Why January Feels Slow for Service Providers and How to Plan for It

Welcome to the Creative Mind Smart Money Podcast where we turn financial confusion into creative confidence. I'm Samantha Ek, the keeper and fractional CFO for creative entrepreneurs. Each week I'm sharing my financial expertise and actionable strategies to help you build a thriving creative business. Plus, you'll hear from industry experts who bring fresh perspectives on growing your business beyond the numbers. As building a successful creative business starts with strong financial foundations, your next chapter starts now. Every year, January rolls around and half of the creative world really wonders if they're doing something wrong. But you're not. The first quarter always has its own rhythm and once you understand it, everything feels a whole lot slot chaotic. So today we're going to break down why this started the year always feels strained a little bit slow and how to use this season that you are just going through because it is just a season to strengthen your business instead of stressing over it. There is almost always with every creative business I work with a natural revenue dip in the first quarter. There's many reasons for it, but I just want to go over just a couple of course. So the first one is that clients really did spend super heavily in the last quarter of the year and are tightening their budgets for the beginning of the year because a lot of people tend to purchase a lot at the end of the quarter, at the end of the year actually because they are getting an on black Friday deals. Christmas time came up. They have a whole bunch of stuff that they wanted to fit into their tax returns so they're buying a whole bunch of stuff and actually a lot of CPAs and CFOs and people like that recommend purchases at the end of the year because they're extra tax deductions or extra tax write offs. So it can definitely and certainly be a heavy paying thing that just causes a lot of people to not want to spend in the first quarter of the year. But there is also a lot of people that are reorganizing their internal systems and are a lot slower to higher service providers or higher outside help because they want to make sure that they have everything in order before they do higher people or they want to make sure that they at least have things going and are flowing smoothly before they bring in another person into their team. So they're taking that time to just reorganize and get their heads on straight so that they can properly bring you on in the next quarter. There are a lot of bigger and corporate teams that are waiting on budgets. So a lot of the time during the first quarter, the budgets are being generated based off of last year's numbers. So there's a lot of stuff that's waiting and they might not be able to hire you right away because they're waiting to see if they have the budget and the capacity to do so. There's also a lot of creatives and people and businesses in general that are just exhausted from the holiday production season. So if you're a social media manager, you just have so much going on with the holiday social media, everything like that or there was just a lot of websites you had to design. Maybe you had to do a lot of Christmas emails and you're just a little bit burnt out or exhausted from everything that was happening during those productive seasons. There are also a lot of people that are thinking about growth. Like how can I grow this year? What can I do better? They want to understand what is going on in their own businesses first, similar to what you're talking about in the habits and the relationship building, that they're doing that same thing. So they're in that same kind of phase that you are as a creative service provider and they're just not buying it. So it's not something that you're doing. It's just there is this naturally, especially for creative service providers, especially for websites that are saying that this is naturally slower period in that first quarter where everybody is trying to pick up their feet from the holiday season and get back into things. So there's nothing that you're doing wrong. It's just that we have this kind of natural slow period at the beginning of the year. It's just that everyone is recovering. So it does happen every year. And I promise you I've seen this across the board with almost all of my clients where January February and March are some of their slowest months they've ever seen. Now when it comes to people like my restaurant clients, it's a little bit different. Usually it's the summer that they're a little bit slower. But when I have people that are creative service providers, they naturally see a dip in January. And it happens even in the healthiest of businesses. That doesn't mean they're not bringing in any income because there are still people that are hiring. It just means that things are just a little bit slower. It's just a slower period and it's natural. A lot of people assume that slow is a sign of failure. So because things have slowed down because things are not going as quickly as they once were, that their business is all of a sudden failing. But cash flow seasons exist just like creative seasons, right? So there is a season for expansion. There is a season for contraction. There is a season for rest and there is a season for rebuilding. And I think we all go through these cycles of seasons every year in our business because we have these seasons or even these entire years where we're in this period of rest and recovery, we're in this period of expansion, we're in this period of contraction, or we're in this period of rebuilding, everything that we've kind of been going. Slow or revenue doesn't mean that your business is weak or that it's going to fail. It often means that it's just a reset your business is resetting from this period that you've gone through to this intensive period. There are lots of times where my clients take this slower period where they are kind of taking a backseat because it is a little bit slower and they're not going out and making these huge marketing pushes or things like that because they want to preserve that cash flow where they've kind of rested and recovered. Maybe they've rebuilt some systems, maybe they've worked on some things in the background that all of a sudden when March came around and people were suddenly looking for service providers again, maybe a website center or something like that, they had huge months in March or April. Again, there is a lot of sales. There's a lot of things that happen these last two months of the year where everybody is going crazy buying and purchasing, not just for business but for personal as well, that there is a lot of hesitation at the beginning of the year to be like, "Mmm, should I invest?" Now certain categories again, there are people who are still spending in the beginning of the year, things like accounting, things like, I'm trying to think like photography. Sometimes people will invest in photography at the beginning of the year because it's a little slower, they have that time. This is a season where you see the difference between revenue and resilience. There's a lot of stuff that people do in the first quarter that generally backfires because they panic because again, like I mentioned, they're worried that they are, the revenues down, omg, there is things that are going to happen. What I always tell my clients is we need to know your bottom level for. What do you as an individual need to make sure that you are bringing in to make sure that your family is covered and then what do you need to be bringing in to make sure that all of your business expenses are covered? I know that seems kind of silly but it is very, very important. One of the things that they do, a lot of people will do is they panic discount or they offer like really deep discounts. So they'll say, okay, I'm going to offer 50% off to this client because I just, I need more money, I need more revenue so I'm going to offer that discount. They say yes to any client who comes in because again, they just, they need that revenue, they need to see those revenue numbers. They're like, okay, this person just came in, I'm going to, I'm going to bring them in. They overcommit out of fear because they think that, okay, well, I still have a lot of things to do. I still have capacity for this and I still need the revenue. So I'm just going to take as many smaller projects as I can, even though you're not looking at the capacity and things like that. Like we mentioned in the last episode, you really need to understand your capacity to be able to make sure that you're not doing this. Rushing into new offers without intentions. Maybe you're building something new and you're not really giving it that space and time to breathe and test. You're just kind of putting it out there and hoping that it brings you something when realistically it does take that time, that marketing, that effort to really bring it to fruition. And then tightening up your marketing in the exact moment when you should be visible. So that doesn't mean, you know, spending hundreds of thousands of dollars on paid ads and things like that, but making sure that you are staying consistent with things like instigimes, staying things consistent with threads, staying consistent just overall to make sure that you are allowing yourself to still be visible in a time when a lot of people tend to go invisible. And I talked about this last year in one of my episodes where a lot of people tend to fade into the shadows when things get slow because they are worried that, you know, oh, well, I guess nobody's out there so I don't need to be marketing, but you should always be marketing. Even when things feel slow where they feel like they're tightening, you can always go ahead and like go out, maybe do some networking, maybe do something like that, do something local. There's not just online resources, right? So when we panic, it leads to those messy decisions and our messy decisions are always going to show up later in our numbers when we see that we are investing maybe in a lot of different things that we don't need to be investing in in this time when it needs to be a period of rest and rebuilding. We want to make sure that we're not going crazy, right? What should we actually be doing in the first quarter if not rushing out and trying to get clients and overcommitting? So we want to talk about the four or five different things that we could be doing. The first one is rebuilding our system. So while things are quiet and you have a little bit of peace, maybe you still have some clients, but you have some free time, you have some time to kind of rest and recuperate, you want to be focusing on updating your SOPs. And I know a lot of people think they don't need SOPs, but if in the event they're sick and maybe someone needs to take over for you a contractor or something like that, having SOPs is so vital for any business. I am still working on building some of my SOPs even though I don't have contractors anymore. It's something that I need to do and make sure that I'm doing, working on your onboarding process, making sure that's smooth, making sure the client experiences there, and working on your financial workflows, just making sure that everything is flowing, properly, everything is working well. These upgrades will just create more capacity for things in spring. You know, when we're talking about, "Okay, we need to determine our capacity for the year." By working on these things now, maybe you have limited capacity in Q1, but you can say, "Okay, Q2, I'm gonna have seven spots "up and instead of four, "because this system is going to bring me "better capacity overall." Looking at your numbers and not just your revenue. So don't just focus on the revenue and be like, "Oh my gosh, I'm not bringing in enough. "Look at your margins, are your margins still there? "Are they still holding? "Look at your cost of service. "Look at the capacity usage, "look at the client profitability, "are the clients that you're bringing in? "How much are you making per hour?" And I know a lot of people are like, "Okay, we don't price per hour, "but again, you still need to know "how much you're making on an hourly basis, "because it's very important to understanding your profitability." And then of course, your offer performance from last year. It's very good to get strategic and have sort of like clarity with yourself on your business overall with your numbers, especially in this slow period, because it'll bring you a sense of comfort seeing if your, perhaps your margins are the same as they were last year. Or the same as they were in Q4. So maybe you brought in and retained 25% of your revenue in December, and then you get to January, and although you have less revenue, you're still retaining 25% of your revenue. Your margins hasn't changed, right? Even though you have less revenue, you're still bringing in and retaining the same amount, which is still what we wanna see. Yes, is it ideal that we don't have, you know, the exact revenue that we wanna see? Not really, but we are working on a rebuild, we're working on making sure that we're, where we need to be. You can also refresh your marketing and your messaging. People are still watching in the first quarter, even if they're not buying. They're still looking, they're still saving posts. They're still saving websites. They're still looking for people. Maybe they're like, okay, in March and April, I am going to hire a bookkeeper. It just as an example. So if you're planting the seeds now, come at March or April, they're gonna sprout, because they're gonna be like, okay, I'm ready to hire now. I already saw Samantha was posting a bunch of stuff that just resonated with me. I'm gonna go ahead and hire her in March and April. That's where you really need to make sure that you are just refreshing your marketing and messaging, okay? The next step is strengthening your cash flow plan. So of course, building in your 90 day forecast and making sure that you are not going to drop a loser, that the money is going to just really be built into your business, mapping out your 90 day forecast and when the income of return and plan accordingly. Because if you always see, and this is where it's good to look at your numbers and see those trends, right? If you always see that your income goes up in April, you can plan around that and make sure that you're ready for it. And then the final thing that you can do, of course, is refining your offers and capacity. Look at the scope of your work, adjust your pricing, decide how many retain your slots you're really gonna have for Q2. If you felt like maybe your pricing has been off and you're seeing other people offer more and you feel like your expertise is the same level of theirs, review that. I'm not saying price the same as them, but look at your profitability, I analyze that. Again, like I mentioned in my pricing episode last year, we are not pricing based on someone else's pricing. They have a completely different story than you do in your business. You wanna understand your business as a whole so that you can price differently. Because of course, all these habits that you have in that you're building in the first quarter are going to just pay off huge once you get to April. Q1 is what I always like to call the reset quarter. It's a season where we prepare and not necessarily perform, even though we feel like we should be performing all year round. It is time to calibrate your business and fix what went off track last year so that the growth that's going to happen in the coming quarters doesn't break your business when you get there. So instead of chasing the revenue in a slower season, build the infrastructure that supports your revenue when it is going to return. And I promise you it will return. Again, I've talked about that before and kind of like our slow season, what happens when we get slow. It will return. You just have to continue to build your business even when things feel like they might be tight, okay? As Q2 approaches, many creatives see very delayed buying behavior. So inquiries start to pick up in late February, slash early March, they're ready for projects and Q2, they're saying, okay, hey, let's get going in April. They really do spike in April. Like I've seen so many of my clients just get a whole bunch of new business at the beginning of spring. And the retainers tend to renew or shift mid quarter two. So there's a lot of people that come in on quarter two and there's a lot more retainers that are coming in. Any low that you see is temporary. Again, just to repeat myself, any low is temporary. The upswing is always going to come. It's just that it's gonna take time. Now of course we want to talk not just about the strategy and the things that we want to do, but about how to emotionally navigate through the first quarter when it feels like everything is just crashing around you. So obviously there's gonna be a lot of, I'm not doing enough. But slower months are not a judgment on your business. They're the breathing room that you need to grow your business. They're natural. Every business has a slower month. There is not a business in the entire world that does not have at least one or two slow months or even a slow quarter. I've seen it across hundreds of businesses that I've worked with. They always have a slow quarter. They're not a judgment of your character. They're not a judgment of you as a business owner. They happen. They're natural. Okay? I'm gonna encourage you to take that intentional rest, that intentional recovery, gain back that creativity and back-end cleanup. And you know what? If you don't have a lot to do in the first quarter, take a vacation, take some time off. Running a business isn't about keeping constant momentum. It's about knowing when to prepare and when to push. So we have to know those seasons and those cycles and we have to know the trends so that we can actually make the appropriate choices. The first quarter being slow isn't a signal of failure. It means that you're just, you're in a normal season of recalibration. You just gotta take that step back and recalibrate. If you use this time to do things properly and wisely, you will walk into spring stronger, clear and more ready than you've ever been. Take the time in the first quarter to prep and prepare for everything that is going to come your way in the second quarter. Okay? As always, if you enjoyed this episode, please like it, share it, subscribe. And if you wanna hear a specific topic, please fill the form in the description box below so that I can present that topic to you. As always, you guys, I wish you the best week ever and we will see you next week. Farewell, my fellow travelers.