How to Grow During the Recession

Hey, everyone, it's Mike Andes and you're listening to landscapefitnesscourse.com the podcast. You might be watching the video. Thank you so much for your attention today. Today's gonna be a short show. I wanted to talk very briefly about something we're gonna dig very deep into when it comes to the conference in January. So one of the keynotes that we're gonna do, I think it's Friday evening, will be completely on this subject. We're gonna dive really deep into it from a financial standpoint, from a marketing standpoint, or what it's going to mean for you, hiring people, all of those things. But I wanted to kind of go from a high level view of how you can grow your business during a recession. And so for most of us, we started our business in the past 10, 15 years. And if you have started in the past 10 years, we have not seen a recession in the past 10 years. It's been growth, the economy has been growing, people are getting more money, unemployment has been low, job market's been tough for us as employers, but overall, the economy has done very, very well. And so I fear is that because people have started their business for five, six, seven years, they begin to build their business in a way that assumes that the economy is going to continue to grow forever. Now, if you've been in business for 10, 15, 20 years and you live through 2007, 2008, you, you know what it's like to get hit in the mouth and all of a sudden your sales go down dramatically, all of a sudden interest rates are higher, et cetera, et cetera, et cetera. And so here are some of the things I would recommend as you prepare yourself for the recession. And I don't know if that's this year, in two years, or in three years, like we are definitely overdue for economic slowdown. We've seen it already in the stock market in the past six months. The volatility and just the unsurety of stock market valuations, etcetera, as well as just, you know, political and economic things happening in the world. And so recession is bound to happen. It's not a matter of if, it's a matter of when. And so the question is, are you ready for it and are you going to capitalize actually on the recession instead of cross your fingers, hold your breath and hope you get your way through it? So first thing you wanted to be doing right now, if you're preparing for the recession is getting rid of debt. So many people in our industry are over leveraged when it comes to equipment and trucks and offices and all the things that they're doing. And they are deep in deep debt. And what's going to happen when the economy, when the economy comes down, their sales come down, revenues start to decrease or level out, they will no longer be able to, to pay off those loans. And I promise you the bank is not going to take an iou. They're going to want to come and collect and they're going to take that equipment, they're going to take that piece of that truck or that trailer you have financed. And so I would highly recommend you get very lean right now and pay off those pieces of equipment. Don't sign a five year lease on a truck like buy used, pay with cash, get rid of debt right now and start to actually save money. And the reason I encourage you to save cash right now and be a little bit cash heavy in your business is that when economic crisis does come, the cost of everything goes down. The cost of new labor goes down, the cost of equipment goes down because people are trying to get rid of stuff and sell off the trucks that they shouldn't have bought. The cost of so much real estate, rent, things go down. And so if you have a bunch of cash during that time, you can really capitalize on it and actually expand during that time when prices are lower, competitors are selling their equipment, they're laying off their staff, and you're able to hire people for pennies on the dollar. That's what you can do if you're in the financial place to do that, come when the recession hits. And so right now you should be preparing for that. Get enough cash in hand, try to get three months of revenue at least in terms of savings. So if you make $300,000 in a year, or sorry, $301 million in a year, $100,000 per month, let's say you should have $300,000 in the bank, cash ready to go. That's like what you should be aiming for. At the minimum. I like to see six months cash flow in the bank in terms of savings when it comes to a time of recession, because you're not going to have to lay people off. You can get through a year or two of slumping sales and you are safe and more importantly able to capitalize on opportunities that show themselves during recession in terms of, like I said, competitors laying off their staff, getting rid of equipment for pennies on the dollar, etc. So when it comes to recession, so many people are used to the past 10 years where it's easy to sell work, bids are coming in like crazy. During the spring, you have so many bids coming in that you can't even stay up with them. And we're so used to that environment, it almost becomes like we just count on there being so many leads that we don't have to go out and market. Like, when the economy hits the fan and everything goes down.

People are gonna have to spend their marketing budget a lot more wisely. They're gonna have to figure out what works and what doesn't. No longer can they just blindly spend money on a campaign or blindly canvas an area with print marketing. Like, they're actually gonna figure out what works and what doesn't. And the people that have already done that already knows what works, what their customer acquisition costs are, what the lifetime value of their customers are. They already know that going into the recession, they are the ones that are gonna be able to spend their money the smartest and in areas that are actually cheaper at that point in time and really, actually capitalize on the opportunity. So really figure out a number. So we talked about really de risking your company in terms of financially not having the loans, not having that debt. Number two would be to really make sure that at this point of recession, when everything goes down, that you're ready for it and that you have really de risked your business by making sure that you're not focusing just on the things that are so easily sold right now. So in terms of marketing, when it comes to marketing, making sure that you know your numbers, know what people are buying when they're buying it, who's buying it, what their value, what their customer acquisition cost is, know those numbers now. So when everything's good right now and you're selling lots of jobs, take that money that you would usually go buy a piece of equipment with and spend that on different types of marketing and figure out what works. So, number one thing I would suggest you do de risk yourself financially, pay off those loans and that debt. Number two is figure out your customer acquisition costs, figuring out what works and what doesn't when it comes to marketing, because you're going to have to know those things when things start getting tighter. And you'll be miles ahead of your competitors who right now are just blindly throwing money away. And when the economy constricts or contracts, they are going to pull that money right away. And now you will be able to expand into that area if you know your numbers and you know what a customer is worth. That's the second thing. The Third thing is that install work dries up. So what I mean by that is if you're doing custom masonry and patios and decks and hardscaping, lots and lots of hardscaping and new installations, that's going to dry up. The reason is because that is discretionary. People don't have to build a 30, $40,000 patio, but they do have to get their lawn mowed. If they're 60, 70 years old, they cannot do that, but they can push off the patio, they can push off the big installation of tre trees or the hedge. So install jobs become much, much harder to get. The leads from those jobs dramatically are reduced when you come into times of economic contraction and recession. And so. Well, what are you thinking about that? No, I do not think you should just go to lawn care, just go to maintenance services because of that. Although it is much more secure come a recession because it's something that has to be done. It's not like you can choose whether or not to mow the grass. If you have a whole bunch of accounts, they got to mow their grass one way. Other they might do it themselves, you might lose some money there. But if you're serving an older demographic and residential, or if you're serving commercial, they have to get that, that service done by somebody. And so your job now is to create a brand that they're not going to leave you for a low price competitor when the time comes for recession. So yes, maintenance is better in terms of recession being recession proof because install stuff just dries up. That being said, there's something I want you to think about when it comes to your. You might say, well, I have install crews and I have maintenance crews. What am I going to do with all these maintenance crews? Yes, you would go after maintenance hard and try and move them over. But what you could also do is this. During times of economic contraction or recession, one of the things that is hit first is the auto industry. New cars do not sell. Why is that? Because people are feeling the economic recession, they're feeling the economic pain, they are willing to get their car fixed instead of buying a new one. So instead of buying, you know, if they might have had a car for four or five years and they're looking to get a new vehicle, but when the recession comes, instead of buying the new vehicle, they figure, you know what I can make do with this car for another few years by getting it fixed or doing a little upgrade. And so there's two ways to look at this and that's one for an automotive Place to be like, I am freaked out. I cannot sell vehicles during this time. My sales are going to go down the drain on my. My sales for new vehicles. But what is interesting about times of economic contraction for the auto industry is used car sales go up as well as repairs and automotive services for those older vehicles. Because now when there's less new cars in the market, all those old used vehicles are breaking down more, more repairs. And so they need to really be able to switch gears and be like, look, we're not going to be trying to sell. We're not going to sell a whole lot of new vehicles. Let's switch the model and either sell used vehicles for a cheaper price point that people can buy, or B, service vehicles more, since people are willing to pay that fee in order to get through a year or two and make do with what they got. How do. What can we learn from that in the landscaping industry? Well, during times of economic contraction, instead of focusing on the new car, I. E. The installation, why not focus on value add or ways for them to negate the $30,000 patio, but create or fix or repair what they currently have? So that might be installing mulch and installing a gravel pathway or patio instead of a $30,000 paver patio. Yes, it's less money, but it's. Again, that's the same thing as it is for the automotive industry. They don't make as much money on the car on a used car as much as they would the new car in terms of gross revenue. However, they are serving the market, and instead of trying to buck the trend, they are figuring out that, hey, look, we got to sell these cars during this time. That's what people want. And during times of economic recession, the amount of jobs for new installs and discretionary work contracts, thus the amount of people bidding on the jobs go up because now everyone doesn't have work and they're all bidding on the same jobs, and that drives the cost down. And so now what happens is you can't make any profit on those installs because you have so many competitors that want that job, whereas before you could get that job without even having a competitor bid on it because everyone was booked out so far. And that's not going to happen when it comes to installation work. So you really got to realize that when that happens and there's less jobs in the install market, and now what happens is the amount of competitors bidding on that job goes up, the price will go down. It's supply and demand. The more and more supply of contractors, less Demand like the price point comes down. And so that's what's going to happen to install work. And so you really got to start thinking creatively. How do we fix landscapes instead of installing irrigation, what if we start really focusing on fixing the irrigation and diagnosing those issues? Again, that is what happens during recession. People try to get by, they try to get through, and you can actually capitalize on that. You know, we recently started a handyman services, prolaborservices.com and this is another thing. When it comes to homeowners, instead of doing a big renovation like they would now or in a time of economic prosperity, during times of recession, instead of doing a big expansion or adding a room, they will just fix a few things. They might fix the drywall or put some new artwork up or change out the flooring instead of doing a big addition. And so we got involved in the handyman services like, look, things are going to break more because people are putting off those, you know, big renovations and the big projects or a general contractor. So we want to pick up the little work, we want to pick up the labor that we can pick up. Four times of recession right now. It's not making a bunch of money right now. It's not taking off in huge, amazing ways. But when homeowners start stop building and doing big remodels and big electrical jobs, that they start fixing things because they're in time of contraction. The economy is. That's what we want to take advantage of. So I just wanted to plant some of those seeds. And during the conference, we're going to talk more about the recession, more about. I believe it's coming up pretty soon. So we're already preparing for it, whether it be financially, from a marketing standpoint, definitely from a hiring standpoint, what you can do during the recession to grow your business and from an operational, what you can do to tell your customers, keep them abreast, make sure you're focusing on branding instead of sales, because we're focusing only on sales during recession. Those people jump ship to go for a lower price competitor focusing on things like that. We're talking really deeply about this for a few hours at the conference, and I hope I can see you there. So go to landscapebusinesscourse.com conference and sign up today. You've been listening to the podcast. You might be watching the video, but thank you again for tuning in today. We'll see you there.