A (0:02)

Today I'm going to be talking about year end budget evaluations and why they are so important for sustainable growth, the importance of financial clarity and achievable financial goals. Coming into the new year is going to be important to you guys that are like me and obsessed with growth. When I think about starting the new year without a solid financial plan, which takes a little bit of work, but when I think about going into 2025 without one, it gives me a lot of anxiety and pan because I know that it's going to create a lot of challenges throughout the year for me. So putting a little time in now is actually going to help me make decisions faster, is going to give me a lot more peace, less anxiety. So let's talk about how I create that in my businesses and the businesses of our clients at Shockwave Solutions, having a complete budget review really helps identify a few things. Overspending, missed opportunity and potential savings. And so when I take a look at what we've done in 2024 and some of you may be saying, oh my goodness, I don't have a budget to review, we can review your financials. Like you can go backwards and look at your financials and find out the same things. So where did you spend money that didn't earn money? Every dollar has a name. So every dollar that went out, what did that dollar bring back to you? Let's understand that and this will allow us to make really, really good decisions headed in 2025 on where we spend our time. When I have a really good financial plan, it makes me very, very strong in my decision making. It makes me very, very strong in my confidence level on my decision making and it makes me move faster. So I don't need to spend a ton of time understanding what, what's going on because I already understand what's going on, I understand what's happening with the money and I understand where I'm at financially. So I understand what pivots I need to make and I can do that quickly, rationally, effectively and with a lot less anxiety. Ready to dive into the process? Let's walk through my guide in how I go about reviewing your budget. Step one, review your 2024 financial statements, your revenue, your expenses and your profit. I want to look at where did all the money come in, all the revenue come in, where did it come from and how much? Month over month. So I want to take that by product and take it and place it out month over month. And then I want to do the same exact things with expenses and I'm going to place it out month over month. Then I want to look at the profit margin month over month. I want to look at what went on throughout the year and want to try and identify some patterns. So that's going to be step two. Identify the patterns. Where did you overperform and where did you underperform? I see January, February, March were really, really slow. And then April, May, June picked up a lot. And then July, August, September, really, really slow. And then October, November were really, really, really great. And then December was bad. I might be able to look back and go, oh, yeah, that's right. I didn't really work that much on the months that were slow or we didn't have any product launches, or we didn't have any new campaigns going out. So you know where your variable is on your revenue. Perhaps it's something different, perhaps that you really do have a seasonal product, and perhaps you could find a seasonal product that works well on the months where your current product doesn't. There's lots of different ways to think about it, but we really want to just sit back and look month over month. What are the patterns there? What can I see that repeats itself? What patterns do I want to replicate over and over and over again? And what patterns do I want to make sure I subtract from the equation completely? That brings us to step number three. Evaluate ROI for major expenses and investments. So roi, return on investment. I'm sure everybody knows that. But just in case, what is the money that got brought back to me for what I invested in? There's a lot of different things that we invest in as business owner. Product launches, product creation, traffic, employees. Right, all of it. So I want to look at my major expenses and what did those dollars out bring back and what was the ROI for that? What was the time consumption that it took me to create that ro? And I really want to be doubling down on the things that took me the least amount of time, the least amount of effort, and the maximum return on investment. And so when I sit down and I really think about that and I write it all out, there may be some things that you decide to cut and there may be some things that you decide to do. You may decide to hire an extra video editor because you realize that your reels have made you a bunch of money. Or you may decide to cut a traffic source because you realize that over six months the CLTV was actually quite, quite low. So step four, I'm going to create a list of necessary cuts. This might be traffic sources that I'M finding my CLTV is lower than my cost of acquisition or perhaps the refunds and the chargebacks are really high and that's hurting my merchant accounts. And then I'm going to look at where I can reallocate that money for next year. So it might be in a new traffic source that the CLTV is quite high and the cost of acquisition is low. Or perhaps I want to get an affiliate manager who can come in and grow the whole program for me. Either way, I want to look at what am cutting and then where am I reallocating funds to in order to increase my revenue and my profits for 2025? We have done these evaluations for many of our clients and we have found that, you know, sometimes it's just a matter of stepping back and looking month over month, quarter over quarter backwards. What you can see backwards is amazing. And so when we look at all of the different patterns and all the different spending and how the employees interact with each other and how they're utilizing resources, when we do that, we can really get an understanding the financial stability of the business and what we need to do to make it more stable and more profitable. If you are liking what you hear so far and it isn't scaring you off, I know a lot of you don't like to do this, but this is going to be the biggest impact for your business. So if you are liking what you hear and really want some help there, you can head over to our free members area. It's called the Visionary vault. It's at www.specialopspodcast.com Sign up for our free members area. Again, it's called the Visionary Vault. And in there you're going to get an eval, checklists complete with templates, tools and everything to make the process super simple. I'm going to move on now to how we're going to plan for 2025. So we did like the post mortem for 2024. We understand where our money went, we understand where we spent wisely and we understand where we didn't. And so now let's get started on planning. So the first thing we're going to do is we're going to set smart financial goals. And smart stands for specific, measurable, achievable, relevant and time bound. So I'm going to take a moment and I'm going to explain that to you because it's really easy for me to say the words, but I want to actually kind of paint the story for you. So smart, measurable, achievable, Relevant time bound goals. Here's what one of them might look like. Over Q1 of 2025, I want to bring in $1.5 million in revenue for X product and let's pretend for a moment that that's achievable for X product at a 60% profit margin. That's specific, it's measurable, it's achievable, it's relevant and it's bound by time. The next one might be, I want to spend $5,000 on employee education. I want my employees to learn the full funnel building systems of GHL and all of its automations so they can build funnels in twice the time. Currently it takes them 30 days, but with this new training it'll take them 15 days and they can do it in one quarter. That's specific, it's measurable, it's achiev, it's relevant and it's time bound. Those are your financial goals you can make. Now that can expand to many, many, many things. But you get the idea. The second one is create a monthly budget monitoring system and stay on track. So if you know that you want to spend X dollars on traffic, you want to look at those patterns that we were just talking about before. Perhaps December isn't a really great month for you because your product doesn't really work well. It's seasonal, you're spending, your budget would be much lower. In Dec, it would be in, I believe, you know, I said that like March, April, May, it was really, really good. So March, April, May, your spending would be higher. So you want to take and allocate what you want to spend for the year and you want to take that and stay on track by looking at what you're spending, what your revenue is and what your profit is. Every single month, 10 days after the month closes, have your bookkeeper, have your controller, have your cpa, whatever it is, send you your financials. What is your revenue? What is your profit margin? What are your expenses? And just take a look at your expenses and make sure your marketing budgets are in line with what you've seen in trends and patterns previously. If you're not going to sell a bunch in December and you can see that your ROI on your traffic spend is very low in December for 2024, you don't want your marketing team doubling down on spending in 2025 in December, right? So make sure you stay on track, make sure you're watching it and that will make a big difference. The next one, anticipating external factors. So that's economic changes at Inflation, that's industry trends. So we saw this a lot. You know, there's been two wars. We had an election that kind of caused some disruption. Recently, our American dollar, we have, we have experienced inflation that is unprecedented. Additionally, with AI and robotics, we've seen some trends in our industry. That's just insane. So you want to be looking at those things and you want to be thinking through how it's going to affect your business in 2025, how you can protect or exploit those things in order to be more profitable. The final one, but I think the most important, aligning your budget with operational and marketing strategies for growth. I'm going to break this one down because this one's likely the most important. So you want to be taking your operational strategic plan and you want to be taking your marketing strategic plan for 2025 and you want to be looking at those things and you want to understand what resources do I need to provide my marketing team and what resources do I need to provide my ops team in order for them to meet their go. Then you need to look at your finances and make sure that that's possible and factor in all the things, employee payments, contractor payments, tools, resources that they need, your, you know, your regular opex and all of those things, and make sure that you're in alignment with the money that you're going to have coming into the business with what's going to be going out to grow the business and that you're going to actually have those tools. Having employees work on or contractors and employees work on something for six months, seven months, eight months, all to find out that you don't have enough money to actually complete it is going to really lower morale everybody and just be a complete waste of time and money for you. Take all of those different plans, look at them together and make sure that they all align. It's likely the most important thing that I can tell you with the rest of this right now. We've worked with a bunch of different clients throughout the years and we've seen clients that because of poor financial planning or poor management of finances, were really just in a tough spot because they were, it was actually because of growth. They were growing so quickly and so their traffic costs were growing so quickly. And if you know anything about growth and traffic costs, you have to pay for the traffic today. And some products you're not getting actual profit on for 45 or so days. And so they were really in a tight spot and it wasn't, it wasn't going too well for them. We really Sat down and we created a great financial strategic plan. And they were able to go from uncertainty to comfortability and they were able to scale without the fires and without the panic. So I highly, highly suggest that you go through these steps. So what are the common pitfalls that you should avoid during this process? We're going to cover that next. Some of the small business pitfalls that we see in financial management or budget, you know, budget evaluation mistakes comes a lot from ignoring the small recurring expenses that really add up. And so I've talked about this a little bit throughout this episode and we all have like these small bills. $10, $20, $40, $44, $104, $480, 600 bucks a year, $320 a year. If you look at it, you're likely spending thousands, if not 100,000. We've seen it that high before of tools and subscriptions and small things that you're just not using. Somebody signed up for something on a trial and they forgot all about it and they're not using it anymore. And that happens a hundred times a day, by the way. So really take some time and don't ignore those small recurring bills. Dive into them, understand what they are and get rid of them. We just recently went through a client one Amex, had $11,000 a month that we were able to eliminate because again, it was, it was tools and things that nobody was even using. The next thing that I find has been a pitfall is overlooking team input and planning in the, in the operational budget. So the team knows what they're doing and what they need and they know what is going to come up because they've been doing it. And so a lot of times as business owners, we don't even realize because we get so far away from it, that we're in the thick of it, but we get so far away from it. All our team intimately understands what it takes to get the job done. So have conversations with them. What are we using? What do we plan on using? What are things that you see coming up? What are some patterns that you see? What are some things that you might need? What are resources that could help you do your job more effectively and efficiently? Sit down, talk to them and let them have some input on those operational budgets for sure. And the last one, failing to adjust budgets based on real world outcomes. If I get a bunch of projections because I thought that a product was going to sell really well, I not only did I, I'm spending a bunch of money, but the money that I'M projected to have come in isn't going to come in, right? So if I continue to spend the money, I'm going to continue to spend the money at a loss. And so if I see a real world outcome, take for example Travis and I at Shockwave or at Tidal Wave Media, one of the companies we own. We launched a webinar that I thought was going to do really, really well, and it didn't. That doesn't mean that it won't. Eventually we got some work to do, but it just means that the budget that I allocated for that product isn't going to work for us right now. I needed to reallocate that traffic money to something that is going to sell well. And so we did that because the real world outcome means that projections need to shift sometimes. And that's okay. In our Visionary Vault, we actually share a quick formula to help you double check your budget projections for accuracy. So don't sleep on that. Go check that out. Visit our free members area to access the 2025 budget planning toolkit. Your shortcut to a worry free 2025. Just to recap really quickly, you understand that end of year reviews are vital for growth and stability. Step by step process for evaluating and adjusting your budget is crucial. And planning for the future while avoiding common mistakes is really going to help you grow for next year. So with the right budget strategy for 2025, it won't just be another year, it'll be to get. And I'm looking forward to that for all of you want to get your finances in order before 2025, download our budget evaluation checklist and 2025 budget planning toolkit. It's available now free of charge in the Visionary vault. As always, www.specialopspodcast.com finally, financial clarity is your foundation for success. So don't skip this crucial step. Let me know in the comments how you do. Don't forget to like and subscribe. See you next time. It.