Discussing Recession on Business
Today, we will talk about preparing for your home services business for success if we have a recession.
For over 243 years, the US economy has cycled through an endless stream of up and down cycles, even some extreme booms and busts.
It’s an endless cycle of what goes up eventually becomes inflated and unaffordable and must come down, and what goes down becomes out of favor. Then, eventually, a bargain, and then the cycle starts all over again.
We’ve now experienced one of the longest bull markets in our economy in all its history.
Technology has brought us new industries, new markets, even new human behaviors, and with it came incredible economic growth.
We now have 4 one trillion dollar companies – Apple, Google, FB, and Amazon.
All tech companies. That is what has fueled our growth. Don’t let any politician on either side take credit for it, and it’s been a great ride. But what goes up must come down.
Adding to the danger are the millions of people out of work because of this damn pandemic, the businesses lost forever, and the fact that the world is still far from normal.
We’ve lived in the same house for 30 years because it was near my wife’s best friend and a happy wife is a happy life, right.
So we’ve seen the so cal RE market cycle three times in that time frame.
The behavior at the top was the same each time. Explosive price increases and multiple offers at the very top, with lots of “investors,” lots of wall street, but entry-level single-family homes become unaffordable for the average family, and soon. The house of cards comes falling. fast
Everything was booming, then the next day, nobody was playing anymore, and prices started tumbling. The game was over.
So I’m a realist and need to prepare my company for what is most likely coming our way.
I’m not shutting down our business. Instead, I’m preparing it for success even in the worst of times.
If my crystal ball is wrong, and we go into a roaring 20’s boom cycle coming out of a pandemic, well then “hell yeah”, bring it on, and we’ll do even better than we would have otherwise, right?
It’s called preparation.
So here are 13 lucky tips plus a bonus that you may be able to use to prepare your company for a potential slowdown in our economy.
- Clean up & standardize inventory – turn old stuff into fire-sale cash or donations and available space.
Standardize what you carry and make every truck be an inventory duplicate – like a franchise – create an inventory, tools, and equipment list for each service vehicle.
Streamline services & inventory (what are the high-margin, big-ticket services to zero in on?)
- Reduce debt.
Yet build credit lines
- Build cash reserves
- Follow the Profit-first accounting system to make sure you always have money for taxes, salary, and profits. – see our episode #2 for more on this.
- When you need to add vehicles – consider 2 or 3-year-old vehicles instead of new
- Increase efficiencies – automate – CRM, project management, sales pipeline & messaging, dispatch, referrals, reputation, accounting, and more.
- Get great at bookkeeping and reviewing the books every couple of weeks and review with your accountant every quarter.
- Calculate your prices properly – use the book “How much should I charge?” by Ellen Rohr – $40M plumbing franchise.
Get your prices right, and everything else cal falls into place; get them wrong, and it doesn’t matter what else you do or how hard you work.
- Systematize collecting accounts receivable. plan & implement a contact, follow-up, and collections system especially for commercial clients.
It’s normal to push back invoices when times get tough. Be ready with a system to be the best you can be.
- Considering if you’re doing a lot of new construction right now, consider adding some service work
Service work is always needed, even during a recession, but new construction can dry up fast in a downturn. As a result, projects get postponed or canceled real quick.
- Add recurring revenue with service agreements, maintenance contracts, VIP Clubs.
- adds revenue
- adds site visits & inspections
- top of mind when problems occur – and they occur in every home
- creates relationships
- creates referrals
And it’s a vital part of staying connected to existing clients.
Which leads to Lucky 13. – The #1 way to stay connected to existing clients is through email marketing.
Yes, it still works.
It works better than almost any other option you have. And it’s very low cost.
Plus, you’ll build an engaged customer list – which can be a very valuable business asset.
Start an email newsletter.
Make it something people want to open because it’s about your town and their home and not about your endless promotions. Who wants that?
Plus a Bonus Tip:
Lastly, consider co-operative marketing
Find other local businesses and business owners you can cross-promote each other’s business with.
WHO do you know and like that owns a business in your service area?
Are they someone you might run a cross-promotion with?
Do they run a great company?
Your reputation is on the line, so only run cross-promotions with solid companies whose customers have rated best in their class.
What other home service companies do you know don’t compete directly with you, but you serve the same client?
Which are homeowners in most cases.
You could team up with and cross-promote each other
- send email announcements with special offers
- print postcards
- ad specialty products for their techs to give out to their customers.
You could do some co-op advertising on direct mail pieces, radio, or local events.
You might be able to exchange referral bonuses per customer if it’s legal in your jurisdiction.
Alright, I hope that helped some of you. Thanks for sharing your time and attention with us today.
Good luck out there, and create a great ay!