feast or famine

[vangogh]

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]

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]

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]

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]

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]

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]

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.