Third Year Boom, Fourth Year Bust

There is an old saying in business known as “third year boom, fourth year bust”. Its a trap that all computer technicians can fall into and its often fatal to their businesses.

The “Third Year Boom, Forth Year Bust” phenomenon begins with the first year of business.

The first year is always exciting because this is when you think about all the possibilities and you come up with some great ideas for your business. During this time you are trying your first client and once you have them, you feel a great sense of accomplishment. A little later you get your second client, then another, and another. At some point during the first year you will have some bad experiences but you can chalk them up to experience and continue on.

Assuming you made it though your first year you will feel a lot wiser in your second year. You have made some mistakes and lost some money but you have learnt your lesson and should be able to avoid them this year. The second year can still be a struggle financially, but you are beginning to see the light at the end of the tunnel. You are happy that you are getting more clients every day but you are also tired because it has been a stressful two years.

Then the third year rolls around, your business is doing great and you are no longer struggling financially. Your clients have told their friends how great you are and you get lots of referral work. After you pay your bills at the end of the month you find is plenty of money left over for yourself. So, you decide to buy yourself some nice things to reward yourself for all your hard work over the last two years. Perhaps a nice car or going on a big holiday. But, while you are enjoying your money you can begin to lose focus on your business. Phone calls go unanswered, your work becomes sloppy and your turnaround time has increased. Most of it you don’t even notice.

Then when you start the fourth year your attention has been shockingly brought back to your business because your income levels have plummeted. Your clients became annoyed at the quality of your work and your poor service then went somewhere else. I’m not saying this happens to all businesses, but when the money starts coming in its easy to take your eye off the ball and lose focus of what matters in business. Its possible to survive this cycle if this happens to you, but only if you didn’t increase your expenses during the good times by paying off something like a car each week for the next 5 years. Be careful with your money, even when times are good. Always have enough money put away to survive the down times.

If you keep an eye out for this cycle, you’ll notice it happens a lot to other businesses. I’m sure most of us can think of a business that used to be great when they first started out but have since lost the your business due to poor products, quality or service.