As the weather warms up, the summer pool season begins again in earnest. And business has been getting hotter for the last couple of years in the pool and spa building and servicing industry.
You’ve probably noticed it in your own business: After the economic collapse of 2008 and 2009, the industry has been making a slow march back to relevance. Today, things are looking pretty good. For example, according to Aqua magazine’s most recent State of the Industry report, 62 percent of owners said business was better last year than it was the year before, while only 12 percent said it had declined. And separate data indicated that all three sectors of the industry – in-ground pools, above-ground pools, and hot tubs – saw sales increases for the first time since 2010.
Yet just because times are better, doesn’t mean life today in your business is easy. Consumers continue to be cautious about spending, competition continues to be thick, and while the real estate market – whose success drives yours – continues to improve, it certainly hasn’t come close to the glory days of the early 2000s.
What does that mean for you? It means that to survive and thrive in the pool and spa industry, you need to carefully manage every aspect of your business. That starts with your numbers, those vital financial metrics that can mean all the difference to your business. Cash flow can be particularly vexing for pool service operators because of the ups and downs of the industry. Need some tips for managing cash flow in this busy pool season? What about the dips during the off-season?
Here are some tips for managing cash flow despite the seasonality of your industry:
Make cash flow projection part of your budgeting process. Include a cash flow projection template as part of your financial planning process. Plan your cash flow over a year. Create a forecast by taking a look at revenue from the last three to five years (including the average sales in each month) and then do the same on the expense side.
Use credit to your advantage. Small business loans and lines of credit can help when times get tough. The Small Business Administration’s CAPLine Loans help businesses meet their short-term and seasonal financial needs. This kind of loan can help at the beginning of pool season with purchasing supplies and hiring extra staff.
Make sure you get paid. The biggest cash flow-destroyer in business is the slow- or non-paying client. Combat him or her by securing a deposit on each job in advance, or get paid immediately when work is completed by using an app with a mobile payment option.
Want more tips on managing finances for your pool business? Download our free eBook, Financial Management: 4 Things Every Pool Service Operator Should Know.
What else is in the eBook?
You’ll get insights and practical advice on key financial management strategies for:
- How to manage to your target margins. Do you know what the optimal profit margin is for a business like yours? Avoid the margin mistakes that your competitors are making.
- Estimating jobs. Bid too high and you could lose out to a competitor. Too low, and you may not be able to deliver the project on budget. Discover some of the hidden factors that torpedo the accuracy of many pool companies’ estimates.
- How to protect yourself from lawsuits. Pool builders and service companies are frequently at risk for litigation. Price disputes with customers, safety issues, and other factors can lead to the courtroom. Find out how to reduce your liability while ensuring your clients are happier.
- Simple techniques for managing cash flow. Get more details on managing your cash flow and making your cash last through the lean months.