Managing Your Business Through an Economic Correction
If you pay attention to any of the media and economic commentaries at present, you will hear opinions of a downturn or correction in the economy - in particular, in the construction and related trades. I am calling it GFC 2.0 – The Great Financial Correction!
Have you prepared yourself for this correction, especially after the last 2-3 years of a construction boom, most that has showed little profit?
In business, it amazes me as to how many people expect spring and summer to be indefinite without a correction or even a downturn, to bring things back into equilibrium. Are you prepared?
Here are some points (some unconventional) to consider for when a potential downturn or correction in the marketplace impacts your industry.
Build cash reserves
Many trade and construction business owners are only one bad month away from running out of cash and having to close the doors. Building a cash reserve, that gives you financial cushioning and peace of mind, is essential to not just surviving a correction, but possibly also taking advantage of opportunities that show themselves at this time of the cycle. You may have an opportunity to purchase a similar business in your industry to expand your offering, or to confidently fill your calendar with quality work by investing more into marketing and your sales process. Building a cash reserve is like preparing for an opportunity in advance.
Increase your marketing investment
When the economy beings to correct itself, this is not the time to cut back on every expense in your business. In many cases, this could be an opportunity to extend your marketing investment because if done correctly, it is an investment that will bring you a return on every dollar that you spend. Ensure that you are clear with your target audience, test and measure all your marketing channels, and maybe even refine the audience that you are serving. This is an opportunity to niche your offering and specialise in one key area, versus being all things to everyone. Double down on all relationships that will serve you over the next 1-2 years.
Associate with positive business owners
When times become challenging it is to congregate, sit around and talk about how tough things become. Jim Rohn, one of my favourite business philosophers, once said, "Don't wish that life is easier, wish for better skills." There are things that you can do something about and things you cannot do anything about in life. Have the wisdom to know the difference. Unfortunately, many people focus on complaining and whining about things that they have no control over, and this consumes them. So, shifting focus associating with positive, future-oriented, and solution finders, will allow you to grow with them. Environment is critical, particularly when things tighten up in the marketplace.
Train your team to deliver great value
During corrections or tightening of the market, money still flows, yet people become choosier on who they spend it with. You just need to ensure that your company is the one that people are prepared to spend their money with. Invest time educating and training your team to communicate effectively, deliver great value, educate the customer, and represent your business in the best way possible. It has been proven that those companies who invest in learning and development of their team, regardless of the economic cycle, produce a higher profit margin and improve staff loyalty at the same time.
Seek a mentor
Your industry is full of wiser and more experienced business owners who have been through many economic cycles. Make sure you have someone from your industry or another trade who has not just survived, however thrived in downturns and corrections. They will often share how they managed their own personal well-being, thinking, and actions during this uncertain time.
As mentioned before, know that winter will always be followed by spring. Trust the process, manage yourself wisely, and pay attention to the points above, and we will see you when spring and summer come around next time.
Written by Jon Mailer
CEO Of PROTRADE United