This is a follow up story for DollarSprout. If you're interested in reading how they got started, published about 2 years ago, check it out here.
Hello again! Remind us who you are and what business you started.
My name is Jeff Proctor and I am one of the co-founders behind DollarSprout along with my friend, Ben Huber. DollarSprout is a personal finance blog that is geared towards helping people maximize their earning potential, mostly through finding new side hustles. We know the impact that even a few hundred extra dollars a month in income can have on someone’s life and we are dedicated to spreading that message each day.
Our core business model right now is affiliate marketing, but we supplement that income with revenue from display ads via Mediavine. In the not-too-distant future, we may try incorporating paid courses/ebooks or even a SaaS product into our mix.
Right now the site is generating around $50,000 a month in revenue, which is quite a way off from the $150k+ levels that we experienced last year. That said, we are more optimistic about the future than at any other point in 2020.
Tell us about what you’ve been up to! Has the business been growing?
Two things have hurt our business over the last 12 months: COVID-19 and Google core algorithm updates. Both are somewhat outside of our control, but the good news is that we have made several meaningful changes over the past few months that have already started to right the ship.
Find your target market and be the best possible solution for them.
Since DollarSprout is so dependent on affiliate marketing, one of our vulnerabilities is that when our advertisers are adversely affected by COVID-19, those impacts are felt by us too. Gig economy apps like Airbnb, Uber, etc are examples of affiliates that we like to promote, but those companies have obviously not had a great year due to the virus. We’ve seen advertising budgets shrink significantly.
We’ve actually fared okay for the last few Google updates, which is great, but there were a handful of updates last year that really hurt us. We’ve been working like crazy to improve our content and become more authoritative on side hustles specifically, and I think we are on the right track. I feel like our site and the value we offer to readers is far better than it was 12 months ago, but unfortunately, the revenue numbers don’t reflect that (yet!).
One cool win for us in the past month was having one of our research studies featured on Forbes. I’ve had Forbes on my list for ages now, so this was great to finally see.
What have been your biggest lessons learned in the last year?
With 2019 being such a breakout year for us, 2020 has felt like a step backward. I think the biggest lesson that we learned was the importance of maintaining high margins as you increase spending.
For many businesses, operating at a 5-10% profit margin is considered a huge win. For DollarSprout, since our business is purely online and our revenue and traffic can fluctuate significantly without warning, we can’t afford to operate at 5-10% margins. If we are, that means we are taking on unnecessary risk.
For instance, if a Google update were to reduce our site traffic by 25% overnight, even at a 10% operating surplus, we would immediately become unprofitable — and with 3-4 major algorithm updates a year, we’re bound to be on the losing side of one or more of them eventually. So, for us, we are very hesitant to add on additional fixed expenses to our monthly budget. We are aiming to get our profit margins back to somewhere in the 30-50% per month range.
What’s in the plans for the upcoming year, and the next 5 years?
Our 3 biggest goals for the remainder of 2020 and 2021 are 1) diversifying our revenue streams, 2) increased PR efforts and personal brand building, and 3) strengthening our top “products” aka our revenue-generating articles.
As a small team, it’s quite hard to balance multiple macro goals at once, but I am confident that we can pull these off over the next 12-18 months. In the past couple of months, we’ve started pulling back on some projects that weren’t going as well as we’d hoped, and the tighter focus has already been a huge stress relief for me!
DollarSprout turned 5 years old in August, and it’s nothing even close to what I imagined it looking like 5 years ago when I left my job to start it with Ben. I truly have no idea what the next 5 years hold for us, but I would like to hopefully look back in 5 years and see any one of the following be true:
- DollarSprout is a low 7 figure business that Ben and I still run remotely in largely the same way we do today
- DollarSprout has a thriving suite of products and/or courses that supplement (or overtake) affiliate revenue
- We make a successful exit and secure our family’s futures and have enough left over to pursue our next big thing
Have you read any good books in the last year?
Radical Candor by Kim Scott is a good one. This is a management book that has so much helpful advice for someone like me who really struggles to have difficult conversations about work performance. In fact, I think I’m going to flip through it again now that I mentioned it.
Another book I read recently — and one of the few non-business books I’ve read in the past 5 years — is Lost Connections* *by Johann Hari. It’s a book about depression and anxiety, which is something I don’t really like to talk about, but both affect me. This book helped me look at things from a new perspective and try to address what I can that’s within my control. Definitely recommend this for anyone out there who might be struggling.
Advice for other entrepreneurs who might be struggling to grow their business?
Unless you are creating something truly revolutionary and unique, don’t try to reinvent the wheel with your first business. Find others who are succeeding in your space, and find parts of their strategy that you can emulate. Of course, don’t directly copy anyone. That’s poor form.
Also — and this is something that Ben and I have realized more this year — don’t try to appeal to everyone. Find your target market and be the best possible solution for them.
In 2019, as we were growing, we wanted to become the go-to website for as many personal finance topics as possible. We pumped out a lot of content, and, in the process, we diluted what we were best at, which is content on making extra money. Our job now is to get back to our roots and be the best in the world at what we do.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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