12 Florida Pool Prosm • December 2023 By Tom Kelly, Shamrock Pools / tom@shamrockpoolservices.com THE SCOOP ON SERVICE Managing sustainable growth in a declining economy The previous two years have allowed the swimming pool industry to enjoy unprecedented success in many facets, including swimming pool service, repair, remodel, and new construction. Rapid expansion of demand has allowed many companies to flourish and reach new heights, with many having seen recordsetting years. However, this increased growth can lull business owners into a false sense of security that can prove detrimental, or even lethal, to their companies. Increased revenue is clearly something all business owners strive for. The aim for most is to grow their organizations and increase their volume of customers. When business is booming, it is easy for business owners to become hypnotized by large values of revenue, particularly if their company has never before experienced such top-line success. But revenue provides a very small glimpse into a company’s performance. To ensure sustainable growth and to minimize the risk of substantial losses during expansion, it is extremely important that business owners review their financial statements (i.e. balance sheets and income statements) thoroughly and often. Understanding lower line items, such as fixed and variable expenses, can mean the difference between surviving the next economic downturn or having to close shop. Fixed costs can often seal the fate of a business owner if not approached responsibly. As a company experiences growth, they may invest in additional equipment for new service routes, new vehicles for plaster jobs, newmachinery to facilitate new construction, or additional warehouse space for supplies. While the demand for work is present, these are all great purchases to serve an expanding company. However, as demand begins to slow, these items can turn from blessing to curse, as additional expenses mount without additional revenue to pay for them. Variable expenses are just as they seem, decreasing as work slows, and increasing as it picks up. As such, some may argue that these expenses are a lesser factor to consider. However, neglect of such expenses can lead
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