We’re in the midst of unprecedented uncertainty in the financial markets, and consumer confidence is the lowest it’s been in a long time. It seems that no one really knows what’s going to happen. We may be facing a serious recession, or worse; we may just be undergoing a bizarre blip, to be followed by a quick return to business as usual. Either way, here are some ideas about how to handle the uncertainty.
Do a Reality Check
Many economists actually like the occasional recession (up to a point) because it purges the marketplace of marginal players. Some of us spent the last 15 or so boom years coasting on the good times instead of building a durable business. If there’s a chance you’re one of those marginal players, it may be time to do some soul-searching: Do you really have what the bankruptcy lawyers call “an ongoing concern” — or are you putting your future clients at risk by taking on new business when you’re living on borrowed time?
If there’s any doubt in your mind, ask an objective third party — like an accountant or a business coach — how your business looks from the outside and take that opinion to heart. It may be time for a career change.
Make a Plan and Communicate It To Stakeholders
Assuming you decide you have the resources to get through a potential major recession, you need to have a compelling plan for how you’re going to manage that survival, and you need to communicate that plan to your key stakeholders — primarily your crew, but possibly your clients and vendors, too.
A clear, quantifiable plan will inspire confidence from your team. It should be specific and candid about what your needs and goals are and how you’ll meet them. “Maintain volume at $1 million” is not enough; you need something more like “Expand marketing to generate $1 million in leads per quarter; cultivate sales skills to achieve close rate of 25 percent based on dollar volume.” Even that — though closer — still needs a lot of detail regarding just what you’ll do to generate those leads and cultivate those skills.
Be the Rainmaker
Your primary role as business owner is to ensure a steady flow of quality jobs. When things get slow, anything that detracts you from that role becomes a problem. A down economy is great time to learn to delegate effectively — motivation and the stakes are at their highest.
Think of it as a team-building opportunity. See what you can do internally to get your staff to take some responsibilities off your plate so that you can focus on sales, marketing, and general networking.
Evaluate Overhead Expenses
Take a close look at all your overhead expenses, as if they were part of an investment portfolio: What sorts of returns are you getting on your budget line items? For instance, what’s your rate of return on those company trucks? How does your gross profit per office employee compare with that at other, similar companies?
If you have multiple profit centers (design, construction, and small jobs, for example), do you track each as a profit center and know that each covers its own share of the overhead?
Provide Superior Client Service
If your crew members are the pleasantest, politest, most reliable, highest-quality people your clients ever deal with, you will do fine in almost any sort of economy. So return calls promptly, keep people informed, keep everything neat and clean, and finish jobs ahead of schedule.
Like all of these recommendations, this has always been good practice — but it’s even more important now.
Diversify
Identify your crew’s skills and think about all the kinds of problems they can be applied to. An ability to fix — with real expertise — a range of major household issues will help you get through any potential slow times, because even when people are not inclined to do major improvements they’ll still want to maintain their primary asset — their home.
A lot of homes built in the last 25 years are having real performance problems: premature rot, chronic paint failure, inadequate insulation, and so on. Knowing what causes these problems and being able to fix them so that they don’t recur is a market niche with a future. People will pay more if they’re confident you’re able to do it once and do it right.
