Strategies To Combat A Recession
As a business owner, this is not the time to focus on these negativities within your company. Now is the time to draw upon your management expertise and place your contracting company in a position of strength.
The following six strategies are designed to help recession-proof your business.
Eliminate “Stinkin’ Thinkin’ ” The first step is to eliminate “stinkin’ thinkin’ ” and develop a mindset for success. Refuse to participate in any kind of negative thinking. Sharpen your skills and focus on delivering a higher level of service. Instill this belief and thought process with each employee.
No matter how tough the economy may become, homeowners are still going to desire hot water and heating and cooling. Therefore, while your competitors are dwelling on the misconception that no one is buying, you need to maintain the right attitude and provide homeowners compelling reasons to buy from you. Then, they will be more than happy to invest their money with your company.
Plan, Plan, Plan Expect the best, but plan for the worst. A good plan will help your business through adverse times and will help you ask yourself the “what ifs.” For example: What if you lose your largest account tomorrow? What if your company truck breaks down? Plan for adversity.
Also, pay attention to the basics of running your business. Watch your cash flow, reduce your accounts receivables, and control your costs — especially watch expense items that do not lead to revenue, such as note pads, pens, and pencils. Look for ways to cut expenses by recycling items you can use again, such as paper.
Strategically plan your major purchases. There’s a reason wealthy contractors always seem to be purchasing tools and trucks when prices are low. It is by design. They can maximize the profit potential of these items during upswings in the economy. A 20% to 25% discount today is the equivalent of a 20% to 25% return on their investment, guaranteed. If you know you are going to need tools or trucks in the near future, now may be the time to make those purchases.
Negotiate and take advantage of discounts offered by manufacturers and suppliers for prepayment of items. Remember, they may not be managing their business as effectively as you and may sacrifice profits for cash flow.
Grow Your Business A company implementing great marketing can actually grow during down times. While your competitors are looking the other way, you could be reaching out to a larger number of prospective clients.
To do so, your team must be positive and ready to serve your clients’ needs. Meet with your employees and stress the importance of maximizing opportunities, continuing to provide exceptional service, and exceeding your clients’ expectations. Your team must effectively communicate to your customers the value and the security they will receive from your services. Either your customers pay for a repair today or have additional expenses in the future because they failed to follow a proper maintenance schedule.
People will buy if they have a compelling reason. Provide customers with a compelling reason for doing business with you. Change your advertising and provide offers to the niche of people you are trying to reach. This requires examining your existing clients. Find out who hasn’t had their water heaters flushed and drained or who hasn’t had their furnace or air conditioner tune-up. Then let these clients know their warranties could be voided without these services. A compelling reason like this will get you back into their homes. While you’re there, be sure you don’t miss opportunities to take care of their additional needs.
Be Attentive To Your Team Players Review every service invoice. Be sure your technicians are completing jobs according to allocated task times and collecting the proper revenue for each repair. Also, review invoices for recommended repairs the customer declined to have fixed. Perhaps a skilled communicator could recontact the homeowner, explain the consequences of leaving the item unrepaired, and convince him or her to request a return visit or authorize the necessary repair.
Watch and listen intently to your first-contact people, your call takers. Are your telephones being answered properly and efficiently? It’s important to watch your service calls and review the numbers every day. For example, let’s say you receive 20 calls in a day and your customer service representative converts 16 calls with five techs running the calls. With this conversion, each tech will run 3.3 calls a day. If your average service ticket is $225, four missed service calls is the equivalent of $900 lost a day. In a 23-working-day month, the result is $20,700 in lost revenue for that month.
What a difference that revenue could make to your bottom line. Are your dispatchers dispatching effectively and for profitability? You must send the right tech to the right call to maximize your revenue.
Upgrade Your Staff If your competition is not out there looking for ways to enhance their business, then you know that their employees are not out there servicing the community. Rather, they are being sent home early with little or no work. These people may be looking for a different job that will provide them with a steady income and stability.
Now is the time for you to upgrade your staff, to find the employee who wants to make the same difference in your business as you do and will follow your program. Again, companies with great marketing in place can grow rapidly when other companies are not marketing.
There are many owners in this business who have grown tired and weary. The daily grind has finally caught up with them, and they are looking for a way to exit their business. The one thing that keeps them working is their desire to service their customers who have become like family to them. But when the economy is tough, often these individuals do not wish to continue the battle.
If you are sincere and have a reputation of integrity, often these individuals will give you their business for asset value. It’s a win-win situation for both of you. They get to retire with the reassurance that their clients will be taken care of and you get to add to your existing customer base. The larger the customer base, the more calls you can expect to receive every day.
If you follow these steps, you can rest assured the economy won’t decide your destination. You will have the power, knowledge, and support to make the difference. Anyone can make money when business is booming and the telephones are ringing. During slow times, great management comes to the forefront. You have a chance to shine and set your business apart from your competition.
The basics of business seldom change. It’s survival of the fittest. The weak will vanish and the strong will get stronger. Let this truth echo loud for you in the upcoming months.
Nicholson is president of Contractor Services, Clayton, MO. Visit the website at www.contractorsservices.net.
Publication date: 12/03/2001