If Revenue Dropped 20% Tomorrow, Would You Survive? Ep. #523

Hey, let's play a little game of what if what if tomorrow morning you woke up in your phone stop ringing not completely but enough that over the next few months your business lost 20% of its revenue. You know, maybe the economy slows down. Maybe your area gets hit with a drought. Maybe a major employer leaves town or maybe a new competitor comes into your market. Whatever the reason 20% of your revenue disappears. Now would your business survive or would it expose the problems that you've been hiding beneath the service all along? Today, I want to challenge you to think about your business before your force to because hope is not a business strategy. Today's episode is brought to you by Yard Book. The all-in-one CRM for your lawn care business and as an exclusive partner of this podcast you can get started today and begin simplifying your business and maximizing your profits. Sign up now at YardBook.com. The link is in the show notes. Time now for Profits with Pageak. Any central podcast for you in the green industry who are looking to unlock the full potential of your business. Posted by John Pageak, your sort of mind financial coach. The show features in-depth discussions with successful entrepreneurs, thought leaders, and industry experts providing practical advice and proven strategies on financial planning, operations, marketing, and sales. Profits with Pageak has valuable insights and action steps that you can implement today for creating long-term success. Now here's John Pageak. Welcome to Profits with Pageak, the podcast where you dive into business strategies and financial insights for the green industry. Now when people hear me talk like this, they immediately think I'm predicting a recession. I'm not. In fact, I hope your business stays strong for years to come. But here's the reality. Your business does not need a national recession to lose 20% of its revenue. You could lose a major commercial account or a large HOA might change contractors. You might have a drought that could reduce the demand for certain services. Or you could lose key employees and be forced to reduce capacity. Or maybe you just simply stop marketing for a few months and your pipeline dries up. The reason doesn't matter, but the result is the same. It's less revenue. And that's why every business owner should ask themselves, "What if tomorrow isn't as good as today?" Now, I've coached enough business owners to notice something. Businesses rarely collapse overnight. It's usually a slow leak. Your cash flow starts to tighten. Your bills start getting pushed to the next month. The owner's skips paying themselves and then the credit cards come out and then they take out a line of credit. And then the stress that comes from all that, it starts affecting decisions. The business wasn't destroyed in one day. It simply didn't have enough margin to absorb the hit. That's why I want you to consider the margin that you have in your business, the profit margin. Think of that as your business's shock absorbers. Just like a truck with worn out shocks, you're going to feel every bump in the road. And a business with no financial cushion feels every little setback that hits them. This is a very important lesson that I've learned over the years. It is important, but cash flow keeps you alive. You can own equipment. You could have the customers. You can show profit on paper. But if you run out of cash, none of that matters. Because cash gives you options. Buys you time. It cash allows you to make good decisions instead of desperate ones. That's why I'm such a believer in building reserves. Not because I expect disaster, but because I expect life. Life happens. Equipment breaks. Customers leave. Weather changes. And cash gives you the room to breathe. And a strong business doesn't prepare during the storm. They prepare while the sun is shining. Now I don't have to imagine this or read this in a book. This is something that we experience. Maybe you could recall this because just as soon as 2020, I think it was a big lesson for all of us that were in business. Again, I don't have to imagine what it's like to watch revenue disappear. I lived it. And back in 2020 when COVID hit, everything changed almost overnight. There was so much uncertainty. This was shutting down mainly because we were getting forced to shut down. People were told to stay home. Basically nobody knew what the next week, let alone the next month was going to look like. And for us particularly, a lot of our customers worked blue collar jobs. They a lot of people still work at the steel mill in the oil refinery in our area or one of the powerhouses that's a little bit further away, but a lot of people that live in my area, they have those type of jobs. Again, these weren't people who could grab a laptop in log into Zoom and then keep collecting a paycheck from the kitchen table. Many of them were suddenly facing layoffs or reduced hours or wondering if they were going to have a job at all. And what happened for us is the phone started ringing. And it was not with new customers. It was with existing customers. They're asking, "Hey, John, can we please pause or service for a while?" We're not sure our income is what our income is going to look like. We've got to tighten up our budget. And some canceled, some paused, and some stayed with us. And honestly, I couldn't blame any of them. They weren't trying to hurt my business. They were just trying to protect their families. And that experience taught me something I'll never forget. It just wasn't my customers who needed a financial cushion. But I realized the importance of having one in my business, too. Because when your customers experience financial stress, eventually your business feels it as well. And that's why I believe so strongly in building cash reserves and controlling debt and protecting your margins. It's not because I'm expecting an ex-crisis. But because I know life is unpredictable. And the businesses that came through 2020, the strongest weren't necessarily the biggest businesses. They were the businesses that had enough margin to absorb the uncertainty. They had cash. They had loyal customers. They had systems. They had options. And that experience reinforced something I still believe today. You don't build resilience during a crisis. You build it long before the crisis ever arrives. Back when I was getting my long-care business off the ground, I was juggling routes, invoices, and customer notes with paper and prayers. It was chaos until I found the art book. Yardbook gave me the structure. It helped me track chemicals, route efficiently, invoice faster, and most importantly, it helped me grow a profitable business. If you're tired of duct taping your systems together, go to yardbook.com and sign up for free. Ready to go premium? Use promo code Pajek to get your first 30 days on me. Hey guys, John Pajek here. If you're a long-care operator, landscaper, hard-scaper dealer, or anyone working in the green industry, I want to highly encourage you to take a serious look and equip Expo this October in Louisville, Kentucky. Because equip Expo is the largest trade show and educational event in our industry. For three days, you're going to have the opportunity to see the latest equipment, test drive machines, attend educational sessions, talk to industry leaders, and network with thousands of contractors from across the country. I've been attending for years and every time I go, I come home with new ideas that make me money, save me time, or help me run a better business. So let's talk numbers. Registration is currently $30, but if you use promo code Pajek, you're going to save 50% and get your ticket for just $15. If you wait any longer, prices are going to keep going up. So the question isn't whether equip Expo is worth the money. The question is whether you can afford to miss the opportunities waiting for you there. So head over to equipexpo.com, use promo code Pajek, and I'll see you in Louisville this October. Link is in the show notes. Now, I've said this time and time again. You know, if revenue starts to fall, most owners immediately think that I need more leads. Well, maybe, but before spending more money on marketing, ask yourself this, how many customers are you already losing? It's almost always cheaper to keep a great customer than it is to replace one. You know, you got to look at these things like, are you communicating consistently? Are you following up? Are you thinking customers for their business? Are you asking for referrals? Because retention is one of the highest return investments you're ever going to make. Now, look at, let's imagine we've got two businesses. One only offers mowing. The other offers fertilization, weed control, aeration, oversight. proceeding, perimeter, pest control, holiday lighting, and mowing. Okay. Well, which one is more likely to whether a downturn? It's probably the second one. Not because every service is going to thrive every year, but because they aren't depending on one source of revenue. Now, that doesn't mean you should chase every shiny object here, but the difference is there's a difference between diversification and distraction. The goal isn't to offer everything, but the goal is to offer complimentary services that make sense for your business and your customers. And if we really take a look at a plan that would help you find a leak before it becomes a flood, ask yourself, if revenue drop up, you know, if you're going to be able to drop tomorrow, what expenses would you cut first? Now, ask yourself another question. Why haven't you already cut them? You know, one of the exercise I have coaching clients do is print the last three months of their business bank statements. Then we go line by line, software subscriptions, memberships, recurring charges, automatic renewals, and it's amazing how much money quietly leaves a business every month without anyone noticing. And sometimes finding an extra thousand dollars a year isn't about selling more. It's about wasting less. And I'll tell you one of the one of my favorite ideas here is the best time to repair a roof is when the sun is shining. You know, that's the same. That's the true in business as well. If you build your cash reserves now, if you strengthen your systems now, you improve your customer relationships now. You reduce any unnecessary debt right now. You get out of that. You get out from under all that stuff because if you once that storm hits, your options become a lot smaller. You know, you start, you know, if you start calling your customers, you never talk to them before, but all of a sudden it's like, hey, there's a downturn and you're calling them. It just reeks of desperation. People sense that they're like, ah, you weren't here for me before. So I'm not here for you now. You know what I mean? It's hard to explain. It's not hard to explain. I mean, you just understand. It's like, if you got a perfect example, I have like older cousins, they're like great cousins or something. I don't know. They're family. Okay. Kind of like distant extended family. I know who they are, but we only see each other like on weddings and funerals and basically everybody's married at this time. So the time that we actually see each other is very, very, very few and far between. But I got one relative that over time has only contacted me when he's got something brewing, right? He's got like a pyramid scheme thing going or some kind of multi level sales stuff. You know what I'm talking about? Like I don't even know what the name of the companies are, but it's basically that. You know, you got to recruit people to do things and to make money. You make it off of the other people while the other people are struggling to. Anyway, long story short, that's the kind of relationship. I'm stating that because if you're just reaching out to your customers when you need something, then it becomes pretty apparent. And that's the quickest way to, you know, hurt a relationship and make them go, you know what? I don't care about this guy. I'm going to get out of town. Anyway, with saying all of that, always have a rainy day fund. Our business has a, we have actually two kinds of funds that I would consider emergency funds. We have a dedicated emergency fund and we also have our winter fund. And we're constantly building the, you know, once we use the winter fund, that's the time when we are out of business. We can't perform the services that we're doing. We are funding that until it hits a certain amount and then we cut that fund off. You know, it gets us through the winter, pays all our bills. And then we have our emergency fund, which we have a cap on as well. But that would, you know, cover like, you know, an additional three to six months of expenses. And you might go, well, how do you do that? You know, it's like, if a, how do I come up with six months of expenses? How do I come up with a winter fund to get me through four months out of the, that's 10 months. How do I get to that point? This, it's kind of simple. You just have to dedicate X amount of money to that account, you know, where does this number come from? Well, again, I tend to, I know that we're going to be shut down on the winter. So I know for, you know, the bills start keep rolling in, you know, the mortgage, the rent on the shop and everything that still comes in every month. It's, you know, that's so it's like we have to make sure we pay that, you know. So our winter fund is based off of our recurring expenses. You know, the ones that are all stripped down, I should say it that way because like, we're not paying for unnecessary subscriptions or recurring services or what it might be, but we, we, we just pocket that, not pocket it, but we put that to the side and it's earmarked specifically for that time period. Our emergency fund, again, how do I determine how much goes in there? Well, let's just say I look at our insurance claims, our insurance, the dockedables, I should say, not our claims. But I want to be able to absorb a few of those. Let's just say, you know, because one free truck, that's kind of how I look at it. Each truck are deductibles like, you know, 1500. So with four trucks, we're looking at minimum of $6,000 in that emergency fund and then we just have another little bit of buffer in there. And of course, you know, some guys are like, I can't just put $6,000 into account. Not about it, I understand. But done over time when the sun is shining, you can do it. And again, I just want to let you know that during this time too, you really need to look at your systems that you have in place. The more certain you are on how to do things in your business, it takes away that stress because when, when stressful times do come into our lives, we don't want to make it to be scrambling and trying to figure out, oh, wait, how do we do this again? It's like if it is a solid system in your business, you can just rely to the playbook. You don't have to have it memorized. You can always go back, oh, okay, yep, this is what we're going to do. If you have that game plan, it helps you get through it. Help us get through 2020. The whole period of time when most people were shut down, I know a lot of you were saying, well, we didn't, we never got shut down. Well, that's great. I'm glad. I know a lot of people prospered a lot during that time period, but at the same time, it did not, it was not the same, it wasn't the same experience for everyone. And I just mentioned that time period because it not only was it not that long ago, but it showed me cold, hard facts of like what could happen. So I want to leave you with one final question. If you're revenue dropped 20% tomorrow, would your business survive? If the answer is yes, then fantastic. Keep strengthening it. But if the answer is no, don't be discouraged. Get motivated because now you know where to focus. It business isn't about predicting the future, but it's really about preparing for it. Hope is a wonderful thing, but hope is not a financial strategy. Preparation is you know strong businesses don't survive because they got lucky. They survive because they built margin. They built cash. They built the systems. They built the customer loyalty. And when difficult seasons come, they're ready. So I want to thank you for listening today. Hopefully this has been educational and hopefully motivational for you as well. But until next time, God bless, keep pushing through and we'll catch you on the next one. Thank you once again for listening. If you've enjoyed the show, please leave a review and share it with fellow business owners. Your support means the world to me and helps keep the show going strong. I want to give a special shout out to our friends at YardBook. Your continued support has been instrumental in bringing this podcast to you week after week. If you haven't checked them out yet, visit YardBook.com and see how they can give you the tools to streamline and manage your long-care business. Also, don't forget to explore the resources and upcoming events that I've collected just for you in the show notes. These are curated to help you stay ahead in your business with the latest tips, tools, and networking opportunities. Whether it's a new tool and insightful article or an event you don't want to miss, I've got you covered. Until next time, keep pushing through and God bless. ♪ ♪ ♪ ♪ ♪ ♪ [MUSIC]