Preparing for the Trump economy

For good or bad, Donald Trump is the new president.  What does that mean for you and your plumbing business?

You matter most: For starters, your success does not depend on some guy in Washington, D.C.  It depends on you.  If you performed poorly under the last guy in the Oval Office, you are unlikely to perform better with the new guy, or vice versa, unless you do things differently.  Your efforts matter more than the current political or economic climate.

Tax cuts should be on the way: One of Trump’s consistent messages has been his desire to cut taxes, specifically corporate tax rates. This is needed. Our corporate taxes are uncompetitive in a global market. They are among the highest in the world. While it is difficult for anyone to roll back regulations, even stupid ones, taxes can and should be cut under a Trump administration and Republican control of the House and Senate.

If Trump can manage a cut in corporate taxes and in the capital gains tax, look out. The sluggish sub-two percent growth rate too many have accepted as the new normal will be blown apart. The economy will grow at least 50 percent faster and likely more than twice as fast as we’ve experienced over the past decade. This has clear implications for your business.

You will need more trucks: In a robust economy, the biggest constraint on a plumbing company is trucks and butts in trucks. Start budgeting for more trucks now. If it looks like the tax cuts are going to pass, find some bright young people who have the interpersonal skills needed for residential service and get them trained up on the mechanical side.

There are several schools, like Ultimate Technical Academy in Arkansas that can turn out a functional plumber within weeks. If the newbie can only perform 80 percent of the work, you can make money with him and use more experienced personal for the more challenging jobs.

At the same time you send the new hire for training, order the truck. Make sure you get a truck with a big billboard (even if it costs a little more, the advertising impact is worth it). Get it wrapped with a professionally produced design.

Protect your plumbers from poaching: The existing shortage of skilled labor will be exacerbated by a dynamic economy. Your competitors will try to steal your people. What are you going to do to keep them? Work on this now. Think about how you can be the employer of choice.

Pay is important and must be competitive. Raise prices to raise pay if necessary. However, even well paid plumbers are often broke. Their problem is not the money, but the money management. Consider teaching a Dave Ramsey course in your company.

If you require your plumbers to come to the shop before being dispatched to the first job, consider providing them with breakfast. If nothing else, buy microwaveable breakfast burritos and sausage biscuits at a warehouse store. It’s inexpensive and a perk that makes you stand out. Moreover, they will perform better if they have breakfast.

If you can find the space, carve out a room where they can relax. Buy a pinball machine. Put in video games. Keep a refrigerator with snacks and soft drinks. Your competitors are unlikely to do this, which is the point.

Everyone wants your customers. The big boxes want them. The utilities want them. Internet companies want them. And they want you to work as a labor only provider on the cheap.

Stock up on key imported products: Trump’s other consistent promise was tariffs and trade barriers. This may simply be Trump the businessman’s negotiating tactic. However, if Trump follows through, costs for some of the key products you buy could rise substantially. If tariffs and trade barriers are put in place, make a list of parts and products you sell frequently. Find out from your main supply house how many of these are imported from the restricted nations. Stock up before the prices rise.

Update your flat rate books: If it has been some time since you updated your pricing, shame on you. Update it now! Update it again in six months. Update if tariffs affect the material you buy, even if you have stocked up at lower prices. Base your pricing on future market prices. If the one point five percent economy becomes a four percent economy, expect some measure of inflation, so price ahead of it.

Fence in your herd: Everyone wants your customers. The big boxes want them. The utilities want them. Internet companies want them. And they want you to work as a labor only provider on the cheap.  Protect your customers from these competitive threats. Get email addresses and send them specials monthly. Get as many as possible into a maintenance agreement program. Make the value overwhelming.

Finally, remember you can have more impact on your company’s performance than the economy. You matter more than the president when it comes to your business’ future.

Matt Michel is CEO of the Service Roundtable. For help, ideas, tools, advice, and better buying to prosper in any economy, visit ServiceRoundtable.com.  Be sure to check out the free downloads.  Call 877/262-3341 for more information.