Running a successful service business can be challenging, even in the best of times. When inflation is at the highest rate we’ve seen in many years – what do you do? What about when you can’t get the materials to complete your jobs? What can you do to recession proof your service business?
By now you’ve seen increased prices in the materials you purchase for each job. You’ve also experienced increased fuel costs and wages. This adds up to less profit or even a loss on each job you do UNLESS you know how to “Recession Proof” your business.
1) Know Your Numbers – do you know where you are today?
- What is your year-to-date gross revenue?
- Do you know how much revenue your company generated this month or week?
- What is your year-to-date bottom line profit?
- What is your gross profit %?
- What is your net profit %?
- Do you know exactly how much each employee costs you by the hour?
- What is your monthly break-even point?
- What is the mix of jobs that it takes each month/week/day to meet your sales goal?
- How much profit are you making on each job?
- How much cash do you have in the bank?
- How much of your cash is tied up in receivables?
- How many calls do you need to generate each month?
- How many jobs need to be closed from these calls?
- How much money do you need to put away to pay your income tax for this year?
- Are your accounts payable current?
- How much money do you need each month to live comfortably in your personal life?
This list could go on and on as you think about the various numbers that you need to know in your business.
2) Cut Unnecessary Costs – this is a very common area forprofit leakage
- Are you paying personal expenses from your business? If yes, STOP it immediately!
- When was the last time you checked on the various dues/subscriptions and other monthly recurring costs?
- Advertising and marketing – when was the last time you tracked results from each type of marketing?
- Do you have unused assets laying around your facility?
- Can you consolidate software/equipment – sometimes one piece of software can take the piece of several pieces that have to be renewed each year.
- Job material ordering – are materials being carefully ordered for each job – the correct materials in the right quantity? Or are you finding materials overages for all or most jobs?
- Do you have underperforming employees on your team? Do you really need them or are they dragging the team down?
3) Keep Investing in Your Business
- Invest in your team – employee training so they can do the best job possible for you. Define your company culture and core values so they know what you and your company stand for.
- Equipment – can you invest in equipment or software that will help your company to be more efficient?
- Coaching – we all need to surround ourselves with someone who has “been there” and can share valuable advice. This person also has a unique perspective about your company since they have no emotion involved in the decision-making process.
- Are you working with an accountant who truly understands your industry and is there to offer suggestions for improvement?
4) Embrace Adaptability
- The mindset of “We’ve always done it this way” won’t work in this new recessionary economy. It may be time to make some changes.
- Is your company able to pivot, as needed? We saw many companies make some big pivots during COVID. It may be time to make another pivot to align your company in the best way possible.
- Learn how to be a better leader for your team. Are you investing in your own professional growth? The skills that got you to where you are today won’t be sufficient to get you to where you want to be tomorrow if you are working toward big goals.
- Keep a close eye on costs and adjust prices accordingly. In the past, you may have only needed to adjust prices every year or two but now price adjustments may need to happen much more frequently. Keep your eyes and ears open!
5) Team – your team is your most important asset!
- Listen to their concerns – they are valid!
- Are they concerned about whether they can pay their monthly bills?
- Are they concerned about whether they will have a job next month or next year?
- Update them on the changes you are making to keep your business healthy so they can see you taking proactive steps to protect them (and you).
- Prepare a plan in case you need to downsize your team – Which positions must be filled at all costs? Can some positions be moved from full-time to part-time status? Do you know how to motivate each team member? Are they motivated by money, time off, kind words, etc.?
If you are enjoying these ideas of ways to recession-proof your business, then please join us on October 13 for a 2-hour webinar where we will discuss these 5 points and 4 more recession-proofing points. We will be sharing a Recession Quadrant Planning Tool and a Leading/Lagging KPI Tracker tool that you can use immediately in your business.
To claim your seat, click here. The cost is only $97 for 2 hours of prime CEO time where you will work on your business so you can be prepared for what lies ahead.