Seasonality Isn’t a Problem, It’s a Profit Opportunity | Ep. 952

0:00 All right, let's rock. Revenue, business and a problem. My name is Matthew. I sell premium catering experiences to proper clients looking to celebrate milestone events in Sydney. We do about 2.8 million this year with 40% net profit. We'll like to be 8 million in two years. Let's go. The main constraint sees Natalie. So we do about 65% of our annual revenue in six months.

0:24 And if I don't sell this, I either say no to demand in summer or I am over start and winter. Yeah. So one thing right off the bat, I will say is that this is a feature not a bug of the industry that you're in. Right. Same thing as lawn care guy. Same thing as guys who do snow plowing. It's just a, it's a super common thing.

0:40 Swimming pool sometimes obviously in the summer. So like there, there are industries that are just going to be more smoothies if you've summer versus a tiny ice store. Like there's a lot, right. That are seasonal. Now, couple questions. So catering. What is your, what is your hot season again? Pretty much September through February.

0:58 Okay. And so from now until September is when it's slow. Yes. So what, why are people not celebrating from now until September? Actually, I'm not even sure why. It's not as much of a festive season. I think people don't spend as much money going through winter. I don't know if any of that has to do with.

1:19 But you still have like me in general. East, I don't worry about economy. I think it's whatever. I'll just remove economy from from Lexington. There's nothing you can do about it. So, okay. So people don't do Easter. You don't do corporate events. We do do corporate. Yes. So we tow a corporate room into more so they haven't been a last time about these, but they have a lot of spend per event, which lowers gross profits.

1:41 Okay. We do market more like exclusively to private. Okay. I'm just like, it actually doesn't sound like you're actually in that season over business. People have like. I mean, I started with that, but like catering happens year round. I mean, shoot, I cater every single week. Yeah. So we do large events.

1:58 So typically kind of 60 to 100 people in the like birthday parties, engagements when in sterile year round. A lot of the corporate rush that comes through in summer for end of year staff parties. Things of that nature that spot it takes us like well beyond our capacity, which gives us our busy season.

2:17 And then through winter, we just we lose a lot of that. You subsist in the not in the off season. Correct. You like lose money or even in the off season? No, no, we're so profitable. We have a really good, we have strong growth profit and strong margins. So we're still good. I just like to make more money.

2:32 Yeah. Okay. Got it. Okay. So a couple of things. So currently, how are you getting customers? We have really strong organic SEO and we also do a lot of Google ads. Okay. That's the most this is that data main channels. So we have probably 50% organic, 40% organic, 40% ads, 20% for real. Okay. There's some type of a lot of method, but it's less tracked.

2:57 It's more about brand awareness. Guys, SEO and PPC kind of kind of rule rule the day. Okay. So what stops you from spending more PPC or you maxed out? Like, is it stopping profitable? Like what's what's stopping you there? Search volume and lead quarterly drops through winter. Okay. So back to LTV source, we're at a 12 to 1.

3:16 So we can just spend more. I'm trying to find why I guess I can straight to all my question. My main question becomes I have considered popping up a corporate to the release. Like a free package typical corporate catering setting. Yeah. To be a kind of entity under catered by Matt, which would be a year of our service.

3:37 Because they haven't very inverted season only to the event side. Yeah. Like the corporate to order in more of that delivery. But it's I don't want to get distracted. Like I'll watch one of your content. I don't want to take the woman of interest. Yeah. It's a whole new business. Yeah. Well, I guess the like the problem that we're trying to solve here.

3:55 Like you are profitable. You're running 40% even in the fact that there's on and off cycle. So to grow the business, we can ignore the fact that it's lumpy. I'll give you two examples of this. So Harry and David. It's a chocolate company here in the US. Does like 100% of their annual profit in the month of December.

4:13 And then the other 11 months of the year they have their mall location. And they just lose money. That's number one. Other is if you look at like insurance, right? Insurance makes money every year. And then every eighth year there's a hurricane Katrina and they lose a bunch of money. And so I think what we need to replace is the difference between volatility and risk.

4:33 So you can have something that is volatile but not risky. So insurance is volatile but not risky. Same is this chocolate thing. It's volatile and the fact that it changes a lot month to month to month. But it's not risky because it's predictable. You know that every season this is going to happen. And so if we know it's going to happen then we can predict it.

4:50 If we can predict it, we can plan for it, right? So all that to say. If we change nothing about the business but you simply did twice as much, what stops you from doing that? Nothing. Okay. Everything is quite efficient to be frank. We can just spend more, hire more. Well then I think you have that answer.

5:10 I think what feels annoying is you just wish that if you're Harry and David, you wish that the other 11 months of the year people celebrated chocolate as much, right? But you're just going to have a slow season and a hot season. And that's fine. Especially since you're not losing money in the off season.

5:26 So I don't think you actually have a big problem to solve here. I think we just need to do more what's working. I wish I could pull some magic business model out of a habit. If you're profitable all the months of the year and then some months you just make more money, that just sounds like a business that has a predictable cycle.

5:43 Right. I mean think about the alternative. It could be unpredictable. That would suck. Yeah. No, it's almost predictable to the sort of percent to be honest and pretty consistent. I've been trying to contemplate how to get around this without actually starting a new business. I've been thinking about it for a couple of years.

6:02 I thought maybe Alex would figure something out. But maybe it's just that. No, what I would like to do is just focus all of your time on not trying to solve that problem and solving the more important problem, which is how do we double PPC and probably get meta ads going? Like if you did nothing else this year, double PPC and just cracked meta ads, you'd hit your goal.

6:22 Yeah. So it's like if you can double the business doing one thing, why do you four? I did say. Right? Yeah. That's it, man. I mean the whole point of the theory of constraints is focus. And it's just being able to say all the things you say no to. Like there's such limited resources in a small business, the biggest one being your time, your effort, and your mental bandwidth.

6:41 If you can just say like, I'm not looking at this anymore because this is just a feature of my business. And I'm so grateful because all my competitors will be distracted by the shiny object. Like let them worry about that while you just keep crushing it. And them. Okay. Cool. Yeah, cool. Thank you. Appreciate you, man.

6:58 Congratulations. Thank you. All right, thanks brother. Talk soon. Bye. Toodaloo. Trio. As they say. You