Well, the wild ride of the past few years looks to be long-gone – probably gone for a long time too. Now what?
I’ve got a few thoughts. Let’s look at a chronology of events.
Past: the incredible up-tick in home prices brought windfall profits to many in the remodeling community. People used their homes as ATM machines through equity financing and with that ready cash spent lots and lots of money to beautify their home – much of which went in the pockets of lucky remodelers. A lot of company owners began to believe that their success was secure and turned their attentions elsewhere. They built a new home or perhaps a second home, they began speculative developers or they began to delegate madly to recent hires in hopes of securing their dream of “having the business run without them.”
Others thought that the upward trend of leads and sales was just the tip of the iceberg and, as such, leveraged much of those profits to provide for future growth. They invested in new office space, hardware/software, systems and new personnel to handle the anticipated growth in volume. Putting their shoulders to the grindstone, reading everything they could get their hands on about delegation and leadership, attending every educational opportunity or seminar on successful growth, and hiring lots of expensive consultants and coaches to assist in developing the company the owner clearly saw in her dreams.
Current: So here we are with bigger offices, beautiful systems, recently hired and trained motivated and excited people ready and willing to help move the company forward. And the bottom falls out of the marketplace: many highly respected remodelers across the country are facing a 40% drop in leads from the prior year, others are looking at a 50% decline in job size, and everyone comments on the significant length of time it takes to close most sales.
Many houses are sitting on the market for long periods of time; owners try to lease if they must move because they can’t afford to pay two mortgages. Credit has dried up. House prices no longer provide easy ATM money for remodeling, college, vacation or new cars.
We’re in trouble!
Future: This too shall pass – just keep saying that. In the meantime, there’s a lot of work to be done to reorganize our companies and ourselves around this new economy. What looks tough is really quite simple – GET BACK TO BASICS!
GBTB entails doing what we should have been doing all along but didn’t really need to for so long that we might have forgotten how to – this is like deciding at 45 to run a marathon which you last ran at 35: you know the training will be painful but you know its a good thing to do! You’ll feel better than you have in a while as you approach the race because you’ll be strong, healthy and focused.
Here are some ideas to consider: prioritize them as you would anything else – work on the biggest issue first, then move onto the next.
- Review your budgets, both personal and business, and cut out the fat immediately. Then develop 3 scenarios for the future – best case, worst case and middle-of-the-road case. Determine how much you need to sell to meet each scenario.
- Increase your marketing effectiveness. Utilize guerilla marketing by calling all the past clients for whom you’ve done work between 2 and 5 years ago. Talk to them, don’t e-mail, and get a sense of how they see the economy. Ask if there is anything you can do for them – fix a screen door, change a light bulb, change out a window. Many people are saying that such personal touches have resulted in small jobs turning into larger projects.
- 3. Devise an employee time-off rotation plan with the help of all your employees: let them know that by working together you’ll all get through this. This assumes that you’ve already let all the non-productive employees find their future elsewhere – that’s part of trimming out all the fat. Everyone who is left should be people you really want to keep and protect
- 4. Know your numbers – every single one of them – and make sure that you know where they come from, how to validate each and every one of them and how to use that information to predict future changes which will impact you and the company
And finally, take care of yourself – eat, sleep, play with your family and friends and maintain that can-do attitude which brought you so far – you’ll need it to get through this one too.
And when this is behind us – remember to save sufficiently to protect against the next downturn. Then we’ll truly have learned all the lessons available to us.