A year ago my friend / business partner / brother-in-law Brady and I started a new summer camp team building company, Custom Camps. We are still going strong, and have already booked more business in the first month of this year than we did in all of our last one. According to the The Bureau of Labor Statistics, 20% of small business fail in the first year, so we just passed that hurdle. About two-thirds of business survive two years in business, half of all businesses survive five years, and one-third survive 10 years. We hope to make it longer than that.
Most business that do fail early fail because of cash flow problems. This seems obvious, but cash flow is a tricky problem to iron out. We have adjusted our contracts over the past year to help us meet cash flow issues as they have come up. Often we are securing venues, catering, staff, and vendors six months in advance, and most require an up front deposit. Many of our clients are Fortune 50 companies whose billing timelines are extended (to say the least.)
To account for the upfront demand for our events, we now require a 50% deposit upon execution of the contract, and the rest upon completion of the event. We have found that this helps in a few ways.
- This up front payment allows us to cover the deposits needed to secure resources for the event.
- The client now has significant skin in the game, and is more inclined to work diligently with us to make sure the event is successful. This is a two way street, and the more input we have from a team, the more customized we can make our offering.
- We pay individual contractors after the event, and the second payment from the client can go towards this expense. However, for some events we still have to float this payment out of profits from previous retreats as it can take over 45 days to get paid from some clients.
Our business is what I would call “soft seasonal.” We have more interest spring through fall than we do in the winter, but the temperate California climate helps in this regard. We are increasing our winter offerings, and introducing new lines of business that should help shore up the slow times, but we still plan on taking the full month of December off. We did this last year and it was a stress free and guilt free way to step back and look around at the other parts of our lives we want to focus on.
We are excited to keep running Custom Camps for the upcoming year and grow it in new and exciting directions!