any reason. So we won’t be switching this any time soon.
Team Member Expenses (-$49,880)
- Permanent Team Members — $41,200
- You Vs. Debt Film Crew — $6,400
- External Tech Help — $1,300
- External Design Help — $520
- Transcripts — $460
And BOOM, here comes the big whammy.
As I suggested, we tested a lot of different setups with team members in 2011. We’ve rotated among four different “permanent” team members, at different times for different purposes. Ultimately, we’ve settled on two moving forward for 2012 (we’re a three-person team now).
This small team can handle most of the operations – design, filming, editing and content production – we want to have in 2012. We’ll still need to contract out a few technical issues and smaller things like transcripts, etc.
We didn’t even come close to using our money efficiently in this area in 2011, but I was more than happy to invest (or even lose) money in trying to figure this out. The next few years will be so much better because of this investment.
I’ll introduce our current team more in the coming weeks!
Operation Expenses (-$8,460)
- InfusionSoft — $2,750
- Email marketing, shopping cart, affiliate program, etc.
- PremiumWebCart — $375
- Former shopping cart, replaced by InfusionSoft
- Optimizely — $500
- Used for split-testing different version of a shopping cart or sales page
- Clothing — $475
- Purchased for filming You Vs Debt or public speaking events
- Aweber — $300
- Former primary email provider, replaced by InfusionSoft; might go back
- SnapEngage — $275
- Allows for live chat during launches or sales period (with potential customers)
- AppSumo — $275
- A “bundle package” that offered discounts on some different design packages, icons, etc.
- Employee Gifts — $350
- Wufoo — $250
- Software we use to survey in You Vs. Debt (and Man Vs. Debt) and sort responses
- Travel Hacking Cartel — $300
- Program we use to earn miles and find discounts for business travel
- GoDaddy — $300
- Domain names. Some necessary. Many not!
- Wishlist — $300
- One-time plugin that we use to manage You Vs. Debt community membership
- Amazon s3 — $200
- Fast, easy hosting for many of our videos and our course content
- Wrike — $300
- Project management software we tested; replaced by free option
- Mailchimp — $200
- Another email option we tested; easy to use, but replaced by InfusionSoft
- iDev Affiliate — $250
- Old affiliate program, replaced by InfusionSoft
- HostGator — $180
- Hosting for Man Vs. Debt and You Vs. Debt communities
- Lynda.com — $150
- Training on editing, design, software for team
- iStockPhoto — $120
- Various images bought for Man Vs. Debt
- Dropbox — $120
- How we share and back up our files
- E-junkie — $120
- How we formerly sold Unautomate Your Finances
- Bank Fees — $100
- Fee to make 1-day ACH payments to contractors and employees; also, some wire fees
- Shipping — $90
- Mostly books we have given away to readers
- Misc. — $90
- Everything random that didn’t fit or was unknown
- Spotify — $50
- Listened to and used every single day in our at-home office
- GetClicky — $40
- Tested for use in real-time analytics and tracking; not used any more
- JewelBeat — $5
- Music for podcasting and programs
First and foremost, as you can tell, we learned a lot about what DIDN’T work in 2011.
Of this entire list, fewer than half are things we’ll be using moving forward in 2012. Many of the moving parts were condensed as we started using InfusionSoft to do multiple things.
That said, InfusionSoft is expensive – and I’m not sure we’ll keep it long-term. In theory, it treats each person as a real person (instead of just a name on another list). It allows you to segment people very specifically; you can customize the way you reach out to those who’ve clicked but didn’t buy in a different way than you might for people who are brand new, etc.
Ultimately, this would allow us to offer better solutions to different people. It would keep people from seeing messages that don’t apply to them. It would make for a better experience overall!
But in practice, it’s a clunky software and requires a ton of training to be able to properly use. We aren’t leveraging it anywhere NEAR its potential.
We’re sticking with it for now, because we’re slowly starting to squeeze our value out of it. But the bottom line is there is no “best” option for email marketing, shopping carts, sales, and customer management yet.
In fact, I know dozens and dozens of bloggers making their livings online – and not a single one of them is ecstatic about this part of the industry. I hope someone figures this out (and soon) to the benefit of everyone!
At the end of 2011, our team sat down and evaluated each expense and whether or not we were fully utilizing it. We cut 75% of them (even ones we were sort-of-kind-of using). Armed with our knowledge of the different options, we’re starting from a clean slate.
If you have any more specific questions about all these apps and software, ask in the comments. I’ll do my best to answer them.
Hardware Expenses (-$10,350)
- Laptop Gear — $4,700
- Camera Gear — $3,900
- Podcasting Gear — $1,300
- Books/Courses — $450
In 2011, we invested in a wide variety of equipment that we’ll get years of use out of (but which cost us up front, out of pocket).
First and foremost, we bought two laptops. The first was purchased for as an “advance” for a team member who’ll be handling all the video editing, audio editing, and design work.
The second, unfortunately, was my own.
Why buy a new laptop, you ask?
Because mine was stolen from the dressing room of TEDx Asheville while I was giving my talk on stage.
Talk about a good way to ruin an otherwise amazing day!
I’ve traveled around the world and around the U.S. – I’ve worked in HUNDREDS of coffee shops and public spaces (not all the nicest of places) and never had anything stolen (at all). The one time I do get my laptop jacked is in Asheville, NC, at a TEDx conference. Oh, the irony.
TEDx didn’t have insurance. The theater didn’t have insurance. All right, whatever. Buy a new one and move on. I didn’t have to replace my MacBook with a MacBook, but I did. I love my MacBook (as expensive as they are) and work on it every day.
On the camera front, we invested in a Canon 5D Mark II to film the videos for the You Vs. Debt course, as well as the upcoming MvDTV Youtube videos. Along with tripod, lenses, bag, etc… it was a big investment.
Courtney is a photographer herself, so we are able to get dual business use from this. But for Man Vs. Debt, we’ll also use it to record speeches, events, and publish amazing video. It’s not even close to a necessity for what we need, but it does give us an amazing level of professionalism to live up to.
In December, we also invested in a professional podcasting microphone, mixer, and recorder to produce our new Man Vs. Debt podcast. In addition, I hired Cliff Ravenscraft of Podcast Answer Man for an hour of his valuable consulting time.
Cliff’s time and expertise saved me countless hours getting everything set-up, configured, and working. Essentially, we were able to focus right away on the content and the approach, which let us get the podcast out the door with almost no friction (a really big deal around here).
Once again, the professional microphone and setup will allow us to shoot better video, better interviews for different blogs, radio shows and other outlets – in addition to helping us to produce a great sounding podcast.
The podcast is going extremely well (off to a fast start) and we’re really excited about its potential in 2012!
Communication Expenses (-$1,260)
- Cell Phone — $610
- Internet — $390
- Mobile Wifi — $200
- Coworking — $60
Not sure why I separate out this category, but I always have.
There’s nothing especially wonderful or helpful for me to explain here!
Food / Eating Out Expenses (-$4,700)
No, that’s not a typo. We really did spend $4,700 on food in various business-related expenses in 2011.
Keep in mind that for the first half of 2011, we were traveling the country on a daily basis hosting meetups. Our sponsor helped pay for some of this cost, but not all of it. Several times, we bought the food for dozens and dozens of people at the meetup.
We also defaulted to connecting with people over food (we still do, although certainly not as much). In my mind, there are few things more powerful than sharing conversation and a meal.
This also accounts for all food bought or purchased during traveling for conference or speaking engagements, etc… Once again, this should go down in 2012 as we’re on a much slower travel schedule.
Travel-Related Expenses (-$3,010)
- Airfare — $1,650
- Other Transportation — $690
- Hotels — $520
- Parking — $150
None of “these” travel expenses are related directly to the RV tour. Meaning, for example, that lodging isn’t counting campground fees. These expenses were related to non-RV travels to conferences (mostly).
2012 will likely see some of these go up, but hopefully so will the compensation for attending and speaking at various conferences.
TOTAL EXPENSES — (-$84,310)
Net Profit From Business in 2012…
Unfortunately, I’m not missing a zero. 😉
After all the work, sweat, and tears I put into Man Vs. Debt this year, we took home around $20,000.
And even more sadly, this doesn’t account for ANY expenses we incurred as part of the RV tour (other than meetup food). So our taxes this year might even show a loss (or a break-even year)… we’ll leave that to the professional accountant.
But, it’s important to note, I’m not at all down about this number.
In fact, I’m proud.
Sure, we were wasteful in many parts. We focused too much on testing software and systems. I made mistakes in my initial team-building attempts. We bought equipment that wasn’t a bare necessity to deliver value.
On the flip side, look at everything we’ve accomplished:
- I’ve found a great team and a fantastic set-up for 2012 (one of my biggest goals). It cost me, but I’m happy with the result.
- We invested in a wide variety of gear that’ll help us increase our professionalism for years to come (on many projects).
- We’ve honed You Vs. Debt to the point where it’s delivering results we’ve never been able to get (from anything else) before.
- I’ve learned more about business this year than in all my previous years combined. School of hard knocks, anyone?
- We prioritized making an impact and delivering long-term value over a quest for sheer dollars. It takes both to survive through the long haul, but I’m glad we didn’t give up to chase more money right away.
Trust me, folks. I want to make more than $20,000 a year when I’m dedicating this much of my life and effort to something. (If anyone tells you that this is *easy*, run the other way quickly!)
Courtney and I will have to net more than that in 2012 in order to live!
But I’m not discouraged. Nowhere close.
I’m excited for 2012.
I talked about this just a few weeks ago, but here’s the short summary of our agenda:
- Launch You Vs. Debt 3 to 4 more times. Make it the best course on attacking debt anywhere.
- Revisit Sell Your Crap and give it a nice facelift. Potentially create a Kindle eBook.
- Record 35 episodes of the new Man Vs. Debt podcast.
- Launch and routinely film MvDTV on YouTube.
- Redesign Man Vs. Debt.
- Record a documentary.
- Analyze the problems of our audience that we can’t solve and partner with genuine, trustworthy solutions.
- Explore developing our own budgeting software and app.
- Speak 12 times this year. Have travel expenses compensated (at minimum) for most of these appearances.
Our choice to invest so much this year was a conscious one.
This doesn’t mean we didn’t make plenty of mistakes, but we chose to go down that path consciously.
Now it’s time to show off what that investment can do.
And, for that, I’m honored to have you along for the ride.
Ask any questions in the comments. I’ll do my best to respond!