Rowell Dionicio

This quarterly income report is a documentation of the ups and downs of being an entrepreneur. I’m being transparent with the journey. You’ll find what worked well for us and what hasn’t worked so well so you can avoid any of the same mistakes I’ve made and gain from our successes.

Take a look at my other Income Reports.

Here’s a summary of Q3 2022.

Gross Income: $107,469.51

Cost of Goods Sold: $38,893.13

Total Expenses: $67,687.27

Net Profit: $889.11

Net Profit difference from Q2 2022: 104.59%

Highlights

The third quarter seemed like a blur to me. But it was one busy one leading to seven new clients added. That might be a record for us in a single quarter.

An anomaly that seems to happen every few months is the higher than normal reselling activity. We’re not actively telling the world we resell major vendor hardware but with existing clients, it’s a big plus for us as we nourish the relationships we’ve created.

In addition to reselling, we’ve converted a few existing clients into a monthly recurring revenue model which we call Managed Network Services. It’s nice to see a new service gain some traction and in a way that is very manageable.

Low Points

Burn out is still a thing. We’re at a pivotal moment in the business where additional help has been brought up in multiple discussions.

Some deals didn’t go as planned. A deal went into negotiations but I failed to think things through slowly and went forward with something not as profitable but hoping for something bigger later down the road. We’ll see how it plays out next quarter.

Chasing overdue invoices is never fun and it eats up a lot of time. Most companies are very good with paying on time but it’s ridiculous we have to follow up so many times to get an overdue invoice paid. My advice for any small company is to get 50% paid for up front.

Income Analysis

Packet6 drove in a total of $107,469.51 in revenue for Q3 2022. That is a -12.03% decrease compared to Q2. The contributing factor is pro services being down by 50%. There’s only so much work you can take on and the invoicing was slower on our end with other invoices being paid late.

But hardware reselling was up 57,320% compared to Q2. Sales cycles are longer, waiting for purchase orders, hardware to ship, etc. With hardware taking longer to ship it becomes a challenge to invoice. As this blog post goes live, I’m still waiting for Meraki to ship equipment that was ordered in August 2022.

If you’re interested in what hardware was sold it was primarily Cisco switches and Mist access points.

Managed Network Services was half of what our revenue was for professional services. It’s a good balance for predictable income but I need to be cautious with the amount of work that is being juggled.

Our average sales revenue per pro services project is $3,840. We’re planning to increase this number by looking for higher value projects.

Expense Analysis

The great thing is expenses are down 41% from the previous quarter.

Vehicle related expenses were down 39%, web hosting decreased by 37%, and a big dip in SaaS expenses by 70%.

The current plan is to replace or get rid of certain SaaS applications where we do not see value today.

We need to focus reducing office supplies expenses.

Our largest expense item was ZoomInfo and if I’m being honest, it hasn’t been as useful for us. It was an experiment we dived into that hasn’t brought in a good enough ROI. Vehicle expenses remained one of the higher expense items which was mostly due to electric charging. There was a lot of driving to client sites. And lastly we increased training expenses with books and video tutorials.

Lessons Learned

Our net income for Q3 2022 was $889.11 which is a 104.59% increase from the previous quarter. Not a big net profit number but this quarter we are positive!

I think we’ve done enough experiments with SaaS products to see which ones help and which do not. But we’re implementing processes for expenses so we can keep a better eye on where money is going.

It’s time to buckle down and increase net profits while aiming for small growth.

Burn out continues to be present and in some areas I tend to lack focus and commitment. I’ve realized there are certain areas of my routine that need improvement such as exercise, meditation, and rest.

What’s Next

We want to end the year on a high note and begin planning for 2023. Think about our values and if what we’re doing aligns properly.

Look to adding additional help to delegate tasks. Train up on business finances and lose excess financial weight (expenses).

This quarterly income report is meant to document the ups and downs of being an entrepreneur. It’s a way for me to be transparent with you if you’re embarking on the same path of consulting.

We’re documenting and learning what has worked well and what hasn’t worked so well so that you can avoid any mistakes and gain from our successes.

Take a look at my other Income Reports.

Here’s a summary of Q2 2022

Gross Income: $122,160

Total Expenses: $114,013

Net Profit: -$19,373

Net Profit difference from Q1 2022: -184%

Highlights

Q2 continues to see steady growth as we gained three net new clients. One company in data SaaS, in biotech, and in retail.

We reached these clients in three different ways. One found us through Google search results. Another was from a previous engagement, and the last was a referral from a vendor.

The last two are important to highlight because they wouldn’t have happened if relationships weren’t nourished. It’s important to work on your relationships regularly. You never know where people might need your help in the future.

We added one additional Managed Network Service client under the Proactive Monitoring portfolio where we utilize Wyebot network sensors. This is a new service we’re rolling out to select clients.

As quickly as we onboarded those three clients we completed all three total projects near the end of Q2. The workflow for Wi-Fi projects is getting fined tuned. I’m able to identify issues quickly, resolve them, and develop a report with my findings. While onsite, I have certain targeted tasks to complete. Then I have the client approve or implement recommended changes. I’ll follow up to find out what the results were.

Income Analysis

Packet6 drove in a total of $122,160 in revenue. That’s a -50.5% difference from the prior quarter.

$84,500 of the revenue came from professional services. The difference from the prior quarter is +86.4%.

Additionally, $27,500 came in the form of managed network services. The difference from the prior quarter was +8.3%.

We did not resell much hardware in Q2, only seeing $3,584. That’s a difference of -100% from the prior quarter.

That leaves us with a Gross Profit of $94,393. A difference of -50.5% from the prior quarter.

Expense Analysis

We had a whopping $114,013 in expenses which includes salaries. That’s a difference of +26.8% from the prior quarter. Almost half of our expenses went to taxes, about $51k.

Approximately $8,300 went to travel expenses, which we usually charge back to our clients. Maybe some of it was a little heavy on the meals. Something I need to adjust for next quarter.

We spent $1,660 from Clear To Send as we have now brought in a producer to help with our podcast episodes and videos.

Lessons Learned

Sales is up and down. We didn’t win a big Meraki deal even though we did the quoting. We lost it to a competitor who was able to take a loss on margins. Anything to win the sale, right? I also did not dedicate enough time making calls to existing clients. That may have contributed to the lower revenue.

We started offering a new service called Managed Network Services. Packet6 acts as an augment to an IT team providing network engineering expertise. I’ve only offered this to specific clients where I can safely manage the work. It’s another source of income that’s predictable. And the work can be very rewarding, increasing experience.

Time management is tricky. Packet6 is a side business so I must dedicate my time to my full-time employer. It’s only after hours and weekends I can really dedicate time to the business or if I use vacation hours.

We’re definitely leveraging subcontractors. More work is coming into Packet6 but my time is getting spread thin on the technical work. I would love to hire an engineer to share the load of professional services and managed network services. That would free up my time to work on the business rather than in the business.

Unfortunately, we ended with a negative quarter, -$19,373. We realized expenses were a big factor in the middle of the quarter. We went through our list of expenses and purged things we thought were no longer needed.

Some expenses wind up being part of experiments or tests we do on the business and sometimes it doesn’t work out to our advantage. But this time around we’re going to shed some of that weight.

What’s Next

We’re prioritizing time to increasing our knowledge around the use of QuickBooks. How can we integrate the software into our workflow for higher efficiency and accuracy of our books.

Soon, our website will be redesigned to enhance the story we’re trying to tell to our ideal clients. In the past, I’ve been the one building the website. I’m not a web designer so it made sense to outsource that to a professional in WordPress.

We’re waiting to see the outcome from canceling expenses. We should be expecting a decrease in expenses through the next 9 months.

There are a lot more processes we want to nail down. Much of it needs to be documented. Training needs to be created and completed. There’s a lot of work but we’ll reap the benefits in the future.

After operating Packet6 for 5 years, there has to be some cleanup. We’ve had a small growth that exposed areas that needed attention. We’re in a small period of recovery so that we may see additional growth in 2023.

What do you want to hear about? Let me know in the comments below.