We are experiencing ever-rising gas prices, inflation rates at 40-year highs, supply shortages, and staffing shortages, among other things. You are likely feeling the pressure of one or many of these issues. What can you do? How can you prepare your company and team?
Times are tough, and all signs show they are going to get worse before they get better. At one time, GE had a policy to let the bottom 10% of their staff go once a year to cut waste and improve production. We may not have that option in our current economic environment, but I have put a list together of some items you can do to prepare yourself and your company:
- Pay off current debt. Don’t take on additional debt, and keep as much cash (or cash equivalent, i.e., gold and silver coins) as you can on hand.
- Strike first and design new contract terms for your bigger projects. If an organization or individual is short on cash, you will be the first one they wait to pay. Get them to agree to better terms and higher late fees if they are late payers. Shorten all terms to 45 days or less.
- Keep a close eye on invoicing and collections and get rid of problem clients. Fire them. Send them down the road to your competition.
- Streamline your inventory and offerings. We offer two main brands; do I need to offer eight models of furnace from each brand? No, now we offer four from each brand. Follow suit with all your equipment.
- Buy some inventory, if possible, on the items you use regularly, and replace inventory as soon as you use it. This will help with the shortages and delays we are experiencing.
- Drop unprofitable products or services. Stop trying to be all things to all people. Be a specialist.
- Play offense! During hard times, your competitors will pull back into a shell. Get out there and take advantage of cheaper advertising and less competition — and gain some market share.
- Outsource what makes sense and cut expenses. When was the last time you went line by line through every expense you had? Chances are, you will be making some changes the moment you do.
- Target your audience to those who are more insulated from a downturn. Higher economic brackets, certain industries, or geographic regions might be more insulated. Learn to sell high-end and value-based products to these groups.
- Develop what I call a fighter line. This is the cheapest gas or heat pump system you can possibly do. Only break the glass on it if you are walking out of the house without a signed contract.
- Watch OT and get rid of low performers now. You only need productive players during a downturn. Look for who is passionate about your business, and who is not.
- Mine your own database looking for business. Big repairs in last year or two? Offer the repair cost back with new install. Similar incentives may work just as well.
- Train your leaders on labor management. Show them the true cost of an hour of labor. Have open conversations about these costs to educate your leadership and employees.
- Your vendors need to be shopped regularly to keep them honest. Don’t let loyalty drain you financially. Some will offer you the best rates regardless, but many will take what they can from you.
- Sell unused equipment or assets and delay expensive purchases when prices are high, as they are currently.
- Lead by example and make sure ownership and management are getting on the phones working their pipeline.
- Introduce or re-introduce your company referral program to your customers and staff and consider raising the incentive. This also works on employee referrals for staffing shortages.
- Team up with other business and cross sell to each other’s databases if possible. Can my plumber friend hand out HVAC flyers if I hand out plumbing flyers? Sure can. Service industries can lift each other up during such times.
- Use your lawyers, your accountants, and your bankers. Ask them what you can do to cut costs and streamline your businesses. You may be surprised how much they can help.
- Liquidate old inventory; the older it gets, the less worth that it has. Liquidate it in slow season every year.
When times are tough and your business and your team members are feeling the pain, put on a smile. Be that beacon of hope that gives them strength. Don’t wait for things to get better. Lead yourself and lead them through it. Give them a plan. Give them a reason to believe in the long-term stability of your business. Offer exceptional service and focus on what you do best.
An economic downturn is not bad unless we allow it to be. It is an opportunity to streamline operations, focus on profitability, and grow your business by making smart choices.