My optimistic nature is to look at this turndown as an opportunity rather than a bad thing. Our company has gone through many of these down times and finally we have made some adjustments that will help us through the period and maintain our profitability. I'd like to share with you some of my recommendations.
The next step I recommend is to look at your sales processes. Given a little more time, is it possible to put more emphasis into selling upgrades to those buyers who are purchasing a home at this time?
When you are very busy, you may not have a chance to push upgrades. But by upgrading a buyer to a high-efficiency furnace and/or air conditioner or by adding an air cleaning unit, you can greatly improve your margins to help make up for some of the lost volume. You may also have the time to call on some new potential customers whom you haven't had time to contact while you were busy.
But there is another more important change you can make to ensure your future success. If you have been concentrating most of your efforts on the new construction market, now that there is a slowdown in that market, you have no excuse to not put some effort into the service and replacement markets.
I can tell you from personal experience that if we hadn't begun to emphasize the service-replacement market, starting with maintenance agreements, we would be in a very bad position right now. In our area, even though new permits are down 25 percent, overall we are down just 5 percent. We have had a hot summer and that has helped us increase our service/replacement business enough to overcome almost all of the loss in volume while actually increasing our profit margins.
So don't hang your head because new construction has slowed down. Use this as an opportunity to sell maintenance agreements and to increase your service-replacement business. In the long run, your company will be better after the downturn.
Publication date: 08/28/2006