How to Survive the Coming Recession
It’s not really clear that there’s a recession coming. If you believe what Australia’s shittier newspapers are saying at the moment, we’re due for a pounding – high-interest rates are going to send us into a big recession and it’s going to be awful. But the economy at the moment is going strong and the construction industry is busy. We’re still feeling the effects of the stimulus payments and people not traveling – people have got savings and they’re spending them on their houses.
So it’s not clear – we might get one and we might not.
The industry has other issues right now – there’s a skill shortage and there are still delays caused by materials shortages. I’ve talked about them previously, have a look for the video on getting more eyes on your ad (for staff).
This video is about what to do if we have a recession – if our industry slows down. What should you do to protect your business?
The first thing to do is to understand that a recession doesn’t mean business dries up altogether. Even in the GFC our economy shrank by 6% – not by half. 94% of the business was still there.
So there’s still business to be had – just more businesses chasing it. And the answer is NOT to drop your rates and be cheaper but to work harder on your marketing and sales.
I’ll come back to this in a minute.
The other thing to remember is that if our industry slows down, it won’t be uniform across the entire industry or the entire economy. Different parts of the economy will get it worse.
The building company failures you’re hearing about are all project home builders. There is nothing wrong with being a project home builder – that part of the market where people are buying land and building an inexpensive house on it. You can make lots of money when this going good but it’s volatile and low margin too.
Now that’s an example and I’m not going to spend ages going through lots of examples. But the first thing to consider is what part of the industry you’re in and how at risk is it. Can you shift a little into another part? For example one of my clients is a builder who specialises in property development. He helps people build 2 or 3 or 4 villas on a block and sell them at a profit.
Unsurprisingly his a bit quiet at the moment and he shifted a little building a few custom homes instead.
So that’s one thing you can do – consider whether your part of the industry is a volatile part or not.
Is it low margin? Is it very dependent and people getting finance (because finance is more expensive now)?
The other thing to do is focus on your sales and your marketing. If 94% of the money is still being spent, it’s up to you to go and get your share.
This is how you win more business – not by discounting but by doing enough marketing and good marketing to get good leads and doing a good job of sales. Don’t stop spending marketing money and hunker down (and discount).
Focus harder on finding and winning work.
Remember people buy from people they like and trust and they will compare the price of you and your competitors relative to the value they think they’re getting. It’s up to you to build the relationship and show them how good your thing is. If you do this well, you stand a very good chance of staying busy.
I mentioned not discounting just now but it’s worth giving it it’s own paragraph. Avoid discounting and protect your margins. Margins are what keeps your business safe and will keep them healthy.
And manage your money carefully. If you usually don’t give it much attention or feel ok as long as there is money in the bank, give it proper attention. Meet your money people weekly, know your profitability or jobs and for the business at all times. Don’t buildup debt, don’t buy things you don’t need (except business coaching – buy that. That helps you make money).
There are four ways you can engage with me:
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4. Book yourself a 10-minute chat with me. We’ll talk about whether coaching is right for you now and if it is, we’ll go further into the process before you have to make your mind up.
See you later.