About Rowell Dionicio

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.

At the start of the year, I develop new objectives to aim for. Some of those objectives are revenue targets.

I’m considering this year to be a development phase of Packet6. And what I mean by that is identifying ways to keep the business relevant and continue to provide value to clients in this changing climate.

See my other Income Reports.

Highlights of Q1

In the last couple of months ending 2021, I was studying for the Palo Alto Networks Certified Network Security Administrator (PCNSA) exam. In January 2022, I was able to take the exam at home and pass! I’m glad I passed because I had been working on Palo Alto Networks firewalls for most of 2021.

A week after, I passed the JNCIA-MistAI exam.

Both certifications reflect the work I’ve been doing in the past year with Palo Alto Networks and Juniper. I wanted to put some certifications behind it.

One of the big things that will really pay off is hiring a podcast producer to work on Clear To Send episodes. It will allow more focus on recording and freeing time for things that need my attention. A big game changer for the podcast.

And as we focus on improving the business, we are learning and implementing tax strategies. We’re registered as an S-Corp which allows us to take on certain deductions. This lowers the business’ taxable income.

It’s a lot more strategic than that. Not as simple. There’s some additional management overhead but we’ll see how it works for Packet6 this year.

Lessons Learned

The first quarter was very busy. I took on too much weekend work filled with network cutovers, traveling, and performing validation surveys. I don’t want to overdo it again which means I need to bring in some help.

Sometimes weekend work is required since Packet6 is a side hustle. It can’t affect my full-time employment.

After having done that much work, I realized we didn’t leave space to do more regular reviews of how the business was performing. Tasks and projects were kept in Todoist but I didn’t have a method of properly reviewing what was completed.

We’ll be changing how we keep track of active projects, have end of week and quarterly reviews to make sure we’re not letting things slip.

And speaking of letting things slip, the Packet6 blog has been collecting dust. I’ve implemented a content calendar to keep track of publishing blog posts. We’ve been fortunate to have many new clients come in through the website that it would be a shame to let it wither on the vine.

Income Analysis

Now we get to talk about numbers. I’ve always been nervous about sharing these but I’d like to be transparent to allow others to learn from my successes and mistakes.

Eventually, these income reports will expand in more detail. There is much more to organize when it comes to tracking finances.

	Q1FY22	Q4FY21	% Change
Revenue	$246,817	$163,233	51%
Expenses	$89,936	$114,420	(21%)
Net Income	($17,641)	($33,056)	47%

We were fortunate to have great projects completed in Q1. We’ve embraced the help of subcontractors and it’s removed some weight off my shoulders. But Professional Services revenue dropped 11% compared to the previous quarter. It was offset by an increased in revenue from Managed Services.

I believe all of the Pro Services work came in as referrals or existing business.

The biggest challenge we’re facing is the shortage of equipment. Some clients waited 6 months, others 3 months, but they arrived in Q1 which allowed us to invoice for network hardware, increasing hardware revenue by 110%. All of Q1 hardware sales were Meraki products.

	Q1FY22	Q4FY21	% Change
Pro Services	$43,345	$51,127	(11%)
Managed Services	$25,384	$19,038	33%
Hardware	$112,659	$53,714	110%

Our Q1 profit margin was 29.2% which is a -41.3% decrease compared to Q4FY21.

Expense Analysis

The biggest objective that has been carried from last year into 2022 was lowering expenses.

Maybe the most important expense goes to salary of two employees. I want to be sure we can always pay ourselves. You hear about business owners who forgo their income in order to keep the business afloat. That’s no way to live.

Another expense that is new this year will be reimbursements back to us for using a portion of our home as an office and for other business expenses incurred that we’ve personally paid for. Gas mileage is an example of this or reimbursement for your home office usage and Internet.

	Q1FY22	Q4FY21	% Change
Travel	$12,300	$6,173	99%
Web Services – Subscriptions	$2,260	$5,214	(57%)
Legal & Professional Services	$897	$2,025	(56%)

I saw travel expenses increase by 99% but most of it is charged back to clients. This is for airfare, lodging, and rental cars to locations such as Arizona, Los Angeles, Seattle, Denver, etc. I’ve stayed with Delta Airlines and Hertz for rewards. Sometimes the cost being higher compared to an airline such as Southwest.

We took a good look at all the SaaS services we use. Some are experimental and others become less utilized. So it was important to cut these subscriptions out and we were able to reduce this expense by 57%. Big win in my book so I’ll take it.

And in the previous quarter we spent a little more on Legal & Professional Services in the previous quarter but in Q1FY22 we reduced this expense by 56%.

We have other expense categories but need to clean it up for improved tracking.

Overall, expenses were down 21% compared to the previous quarter. I’ll take it!

What’s Next

We’re improving our business processes to keep things consistent and to ensure we’re operating with intent. I’m documenting technical processes for future training purposes.

Some examples of processes:

• Weekly reviews
• Quarterly reviews
• Project & task management
• Sales calls
• Podcast production

Our reason for working on processes is to have an overall system that allows us to work on the business instead of in the business.

Now that we have many of our processes documented, we’ll begin to offer Managed Services to more clients. This would bring in recurring revenue in addition to Professional Services & equipment reselling.

I’m also going to go back to creating useful content for technical audiences from my personal website. Packet6 content will have a content targeted for IT decision makers.

I hope this Income Report was valuable for you. Send your questions in the comment section below.