It is 2024 and a frequent thing I hear is “there isn’t a lot of work out there right now”.
Well in a recession this is a common statement and we have to survive economic downfalls to benefit from the surge of an economic comeback. If you go out of business before the comeback occurs, you will lose out on a great opportunity for your business. It is important to survive and not give up when the market is down and there are some things we have done with our companies to survive an economic downturn so far.
Although this is considered a negative subject, a recession doesn’t have to always necessarily be bad. It will train you on how to run your business more efficiently and force you to make difficult decisions that will strengthen you as a business owner.
I have 10 different items you need to look into for your company.
- Trim The Fat
If you have employees who are “mediocre” or “decent”, then you may want to consider letting these people go. Right now is the best time to find good talent because so many people are looking for work. Having weak links during an economic downturn can mutilate your business.
We had several employees who were waiting on payday and outside of that, weren’t doing much else. They did “the bare minimum” and had no interest in helping the business grow or even succeed for that matter. We downsized from 15 employees to 4 employees and found our profit margins didn’t change even with our workload cut by 70%!
We also downsized one warehouse from 6400 square ft at 5000$ a month to 1300 square ft at 1100$ a month without interfering with our day to day operations. We liquidated our excess equipment and furniture and managed to produce a decent amount of surprise income during a recession.
2. Get What You Need
This is not the time to be buying experimental equipment unless your business is expanding during slow times. Get what you need and nothing more. If you are struggling to pay the bills this is not the time to get a new truck, unless you NEED a new truck because your current one keeps breaking down and interfering with profit margins.
We used to frequently add vehicles and equipment to our company so that “we had reassurance”. We have recently sold off 2 of our trailers and 1 of our vehicles to make our fleet more manageable and the money that came from it was a nice surprise income to help float bills on slower months.
3.Carefully Select New Customers
Just because it is slow doesn’t mean take any work from anyone out of desperation. Define who your ideal customer is and go after them. Your goal while things are slow are simple, improve your systems and training program for your employees. This is a great time to get your staff trained on more diverse items. Getting a bunch of cheap customers will interfere with this and you would be better off having training sessions than picking up work just to keep hours fulfilled. This is a great time to find the high bearing fruit (1 decision maker, multiple jobs).
We have been working on this model for years. We have shied away from getting our phones to ring and instead have been targeting customers we want to do more business with. For every 1 good customer we gain, we shave off 10 mediocre customers we no longer need to service.
For the clients we want, we generally use Linkedin to identify and locate the clients we want to have. (Have your dream customer list and act on it)
4. Keep up with maintenance
If you are slow, there is no excuse for your equipment to be down. Get your equipment in good functioning order and maintain it that way if you don’t have the clientele to keep you busy 5 days a week. This will help with operational costs and prevent equipment from having more expensive failures in the near future. We have some customers who have had a machine for 1000 hours and never changed the oil. This should not be you when things are slow.
We have been replacing tires on vehicles, getting machines operating that have been down for months and regularly running all of our equipment so that they will be ready to use in the field.
5. Stay On Top of AP
It is slow for you, it is likely slow for your customers. You will find they may “forget” to pay their invoices (especially the net 30 customers). This will be a task that needs to be performed regularly to get paid. Send reminders and also make phone calls as needed so you are collecting on these accounts. If they aren’t paying after 30 days consider pausing their wash services until they are caught up on their bills.
We have had some companies who were not receiving our emails through the right channels and one particular company chose to not pay or advise us we were sending the emails to the wrong channel to get paid. We had to spend time with their AP department (over 2 hours) to get payment rectified and get them back on good standing.
We have one company who was past due and we simply quit washing their fleet. After we stopped washing it took them 4 months to clear their balance and now they are inquiring about more wash services. We are accepting the work with a tighter leash on their AP.
6. Keep marketing, but don’t overspend
Just because it is slow, doesn’t mean for you to increase your Google budget for AdWords. This is a better time to cold call and find new clients. We find increasing our AdWord budget while it is slow is expensive and ineffective, ultimately costing you more in ads than what you would gross in the first place.
We accidentally spent 1500$ in 3 days of Google marketing while we were slow (we meant for it to be 150$). We got less than 500$ in sales from that 1500$ campaign and we essentially wasted a 1000$.
7. Use This Time to Build Relationships
When it is slow it is important to use the tools you have like networking and relationship building. It doesn’t cost much to do this and your customers who are likely to spend more money will remember you more when you stay in front of them during the slow times, even when it isn’t currently in their budget for your services.
Another thing to consider is building relationships with some competitors so you can work together on larger projects and keep your staff busy. If you get slammed during a slow season it doesn’t mean hiring more employees, you should have a system to subcontract another company for those odd periods where work is overwhelming. This is not the time to be adding trucks and employees, unless you are consistent on adding more work every week and the steady workload requires it.
For customers we currently service, I will contact the fleet manager and just ask them how things are going with their business, take an interest in their upcoming projects and learn more about what the companies actually do. We have been learning a lot about the chemical waste industry in this time and have a great market we are expanding to, because we are taking the time to learn the needs of a specialized industry that is recession proof (industrial waste is produced in any economic climate).
8. Locate Government Work
Just because the economy is slow, City Government and County Government continue to move forward and still have a budget allocated for services. These are great customers to build relationships with during an economic downturn.
We recently went to a Parks and Recreation convention and managed to get in front of several city decision makers leading to more work. We got more out of this convention than we ever did attending a pressure washing trade show.
9. Stay Out of Debt
If work is slow, the last thing you want to spend money on is interest. If you do not have the capital to make the purchase, now is not the time to finance nearly anything.
We have fought to stay lean and when we have taken loans, our profit essentially has to pay out the interest and it is difficult to afford interest when meeting payroll is your priority.
Fred Ramonda worked for a company that produced a massive amount of sales from 2007 to 2009. In 2010 the economy had gotten so bad the majority of their rentals were sitting on the yard. What else was sitting? The loans that were used to acquire the rental equipment that is not producing revenue. This company ended up going bankrupt. They did not plan for an economic downturn and ultimately shut down in 2010. If you have heavy loans and no business, your company may be at risk. Staying out of debt is the safest answer for small businesses during a recession.
10. Use Time to Learn New Trades
This is a great time to learn a new trade to add on a complimentary service with your company. If you are a commercial pressure washing company and don’t offer striping services, this is the best time for you to consider adding on this service to make your cleaning a more appealing package.
Although I am not a fan of “adding” services, we sometimes do. We wash trucks and we do not clean the “interiors” of trucks. Well with how things have slowed down we bit the bullet and now offer vacuuming the interior of trucks, because it is needed to close certain accounts. You may have to offer the same thing to keep yourself busy with your clients.
I hope this article resonates with you and can help you make better decisions for your business in this rough business climate we are experiencing this year.
1 comment
Outstanding article!