Four tips for weathering an economic downturn
In 2008, the country was struck by one of the most significant economic catastrophes in modern history. People called it the Great Recession and, for some, its impact was as devastating as the Great Depression. Those of us who are watching the signs can see that there’s a large potential for another economic storm coming. Are you prepared for this one?
Many experts aren’t debating whether or not we’ll experience another economic downturn; they’re discussing when it will happen and why. Either way, preparation is key for HVAC contractors to ensure they survive the upcoming storm.
Here’s the good news: The service company that my business partner and I built (Gold Medal Service in New Jersey) not only survived the Great Recession … we grew during it. We’ve since gone on to sell the company and exit it. Now we focus our attention on helping other contractors grow; therefore, we’re still very much in the industry and watching the next economic storm roll in.
If you’re an HVAC contractor who wants to see the other side of this downturn, here are four ways to master your business, so you can continue to thrive, even when the storm hits.
NO. 1 – MASTER YOUR TEAM
Your people rely on you for a job, but when they see on the news that the Great Recession is shutting down one company after another, they’ll surely start to worry. Worry reduces job performance. If employees think your company is in trouble, they may start looking around for a company they believe will survive.
The antidote? Your employees need massive confidence that the company will not only survive but thrive during a downturn. When I knew the last recession was coming, I called an all-company meeting. I got up in front of everyone and said, “You’ve heard about the coming recession. Well, I’ve got news for you: We’re not participating in it. It’s business as usual for us.”
Of course, this isn’t the only thing to do, but it’s the first thing. Be a confident leader. Give your people confidence, and they’ll see you as the safe port in the storm. Confidence is contagious. Confident employees immediately solve two key problems you’d face otherwise: They tend to stick around, and they will sell more to your customers.
NO. 2 – MASTER YOUR NUMBERS
Many HVAC contractors can navigate the specifications of an HVAC unit but are terrified to open a spreadsheet of their business numbers; however, the more you master your numbers, the more you’ll thrive during an economic downturn. Mastering your numbers gives you a familiarity that allows you to see which expenses are out of control and need to be reined in. More importantly, mastering your numbers means understanding your breakevens on every job. This provides the knowledge you need to confidently price a job. You’ll know exactly what you can charge on jobs and whether some jobs could be acquired with a strategic discount.
Input your numbers into a spreadsheet and review them daily. You can do this now, well in advance of the downturn. You don’t have to wait until the first wave of bad news comes crashing down.
NO. 3 – MASTER YOUR SERVICE
When the economy is strong, customers don’t like to be sold anything. When the economy turns weak, they want to be sold even less! (And, believe me, your team doesn’t want to sell anything to anybody anyway.) HVAC contractors should get out of selling altogether.
At Gold Medal, we never sold anything. We served. We served customers by ethically helping them find the products and services that helped them provide the most value. We served our customers by showing them how an investment into a replacement HVAC system was better than a repair. We served our customers by showing them that ongoing duct cleaning was the best investment to prolong the lives of their systems. We served customers by creating packages of products and services that provided value.
Serving is a mindset shift that will actually motivate your team to close more jobs.
Bonus tip: Survival in the recession is not about diversifying outside of your core services; it’s about asking yourself “How can I serve my customers more effectively right now while they are price sensitive?” Such changes may include:
- Creating packages of products and services (for example, since many customers chose to repair systems instead of replace them, we made sure we had packages available that included repairs plus other services).
- Offering follow-up sales with other products you offer.
- Offering financing.
- Building referral/affiliate relationships with related companies who serve the same customer.
NO. 4 – MASTER YOUR FOLLOW-UP
You invest in marketing to bring in new leads, but how are you leveraging the leads you already have? At Gold Medal, we relentlessly followed up with leads in our system.
We followed up with those who hadn’t hired us yet.
We followed up with those who said they were hiring a different company.
We followed up with those who were our customers already and may need additional service.
We served them all with great value (not just sales pitches) by sharing information and remaining in contact. If customers were once thinking about a replacement, we didn’t let the lead die because we knew they said they couldn’t afford it any longer. We followed up and recommended a financed replacement, a lower-cost replacement, or a couple of different repair options.
Remember this: Most HVAC contractors will only follow-up with a lead a couple of times, but it can take five, 10, or even 15 touch-points before a customer remembers you and chooses to act.
Many HVAC contractors are looking at the horizon right now and seeing the oncoming economic storm. Panic is setting in. The problem is, many are scrambling by making massive structural changes to their businesses; they’re adjusting who they serve (such as repair versus replacement or new builds versus commercial). In my experience, those massive structural changes aren’t as important to surviving a recession as mastering the fundamentals — your people, your numbers, your service, and your follow-up. These practices will get you through the economic downturn, and even if the economy never tanks as badly as it did 10 years ago, they’re great practices to follow in all other economies as well.
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