2008 Re-Cap: The Perfect Storm

Wow, what a year! Gas prices are up, real estate transactions are down - its almost a perfect storm...

Budgeted for little to negative growth this year, boy was I wrong! Well the year started out pretty good. Q1 was profitable and we had decent numbers, experienced some small growth over the previous year (even when factoring in the aquired business). This lead me to believe my projections were going to be close.

Q2 was when reality set in though! We have been off by as much as 30% in a month over the same month previous year. Its been a tough pill to swallow. Bonuses to staff were cut. Our daily bonus program (commission) has taken a beating hence so have the paychecks of the field staff.

What the Hell are we going to do now?

Well, first get out the P and L. Fuel is up 33% over last year, not a huge cost for us but its still shaving something off the bottom line, which has to be protected now! So where can we save some $$ now? Well, Labor is our number one cost, this is managed pretty carefully and we do well here, plus the staff are already seeing less $ in their paychecks and we dont want to rock the boat too hard going into summer, they might start leaving and if things pick up we will need them to capture some profit quickly. so we go to the next line item (franchise royalties, well those are fixed on Gross Revenue) so short of defrauding the franchisor, we cant change these! Next... Our third largest cost is somewhere we can shave, so lets get our staff religious about saving as much as we can here.

Long story short, it has worked and worked well. We have pretty much counteracted the increase in fuel prices here.

I really will start again!

I will start blogging again for real now, its been too long!

I will spend 15 minutes a day posting updates here.

Re-cap on 2007:

• The year started off great! We were pretty much right on target (45% top-line growth) right up through May 2007.
• June 2007 - thought we encountered a hiccup, which sometimes happens in this biz (very unpredictable demand curve and a short sales cycle. (almost 10% drop in revenue from May- unusual but not too crazy)
• July 2007 - OK something is not right here! Further drop in revenue (a further 15% drop month over month, now we dropped 23% comparing May to July)
• August 2007 - we rose back up to May 2007 revenue level, which is what was projected for this month. Very reassuring.
• September 2007 - (here is where we go off the cliff!) 38% drop in revenue from August to September! Wow, this is bad.
• October through December 2007 - OK, we stay pretty flat for the rest of the year, cuases us to miss our goals and budgets pretty badly. We do manage to eek out some small improvements month over month until December, which is normal.

Summary of 2007: Q1 Good, Q2 Solid, but shaky last month, Q3 August is misleading but September is worrying!, Q4 Back to the drawing board

It looks like the sudden burst of the housing bubble has caused some serious problems in our business. We are tied to real estate somewhat, especially during our peak months (Summer - since some of our work is related).

Big New Happening: Did buy out another business that serviced a neighboring area. Closed in late March 2007, began operating April 1, 2007.

2008 Outlook: Predicting little to no growth, even budgeting with the possibility of 5 - 10% negative growth over 2007. Building budget in a more flexible manner so things can be turned on and off as we see where we are headed with our revenues.