Looking Back at 2023

Here’s to the best year we’ve had on books. The processes and strategies we started in the previous year began to pay off.

We went all in with Notion to document everything we do in the business. From how-to and knowledge base articles to project management.

Inside of Notion we keep a task database for everything that needs to be completed. Whether if it’s for internal to the business or for clients and projects. We kept track of what was coming up and what is overdue.

Last year, we made a goal to hire a new employee. It really became evident in Q1 and Q2 of this year. The amount of work kept me at capacity. This is when we asked for help from people we trust who became subcontractors.

With the help of subcontractors, my travel decreased 37% compared to last year. I’m really grateful for that.

A huge move we made this year was hiring our first employee. As work started to increase, my capacity was at an all-time high. I needed to delegate work. We began our search for a Jr. Network Engineer in the summer and made the hire in Q4.

It was a priority goal for us to bring on more help and it has already started paying off. The recruiting process is critical in finding someone who would be a good fit. Thankfully, my partner (and wife), has HR skills which really helped narrow down the list.

Now that we have an employee, it has shed some light on the processes we are missing. We’re starting to fill those gaps. It has also made me look into certain skills I did not possess, such as being a leader. This will be one area where I’ll be improving in 2024.

Revenue Analysis

Pro Services

Unfortunately, our Pro Services revenue decreased -35.84% this year. Most of the work came from existing clients. While only 6 new clients were onboarded for Pro Services. The average Pro Services invoice is approximately $3,147. We’ve been experimenting with our prices to see what the market will take based on the value we include.

The Pro Services section of our business relies on referrals and lead generation from the website. We didn’t do outbound sales this year. It might have helped boost revenue in this area.

Managed Network Services

An area where we did put more focus on was Managed Network Services (MNS). We brought on two new clients that increased our MNS by 43.49% compared to last year. Doing so also increased the workload. Probably a good thing for my sanity we didn’t increase Pro Services.

We leveraged subcontractors and hired on a Jr. Network Engineer.

The recurring revenue helps to make things predictable and stable. In this area we aim to provide our best customer service and value. We didn’t do any outbound sales to acquire MNS clients.

We’ve came to these clients as existing partners working on individual projects. Then a need arises where we can offer our services on a recurring basis. On average, we invoice at $2,798 per month with these clients.

Something I keep considering is Network as a Service. The vendors have been pushing lots of information on this but I haven’t dived into it that much. I’m not sure how much investment will need to be put forth up front. We will research it as a potential revenue stream for 2024.

Reselling

I was surprised by how much reselling we did this year. It helped reach our goal of $700k revenue. We don’t advertise that we resell hardware and licenses but after this year I think we should.

We resell to new and existing clients with most being referrals. This year, our reselling activity was up 50%. It accounted for 61% of our total revenue!

When I look at what we sold, that distribution of vendors falls under:

• Meraki - 31%
• Juniper/Mist - 26%

The remaining sales were licensing, antennas, and other vendors.

Those other vendors were Palo Alto Networks, EnGenius, and Ventev. We had smaller sales in infrastructure related products such as UPS and servers.

One of the challenges with reselling as a small company is developing credit with the distributor. As deals get larger, you have to request more credit with the distributor. They’ll run through an evaluation of whether you can handle it.

For example, reselling $10k worth of network hardware might be simple but doing a $500k deal will trigger some thresholds. It can get stressful sometimes but there are programs to help small businesses deal with larger sales. A conversation for another day.

Net Income

At the end of the day, revenue is just how much we bring in. When you’re reselling, there is cost of goods sold. We have to pay the distributor for the network equipment and the subcontractors.

Subtract all the expenses (I’ll get to that in the next section), and you’ve got what’s remaining. The take home money. Net income. That’s the only number that really matters.

Net income allows us to reinvest back into the business. We can send ourselves to conferences! We can upgrade our laptops, purchase lab equipment, and more.

At the end of this year, our Net income ratio sits at 26.1%! We had a 36% increase compared to last year. Actual net income is $213,800! Last night, I just decided to purchase my ticket to WLPC in Phoenix. And I did so knowing it will be just fine :)

Expense Analysis

A primary goal for 2023 was to reduce our overall expenses. Because of how much we were tracking, we kept an eye on all that came out of our account.

This year, we were successful in reducing our expenses by 10.7%!

Reducing our expenses helps to increase our net income. The way this was achieved was following a budget and having a cool off period for expenses. We also removed a lot of recurring payments to different SaaS vendors.

I expect our expenses to increase slightly in 2024 because we hired an employee but what we should always look towards is the intent of a purchase.

Our largest expense categories went into the following:

• Salaries - 10.52%
• Travel - 3.31%
• Equipment - 2.57%
• Payroll services - 2.34%
• Reimbursements - 2%
• Marketing - 1.93%
• Vehicle - 1.76%
• Taxes & license - 1.19%

In a services based business, most of our expense will go into salaries.

Lessons Learned

Maintaining relationships with people is key. Whether they are past or present clients, previous partners, or people you’ve met at conferences. Keep in touch and find ways to connect people within your network. Nurture your relationships.

Keeping expenses low will increase your net income. Find ways to make money work for you. Different strategies help here such as negotiating payment terms on services or decreasing your tax liability.

Plan a go-to market strategy for your services and offerings. Test it for some time before changing gears too soon.

Delegate work to others so you can spend more of your time where it matters most. Time is money.

Start documenting the work you do as a process in preparation for someone else to take over that task. You can document it as a written process or record yourself doing the task.

I hope this was useful for you. If you have any questions please leave a comment below.