It’s been said that the only constant is change. Well, that certainly applies to today’s economy. The economy of today is not the same as yesterday. To survive and prosper in a changing economy, you need to adapt. Here are eight ways you must adapt.
1. Focus
You must focus. There are a lot of distractions. Block them. Do not worry about elections. You cannot do much more than vote, so vote and forget about everything else.
Block out politics. Block out news. Block out family drama. Focus on the business. No one else will.
2. Build Cash Reserves
People say cash is cold and hard. It’s not. It’s warm and soft and you can cuddle it. Cash is king under any circumstances. It is more important when economic turmoil reigns. Building your cash reserves means you can sleep well at night. It means you can weather the economic storms. It means you can take advantage of opportunities, such as growth by acquisition at fire sale prices. Periodically, sweep your cash into reserve accounts, outside of the business. Invest the cash in conservative, but interest-bearing accounts.
3. Update Prices Continually
In inflationary times, you must, must stay on top of your pricing. Don’t change prices annually or even monthly. Be prepared to change prices on a weekly basis. When your costs rise, your prices must rise to maintain margins. Doing anything else is subsidizing your customers. Do they need your subsidy?
4. Price Dynamically
In an inflationary economy, people are more price sensitive, so give them something to compare. Flex your prices. Price dynamically. Lower the price and margins on easily compared tasks and promote those. Make up for it by raising other prices to maintain your overall margins. Rote pricing by across the board mark-ups won’t work in today’s economy.
5. Target Like Willie Sutton
Take a Willie Sutton approach to your marketing. Willie Sutton was an infamous bank robber. When he was caught, he was asked by a reporter why he robbed banks. Sutton looked at the reporter like he was an idiot and said that’s where the money was. Focus your marketing efforts where the money is. Target affluent neighborhoods and communities. That’s where the money is.
6. Offer Financing
Even the affluent are careful with their money in the current economy. It’s one of the reasons they’re affluent. Line up financing options and offer them. There are a number of companies who focus on financing for home services. Partner with one or more.
Build merchant service fees into your pricing. Let people pay by the method of their choice: cash, check, or credit card. Do not charge extra for credit cards. Price for credit cards and make a little extra if people do not use them.
7. Team First
Your ability to grow is constrained by your ability to put butts in trucks and keep them. Put your team first. Pay them more and build it into your pricing. As St Louis contractor Steve Miles likes to say, “If they are the best paid in your town, it’s not their fault.”
Respect their family time. Be cautious about putting people on call too much. It’s better to lose a customer than to lose a plumber.
8. Seek Knowledge
The way you used to do things won’t suffice going forward. Make sure you attend conferences like the Service World Expo and PHCC Connect. Learn what other contractors are doing.
Looking for inspiration and information combined in one easy to digest package? Buy Matt Michel’s latest book, Contractor Stories on Amazon.