Suddenly the sales have dried up along with demand. The economy turns south, the phone stops ringing and your stomach starts churning — you don't sleep well — you're scared. It's the cold, raw fear that comes with a business downturn.
While it may be tempting to slug down an antacid and slip back into bed, trying to escape the reality of the economic downturn, that's the worst thing you can do. Believe it or not, your business can be productive regardless of the unstable economy. It just means you're going to have to work harder to keep and increase business.
Remember that business is there, and downturns are rarely uniform. During economic market growth, most companies expand. In an unstable economic market, it seems that most, but not all, companies shrink. You always want your company to increase its business whether it is in a good or bad market.
It starts with the guy in the mirror
Your expectations, whether good or bad, can easily become self-fulfilling prophecies, so set good ones. Then be ready to work like crazy to meet and possibly exceed them. Don't try to save your way to prosperity — it doesn't work. But that doesn't mean there aren't ways to save. Given the ridiculously low interest rates, this might be the right time to refinance your home and/or building. This is also the perfect time to consolidate your debt and free up cash for marketing.
Remember that cash is always king. It's especially important in a tough market. Collect on delivery for all residential service work. Also, suggest that managers of your commercial accounts pay by credit card to get miles or points.
If you don't accept credit cards, start doing so. If you do accept them, re-examine your merchant services plan. It is typical that many contractors pay several thousand dollars too much in merchant service fees every year because of the high credit card rates and various fees. Making arrangements with a local or national finance company is something else you can do. Offer customers financing for large projects, such as remodels. Discuss payment options with them instead of the total price. People want to improve their houses, but they need you to show them how they can afford a project.
Understand that the Yellow Pages will not make the phone ring. These directories have no effect on increasing your sales, and they are rapidly losing share to the Internet. You need to go online, and list your company in every local and community directory you can find. Explore search engine marketing as a low cost lead generator. It sounds intimidating, but it is really at the heart of simplicity.
Don't overlook your existing customer files when looking for business — make use of these past customers. On slow days, review the files and look for recommendations that were never followed up on. Call the customer and make a special offer. This can and should generate more business than if you just sit by the phone, patiently waiting for it to ring.
Company Websites are essential to businesses. Moreover, Websites do not need to be expensive. For example, one of our partners offers small contractors a basic Website and professional email addresses for $20 per month. If you don't already have a company Website, make sure to invest in at least a basic one.
You should also try to lower your marketing costs by leveraging relationships through affinity marketing programs. Affinity marketing is when your company forms a partnership with an interest group. For example, a homeowners association, parishioners at a local church and parents of children that go to a specific school are all groups that you can partner with. Affinity marketing is just like an incentive to an employee for generating business, except that you're giving an incentive to a charity or group as a fundraiser. When the group promotes your business to its supporters, it's tantamount to an endorsement. It's more credible than advertising and far less expensive.
It is important to revisit your pricing to make sure you're charging enough to cover your costs and generate a profit. It may be time to update your flat rate books. Unless you reprint your books every six months, you're probably leaving money on the table with every call.
Regarding overhead, after it is covered by the basic service call, gross profit from add-ons drops straight to the bottom line. Offering low cost add-ons like water alarms and carbon monoxide detectors can boost your bottom line and save your customers untold agony.
Make 2009 a year of opportunity
It is not a surprise that lethargic performance by some companies will lead them to exit the business or sell. It might be wise to consider buying a struggling contractor's business on a pay-as-you-go basis. If this is an option for you, create a contract to pay him or her a royalty on all business from his or her customers over the next few years.
Every three months, call your competitors just to see if any phones have been disconnected. If a competing business has closed down, see if you can pick up their disconnected phone number, so you can service the customers that used to do business with them and are now looking for a new contractor.
Always keep in mind that just because there's an economic downturn, your business does not have to go down with the economy. If you are creative, persistent and upbeat, you will find business.
Matt Michel is the CEO of the Service Roundtable (www.ServiceRoundtable.com), plumbing's most affordable contractor alliance. For just $50 a month, contractors receive a wealth of business tools and peer support, such as the Comanche Marketing Step-by-Step Guide to Affinity Marketing. For a FREE copy of Matt's audio CD, Staying Positive in a Negative World, contact him at [email protected], toll free at 877.262.3341 or at 817.995.8889.