We’ve made it through half our fiscal year. And what a half it’s been! We’ve posted revenue of $1.6 million for the first half of the year and are on pace to have revenue just shy of $3 million for the year.
Six months in to our new budgetary process exposes us to the educated guesses made last summer. Happy surprises have happened. I didn’t anticipate with much precision the timing of Frontier’s client growth, or that Good Marketers Group would be so far along with its recruitment services.
But also there’s the inevitable hidden obstacles to a productive year. I didn’t anticipate the loss of key staff members, our struggles to secure grant-revenue for clients, or Charity Electric and Capstone both missing quarterly revenue targets.
Having a budget is one thing, choosing how you use it is another. As a year progresses you’re challenged to fit reality into a static budget, or choose to adapt it according to the shifting landscape. We’ve chosen the latter.
As each quarter closes, we adjust our upcoming quarterly budgets. There’s a shared vision of what makes for a successful year, but a good budget shouldn’t be inflexible to circumstance.
And so, we end the second quarter and begin the third. The third quarter of our year is defined as a time of discipline. Before the entrepreneurial fires can burn hot with the summer sun we need to tread carefully through the dark winter.
For the last two years I have not managed this quarter well. This time last year Shift Agency was quickly losing clients, eventually leading to an end of March shut down. Charity Electric had taken on additional overhead while losing an anchor client, and Frontier was beginning a reorganization internally dubbed, “the staffening”.
Each of the two years I’ve lost a senior leader during this period and I directly attribute it to the over-ambitious growth plans we’ve had in the spring while the organization is most fragile.
These painful lessons have taught me that our operations are highly seasonal and a mistimed or excessive investment in growth can expose us to harm if other operations underperform.
The lessons of the past have taught me not to start anything new until Summer and I’m currently learning more advanced principles within that rule. For instance, I neglected to allocate budget whatsoever to the start up costs of that summer venture in quarter four. Another lesson learned.
And now, here’s some numbers about the recently completed quarter.
For our fiscal 2018/2019 second quarter the company posted quarterly revenue of $871 thousand, an increase from $856 thousand the year-ago quarter. Large numbers, but remarkably similar. And, as similar as a year ago was, two years ago is different, with revenue of $461k representing an increase of 89% over two years.
I expected to cross the $800 thousand mark for revenue but was pleasantly surprised to see the growth in revenue considering Frontier’s efforts to front-load their fall fundraising work. The Frontier team continues to perform above expectations.
As I mentioned in the last update our focus is on net cash flow. We generated net cash increase of $118 thousand last quarter and expected this quarter to be negative. Well, we managed to post -$24 thousand this quarter, a 70% improvement over the year-ago quarter.
The quarterly goal of keeping the low from getting too low was by and large a success. Next year I hope we can have both quarters be net positive. In order to do this we’ll need a strong performance from Charity Electric and Capstone who both struggled to match quarterly revenue expectations.
Some other highlights:
Glass Register’s revenue is up 42% from the year-ago quarter
Frontier spent $150 thousand on people this quarter
Charity Electric last 12 months revenue have grown 35% over the previous period
Good Marketers recruitment revenue exceeded $10,000 in revenue this quarter
Capstone has begun working with its fourth client
If you have any questions or comments based on this letter, feel free to email me at firstname.lastname@example.org.
Benjamin Johnson, CEO