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

0:00All right, let's rock. Revenue, business, and problem. My name is Matthew. I sell premium catering experiences to private clients looking to celebrate milestone events in Sydney. Great. We do about 2.8 million this year with 40 % net profit. Woo! We'd like to be at 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. And if I don't solve this, I either say no to demand in summer or I am overstaffed in 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.

0:35Right. Same thing as lawn care guys. Same thing as guys who do snow plowing. It's just a it's a super common thing. Swimming pools sometimes, obviously, in the summer. So like there there are industries that are just going to be more smoothies if you summer versus Italian ice store. Like there's a lot right that are seasonal. Now, a couple of questions. So catering, what is your what is your hot season again? Pretty much September through February. Okay. And so from now until September is when it's slow. Yes. So why are people not celebrating from now until September? Actually, I'm not even sure.

1:08It's not a festive season. I think, yeah, 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 economy in general. Don't worry about the economy. Whatever. Just remove economy 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 target corporate through winter more so. They have better lifetime value, but they have lower spend per event, which lowers gross profits. So we do market more or less exclusively to private.

1:44Okay. I'm just like, it actually doesn't sound like you're actually in that seasonal of a 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 we do large events so typically kind of 60 to 100 people in the like birthday parties engagements weddings there all year round um a lot of the corporate rush that comes through in summer for end of year staff parties uh things of that nature that's what it takes us like well beyond our capacity which gives us that busy season 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 break even in the offseason now that we're still 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 okay got it um okay so a couple 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 is that they're the main channels so we have Probably 50 % organic, probably 40 % organic, 40 % ads, 20 % referral.

2:53Okay. It's a bit of some top-of-the-con-law meta, but it's less tracked. It's more of a brand awareness. Got it. So SEO and PPC kind of rule the day. Okay. So what stopped you from spending more PPC? Are you maxed out? Like, is it stopping profitable? Like, what's stopping you there? Search volume in the quarterly drops through winter. Okay. So our back to LTVs to a strong, we're at a 12 to 1, so we can just spend more. I'm trying to find, I guess my constraint or my question, my main question becomes I have considered popping up a corporate delivery, like a prepackaged typical corporate catering setting to be a kind of entity under Catered by Matt, which would be a year-round service because they have a very inverted seasonality to the event side where the corporates are ordering more of that delivery.

3:44But I don't want to get distracted. I'll watch a lot of your content. I don't want to chase the woman in the red dress. It's a whole new business. Yeah. Well, I guess the problem that we're trying to solve here, 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's, it's a chocolate company here in the US, does 100 % of their annual profit in the month of December. And then the other 11 months of the year, they have their mall location and they just lose money.

4:18That's number one. Others, 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. So you can have something that is volatile but not risky. So insurance is volatile but not risky. Same as this chocolate thing. It's volatile in 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.

4:49We 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 everything's quite efficient to be frank. We can we can just spend more higher more Well, then I think you have that answer. I think what feels annoying is you just wish that, you know, if you're Harry and David's, 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.

5:26So I don't think you actually have a big problem to solve here. I think we just need to do more of what's working.

5:32I wish I could pull some magic business model out of a hat, but 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 right i mean think about the alternative it could be unpredictable that would suck yeah no it's it's it's it's almost predictable to the to the descent to be honest and pretty pretty consistent um i've i've been trying to contemplate like how to get around this without actually starting a new business and i was just i've been thinking about it for a couple of years i thought maybe maybe alex would figure something out, but maybe it is just that.

6:05It's just a feature. 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 like, how do we double PPC and probably get meta ads going? Like if you did nothing else this year, doubled PPC and just cracked meta ads, you'd hit your goal. Yeah. So it's like, if you can double the business doing one thing, why do four? Yeah, touche. Right? Yeah. That's it, man. I mean, the whole point of 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.

6:40If 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. Congratulations. Thank you. All right. Thanks, brother. Talk soon. Bye-bye. Toodaloo. Cheerio. As they say.