Imagine a sales manager, from a scene in Wolf of Wall Street, motivating his sales team into realizing telephones won’t dial themselves. I’ve always known sales people and vendors to be running with their heads cut off trying to meet end of quarter or end of year sales goals.
We’re lucky that at Packet6, we don’t think about quotas too much. But we do track our financial metrics closely. Finishing the year strong is always preferred and top of mind but not at the expense of being an overbearing sales person and treating clients like numbers.
How were Q4 financial goals met?
We brought in $132,026 in revenue through professional services, managed network services, and reselling. Three services keeping business rolling like a trio sonata coming together in a single composition.
27% of those clients were referrals – which is why it’s so important to maintain relationships with people and keep existing clients very happy.
45% were returning clients initiating new projects – a sign that we’ve been doing well with previous projects. One thing I need to include in our process is getting feedback on the work we’ve performed to learn where we can make improvements. As if in a period of courtship, wooing the client in hopes of an engagement of some sort but in our case resulting in an invoice.
I don’t hold ourselves to arbitrary quotas just for the purpose of increasing revenue. There needs to be more value to it than hitting a quota for the sake of hitting a quota. There’s no round gold gong, sitting in front of a sea of cubicles with our sales target written in a red ink on a whiteboard, waiting to be banged.
During the last week of December, one evening, I rocked back and forth in my white desk chair wondering if an invoice would get paid. It accounted for 47% of the quarter’s revenue, comprised of licensing and subscriptions. As a network operator, I cringe at the idea of subscription models for network equipment. But for the vendor and the VAR, it is recurring income. It nearly becomes passive income.
Compared to the previous quarter, this was a 518% increase in licensing and subscriptions. This comes from renewals coming due after 1, 3, or 5 years. Something to consider and forecast for future revenue streams.
Professional services saw a 20% decrease quarter over quarter. We have clients who pay on-time and we’re grateful for their quickness. But the growth is limited due to my capacity, I cannot in two places at once. I have two options – increase prices or bring on help. If I increase prices, I can lower the amount of active projects. When bringing on additional help, I have to consider the salary I will take on and most likely increase prices slightly but that means we can take on more projects and complete them faster, thus increasing revenue.
Then we have irregular sales, such as antennas, which had a 1,200% increase compared to last quarter. This was in fact due to Meraki finally shipping hardware that had been ordered last August of 2022. I’m glad the client didn’t cancel the order!
Supporting revenue streams included a 20% increase in podcast sponsorships. Quite the year for Clear To Send which is allowing us to reinvest it back to our goals for the podcast.
Expenses are still high
My overall goal last year was to decrease expenses. In Q4FY22, it increased 7.38%. Not too bad but its 7.38% too much. It was led by expenses with vehicle use, web hosting, software subscriptions, and airfare.
Compared to FY21, our expenses decreased 5.22% which meets our goal for the year and leaves us with more net profit.
Happy with where we are
While we brought in $132,026 in revenue, I was more ecstatic to have a net profit of $41,132! Having different revenue streams within the business helps minimize the risk of a single source of income. Where we saw professional services take a dip was picked up by reselling activities and managed network services.
Our cost of goods sold totaled $16,784 but we were able to have margin to keep for ourselves to reinvest and build a better business in 2023.
If you’ve seen my previous posts and goals, I keep hammering on lowering expenses. I made it an objective for 2022 to get rid of things we no longer need to pay for. And I may just keep doing that in 2023. We get to retain more money in the business which in turn allows us to grow and plan for the future. We’re able to save some money for any unexpected bumps or dips in revenue, especially in a questionable economy.
Key takeaways: Different revenue streams, keeping an eye on expenses, executing on a goal, and persistence.
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