The Secrets To Surviving A Slowdown

Ed the Roofer

I Suscribe to this e-newsletter and thought this topic would be helpful and timely. The link is at the bottom.

Ed

THE SECRETS TO SURVIVING A SLOWDOWN

Are we really heading for a recession? The news media seems to think
so, but that’s not new. The media has accurately predicted twelve of
the last two recessions.

It’s natural. The news media seems overfilled with pessimists.
After all, who would feel compelled to buy a newspaper blaring the
headline…

“All Well With World”

Or, how about…

“Things Better Than Expected”

So the media reports about doom, gloom, dark clouds, and misery. News
reporters and anchors seem to relish bad times with the same zeal a
Dallas weatherman uses to report the potential of snow.

Phooey.

It’s possible to find bad news anywhere if you look at things the
right (or wrong) way. Just ask an economist. After all, there’s a
reason economics is known as the “dismal science.”

Yet, somewhere between optimism and pessimism lies realism. Realistically, the economy does appear to be entering a bumpy stretch and it’s
not just because the pain is showing on the east and west coast media
markets. People in fly-over country are starting to act a little
nervous too (fly-over country is the part of the country where most of us
live, but that the important media, political, and Hollywood types “fly
over”).

Personally, I’m not sure I buy the bad news. But, let’s assume the
broad economy slows. The first thing to remember is that economic
slowdowns are often uneven. Some areas do well while others suffer.
Ditto for industries. In short, any recession might miss you altogether!

But, let’s say it doesn’t. What can you do? Try the following
(I’m going to start broad and get more specific):


1. Don’t panic

Recessions are generally temporary self-corrections of the market. As
long as the government doesn’t try to interfere too much, recessions
don’t last. In the last 25 years we’ve only experienced two
recessions and each lasted for eight months.


2. Refuse to participate

It may sound trite, but you can simply refuse to participate in a
recession. Remember, in any economy some companies grow and some companies
shrink.

Can you grow in a recession? Yes! Except for isolated situations like
the boomtowns of the California Gold Rush, there’s never a time when
ALL companies grow. There’s also never a time when ALL companies
shrink.

When more companies are growing than shrinking, we call it an
expansion. When more are shrinking than growing for two quarters in a row,
it’s a recession.

The difference between an expanding and declining economy is slight.
An overall growth rate of 3% is considered robust. A contraction of 2%
is felt to be a deep recession. That’s not a big difference.

Here’s the point. Economic expansion or contraction, SOME companies
are ALWAYS growing. Why shouldn’t your company be one of them?

Your mindset is important. Lots of empirical research studies show
that people with a positive outlook outperform people who see the glass as
half empty. Positive live longer lives, are healthier, earn more
money, and have fewer problems in general.

If you run around focused on woe, then woe you shall have. If, on the
other hand, you focus on growth and refuse to accept less, you will
grow.


3. Put forth an extra 5%

If most contractions are limited to a couple of percentage points, what
happens when you put forth more than a couple of percentage points of
extra effort? What happens if you put in more effort to meet people
who might become or refer customers? What happens if you put forth more
effort to stay in touch with your customers? What happens if you
increase your marketing to new customers? What happens if you get up a
little earlier and leave the shop a little later?

Can pure brute force effort overcome a declining economy? Yes! And
the effort doesn’t have to be monumental. Increase prospecting by 5%.
Write 5% more letters. Meet 5% more people. Work 5% longer hours.
Cumulatively, this will have a dramatic effect on your performance. If
you can get everyone in your company to perform similarly, your
challenge will soon become finding people to increase your headcount.


4. Be a rainmaker, first

Imagine sitting in a boat on a lake. The lake water is sales. Beneath
the water are the jagged rocks of overhead. You can try to avoid the
rocks, and thus, avoid sinking. You can hold your breath, dive into
the water, and chisel away at the biggest rocks before they sink you.
Or, you can try to make rain so that lake water rises and you can sail
comfortably above the rocks.

Inefficiency and excessive overhead is never good. However, if you
generate sufficient sales, you buy time to attack the problems at your
convenience. It’s easier to raise sales than cut fixed overhead. And,
no one ever saved their way to prosperity.

Now is the time to step up your marketing. Now is the time to make
rain for your company.


5. Get involved in your community

I belong to a local service club and often visit other area clubs.
Each club seems to be overrun with bankers, financial advisors, insurance
agents, realtors, developers, and small business owners of all stripes.
Well, most stripes. There are no plumbers, electricians, carpet
cleaners, or pool contractors in any of the three clubs I visit. There’s
one mechanical contractor and one general contractor.

The people in service, civic, and leads clubs are centers of influence
in a community. They are the people others call when they need a good
plumber, air conditioning contractor, electrician, etc. Who do you
think gets recommended?

You. Well, you get recommended IF you’re in the club.


6. Focus on service

Pure service companies may find slowdowns pick things up. When the
economy slows and people feel threatened, they put off big ticket
purchases. They will choose to repair rather than replace. Gear your company
and marketing accordingly.


7. Check your pricing

Service transactions are smaller than big ticket transactions, but are
more profitable. Your margins for service should be higher because
your labor component is higher. If you haven’t checked your pricing
lately, now is the time.

If your pricing is too low (and for a majority of service companies,
it’s too low), it’s natural to wonder if a recession is the right
time to raise prices. That’s like asking if it’s better to subsidize
your customers when cash is tight than when your bank account is flush.


If you’re losing money due to low pricing, you won’t make it up
with volume in good times, let alone a bad economy.


8. Restructure your pricing

Consider playing with your response charge (i.e., a diagnostic charge,
trip charge, whatever you call it). You might lower it to give
yourself a lower number to quote to homeowners (i.e., when homeowners ask
about pricing, quote the response charge).

If you charge time and materials, you might raise it to offset your
hourly rate (i.e., make your hourly rate appear lower).

You might waive the response charge if the homeowner agrees to proceed
with the repair (i.e., use it to capture calls).

Remember, if you reduce your response charge, you’re taking money out
of your pocket and lowering your effective hourly rate. You must
offset the reduction in your hourly rate, no matter whether you are a flat
rate or time and materials contractor.


9. Make smart investments

One of the benefits of an economic slowdown is you naturally look for
fat and cut it. It positions your company for greater profitability six
to nine months down the line when things turn.

While you want to watch expenses and might delay major purchases
yourself, you shouldn’t avoid investing in your company. For example, it
might cost you a couple of thousand dollars to reprint your flat rate
books, yet the new books raise your average service ticket by $10 to $25,
it will only take a few weeks to stimulate a return. This is a smart
investment.

As a rule, you want to give greater weight to investments that will
help drive sales. Buy new furniture later. Invest in a direct marketing
campaign now.


10. Get the no-brainers done

Every company has a list of “round-to-its” that haven’t been
done. When the phone’s seemingly ringing of its own accord, it’s easy
to let things slip. In a tight economy, you don’t have that luxury.

Here are a few of the no-brainers…

Magnets – make your magnet more than the standard truck magnet to
earn refrigerator real estate and keep customers away from the yellow
pages

Referral cards – give all employees cards to hand to your customers
to give to prospects, offering a discount for the customer’s friend
and something for the customer

Door hangers – Make sure you’ve got door hangers to cloverleaf
around service calls (ask how many door hangers the technician hung after
every service call, prior to dispatching to the next call)

Leave aheads – Leave ahead brochures are given to homeowners at the
start of a service call to inform customers about products and services
you offer – they open the door for add-on sales after the initial
work is complete

Fax cover page – Dump the Microsoft fax cover template and turn your
fax cover page into a marketing piece

Stickers – Your stickers are another way to keep your name front and
center with your customers and keep them out of the yellow pages

Consumer newsletter – A basic tool for communicating with existing
customers, staying top-of-mind, and subtly driving sales

Yard signs – You should place yard signs out for every installation,
remodel, or multi-day job. But don’t simply put up the yard sign.
Add a brochure box and place the yard sign near the sidewalk so that
curious neighbors can learn more about your company (psst… offer a
discount if they call while you’re still working in the neighborhood).

You can find a couple of other ideas here…

https://www.serviceroundtable.com/info/surviving.htm

Celtic

HUH??

I had to stop reading....

__________________

Ed the Roofer

They continually delve into the most pessimistic portrayal.

Who would buy the newspapers if it said, "Things Are The Same As Yesterday".

Ed

a1propertyclean

Great article, Ed. Very well written. I love the author's optimistic approach to the "recession" and his dry sense of humor regarding the pessimists.

Thanks for sharing it with us.

Linda

__________________
Linda @ All REO Preservation
http://allreopreservation.com
allreo.vendor.review@gmail.com [experienced vendors only - please list state and counties if you're looking for work]

Ed the Roofer

Even though the "Service Roundtable" is a plumber/HVAC site, everything they have can be used across the board for all contractors. I especially like their free "Commanche Marketing" downloadables.

Ed

Celtic

Good story.

__________________

Ed the Roofer

Here is the link to loads of free marketing tips and business letters from that site.

The sign up membership is free.

http://www.serviceroundtable.com/freebies/default.asp

Ed

Tiger

Good tips & a good site.

Dave

wackman

Great thread Ed. Thanks.

__________________
"I only bother remembering things that I can't easily look up." Albert Einstein

kevjob

bravo ed!

__________________
Kevin
Basement Finishing Highlands Ranch Colorado
Littleton Colorado, Basement Remodeling
Kitchen Remodeling Denver

A.W.Davis

Ed great article!!

I had some classic rock playing on I-tunes and had a brief nostalgic moment of when I never worried about anything. It was a nice escape for a few moments!

Ohh well back to more estimates! Great article!

__________________
A.W. Davis Construction Co.
http://www.awdavisconstruction.com/
Your friendly remodeling contractor

joasis

I really enjoyed that piece. I have read a variation of it long ago, and had forgotten most of it...but the best part is just don't participate. I plan on diversifying this time around, recession or not...time to change directions a little.

__________________

woodmagman

A little bit of sunshine is that home improvements are by far more recession proof than new home or commercial construction.
People have a tendency to fix what they have, and when travel is not in their plans do home improvements that are small but will sustain some of the smaller contractors.
You can trash sites like craigslist and similar, but if you are the most qualified on that site you will get the work and it will cost you nothing but possibly a little pride.