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huggytree
11-09-2009, 04:45 PM
Last month (Oct 09) was my best month in business yet.
This month (Nov 09) will more than likely be my worst.

the longer ive been in business i notice my monthly hours flattening out slightly...its always up and down, but alittle less dramatic each year.

now this month happens....i am working 3 hours a week right now. last month i worked 10-12 hour days and some Saturdays...

its just weird.....wondering if anyone else experiences these dramatic differences in what you do?

vangogh
11-09-2009, 07:21 PM
Some of that is normal statistical deviation. Over time you've probably been getting customers from a variety of sources, which is why the fluctuations have generally evened out. The same thing has happened to me over the years too.

For whatever reason you're experiencing a high and low month back to back. Some of that is probably time or year, some perhaps is the economy, and some is possibly just random. I don't think you should look at a two month time frame as an indication of anything.

I think the main thing to avoid this kind of up and down is to diversify where you get customers as much as possible. Market yourself in different ways and through different medium. I know you have a phone book ad, maybe more than one. Each ad probably reaches a similar customer base. Maybe that base is experiencing an economic hit for a few months and during that time you get less calls from them. A few months later they have money to spend and you get a lot of calls. If that's your only source of customers you have no choice but to ride the wave.

If, however, you also reach people through the newspaper or local magazines or even through search marketing or your website, etc., each of those sources will probably also have the same ups and downs as the phone book people. The likelihood is the timing won't be the same for all sources. While the phone book people aren't spending the web people are spending normally and the newspaper people are spending more.

Overall you'll still have ups and downs, but the more diversified your source of customers the less likely the ups and downs should swing so far.

Spider
11-09-2009, 10:23 PM
Another consideration is the size of the jobs you focus on. The smaller the project the greater the fluctuation, the larger the job the less will be the fluctuation.

$200 jobs can be done on a whim for most people. $2,000 jobs take a little more planning and budgeting. $20,000 jobs require more lead time and thus make workload easier to plan. $200,000 jobs require more input, more lead time and planning further into the future. $2,000,000 jobs require careful planning, careful management, resource aquisition and long lead times. Etc.

IOW if you want a more steady flow of work, target bigger jobs. And make sure your own planning and workflow projections can keep pace.

nealrm
11-10-2009, 09:30 AM
Smaller business can be feast or famine. When things are busy, you send all your time working on your current job. That leaves less time for marketing, you may even have to turn down some jobs due to lack of time. Then when those jobs are over, there is nothing in the pipeline.

cocoy
11-11-2009, 02:53 PM
Are there things people call you for that you don't do?

Other plumbing type services you don't do, but other plumber will do?

Fixture/heater repairs, uncloggings, installing new piping to the public main, gas piping, etc...

Even commercial work.

Market yourself to businesses. Restaurants, salons, gyms...

huggytree
11-11-2009, 07:37 PM
I just wondering if anyone elses businesses have dramatic ups/downs like i sometimes do?

vangogh
11-11-2009, 08:09 PM
I'm sure we all have ups and downs. I know I do. But how wide those swings are has a lot to do with where you get your money from and how you market yourself. You'll never completely get rid of ups and downs in business, but you can minimize the dramatic part by diversifying where your revenue comes from.

Steve B
11-12-2009, 02:54 AM
Mine does. I had a great July / August and a big drop off in Sept / Oct.

nealrm
11-12-2009, 08:41 AM
Diversifying your revenue sources and keeping 2 to 3 months of reserve cash is good advise for any small business.

Spider
11-12-2009, 12:10 PM
Let me question that advice to diversify. It's great if you are a large business with different departments and have the ability to add another department when the fancy takes you. Is it such practical advice for the 1- or 2-person business, though?

A small or micro-business does one thing only - (A). Business is good, A takes up all their time and they continually improve their systems and service. Economy dips. They "diversify" taking on something new (B) - that will require certain financial outlay, at a time they can ill afford it. They scrimp on the expenditure and do not adopt B as well as they should. B becomes an after-thought - a "grabbing at straws!"

It probably doesn't help much in this downturn, and when the market picks up, they have a second line that is underfunded, improperly implemented and offers a poor alternative to others already doing this work. Their excellent A brand is dragged down by the poor B brand and the company goes into the next downturn worse off than before.

Obviously, this is not a guaranteed scenario but a potential one, nonetheless.

I think a downturn in the market should be countered (for the small and micro-business) with maximizing marketing, especially no-cost marketing like networking, walking the neighborhoods and talking to potential prospects, contacting other businesses for joint ventures and cross-advertising (recommend me to your customers and I'll recommend you to mine.) Making friends with competitors.

Time might be spent (we have time now, right?) to improve one's internal processes, make the changes that you've been intending to make but never did, empty all the crap out of the storeroom and have a sale of outdated and damaged stuff, paint the office, clean up the yard, create a new sign.

Prepare for the upturn so you are first out of the gate - and looking sharp as a new pin - when customers realize that life goes on and they are ready to buy again.

vangogh
11-12-2009, 02:26 PM
I wasn't meaning diversify in the sense of having to create new product lines, though I do think even small businesses can do that to a degree. What I mean here is what's the source of your customers and how much of your revenue comes from one or two clients.

Say one customer is supplying 40% of your revenue. Your downs can be attributed to one customer not sending you business for a month and your ups can be one additional job from that same customer. On the other hand if no single customer is sending you more than 15% of your business each month, your ups and downs are much less tied to any single customer.

In that sense diversify means not getting too much revenue from any single customer. Or at least if you notice you do work to get more customers. If a large chunk of your business comes from one customer, know that in a short amount of time your business could be in trouble.

Also where are you getting new customers from. Are they all coming through your one ad in the local paper? All through your phone book ad? Any marketing source could dry up for a variety of reasons. The local paper gets canceled or it's circulation drops. People who used to go to the phone book now go to a search engine.

Diversifying in this sense is making sure there are many ways someone can find you. If your advertising/marketing is limited to a couple of places you're reliant on those one or two places.

And like you said when the economy is down the price of advertising goes down. This past year has been the time to market in more places.

huggytree
11-12-2009, 07:11 PM
another thing i find strange is when i compare this year month by month to last years

i sat and did nothing in March 09, but was extremely busy in March 08

Oct 09 was my best month, last year it was November and this year Nov is horrible

my business has 3 spikes..spring, summer, and fall....it goes down 4-6 weeks inbetween the spikes....each year has them, but can vary my 4-6 weeks where that spike peaks out

i would just think that each year would exactly mirror the year before with where those spikes are. maybe the economy is making people put off projects a bit and is screwing with my graphs.

vangogh
11-12-2009, 07:39 PM
A couple or three years isn't enough to determine a pattern in the spikes. One person hires you for a decent size job at the end of October last year and one person hires you for a big job at the start of November this year. Look at quarters more than individual months. You get spikes in 3 quarters. Assuming it's normal for your business you'll likely get a spike in those 3 quarters next year too. They might not be in the same month though.

I don't think this a result of the economy. It's normal in any economy.

huggytree
11-12-2009, 08:29 PM
one project is never enough for much of anything...the spikes are typically 10+ large projects or 20 medium projects in a month...

my spikes are typically tons and tons of calls and jobs....its a noticable up tick

vangogh
11-12-2009, 09:48 PM
It's still not enough to be a meaningful pattern. There are so many variables that you need to look at more data before you can really say anything meaningful about it. That's why looking at quarters as opposed to months makes more sense.

Now 10 years from now if you've had 9 straight great Octobers and then in the 10th year you don't it's probably indicative of something. But if it's just that last year October was your biggest month and this year November is your biggest month I'd say it's just that people this year waited a few extra weeks to call you. Is that because of the economy? it could be. It could also be hundreds of other things.

Steve B
11-13-2009, 05:18 AM
I agree with VG - you don't have nearly enough data to conclude anything here. I would advise looking at everything in terms of Quarters versus months. This will smooth out the data and prevent you from getting overly concerned or optimistic when you have a bad or a good month.

Dan Furman
11-13-2009, 01:08 PM
To me, this is normal - it's just a question of scale.

For example, if you look at the US (or even the world) economy, it is full of peaks and valleys.

Bigger companies panic after even one bad quarter, etc. Medium companies might do belt tightening after a bad quarter. Smaller companies might do a layoff after one bad quarter. And so on.

The ups and downs are normal. The difference is how close you personally are to the revenue stream. If the revenue goes right into your pocket, you're really affected. If the revenue goes into a bank account and then into your pocket, then you're still really affected. If the revenue goes into "the business", and you draw a steady paycheck every week, you may not be as affected by ups and downs.

This is what we did - we incorporated, and I draw a salary. It's just me and my wife, but doing it this way leaves me at least one step removed from the ups and downs. To tell you the truth, I have no idea what's in the business account right now.

You have to get to the point where you're not affected by every dollar and phone call. Because the way you sometimes react to this stuff... well... I can't see how you are actually enjoying your business. And isn't enjoying business, and the entrepreneur lifestyle, part of the point?

Now, how do you get to that point? It's hard to say - I would say two things are paramount - mindset, and marketing. I have a "bigger" mindset than "do a job, get paid, buy food" - I want my business to be its own little entity. So I made it that.

Next is marketing. I have a little marketing machine set up. While I do experience ups and downs in terms of visitors to my site, I have my website to the point where it converts. If I get 100 visitors interested in what I do, I will get 15-20 contacts. Period. So if I am slow, I am not grasping at straws at how to make the phone ring - I just say "ok, let's get more people to the little conversion machine I call my website."

Your little conversion machine may be different (as you insist websites don't work for plumbers)... you need to find it. Because once you do, ups and downs affect you less.