Mike Andes presents a concise playbook for businesses to prepare for and exploit economic recessions using an "defense vs. offense" framework. During good times (offense/defense mix) he recommends playing defense by saving cash and paying down loans, and playing offense by testing marketing channels, raising prices, and expanding so you know customer acquisition costs. During recessions, he advises playing defense by shifting from large new installations to repair and maintenance services (recurring/repair work), using cash reserves as an advantage, and leveraging pre-tested marketing channels to allocate reduced budgets effectively.
What I would be looking for if I was you is one thing. Just take one thing away from the entire conference.
It's not a question of if another recession will come. It's only a question of when it will come and whether or not you're ready for it.
All right, it could be this year. I don't care if it's 2020 or 2025, it's going to happen at some point. And whether or not you're ready to capitalize on that opportunity will be decided on how you plan for it during good economic times. So right now, the past several years, I'm going to talk about defense and offense. During good economic times, your defense.
Should be saving money and paying off your loans. Your offense during good economic times is going to be spending dollars on expansion, raising your prices, figuring out your marketing mix. And you know what I mean by that is test out a bunch of different marketing methods, see what works, see what your customer acquisition costs are. And so that's what you should be doing during good economic times. Play defense by keeping your loans low, saving money. That's why this past year, like I said, I could have taken the money out of the company I left it in. Why I wanted to hoard the cash and have it available when no one else has cash and everything's hit the fan, right? Puts you in a huge opportunity. Turn an economic recession into a huge opportunity if you can do those things by playing defense. Now, the offense side during a good economic times, like I said, is spending the money on expansion. Raise your prices. Figuring out your marketing mix is probably the most important, and that is testing a bunch of different things. Try Facebook ads, try Google AdWords, try print marketing, try getting a newsletter out and track all of the different marketing methods so that when recession comes, you know where to spend the dollars. Because when all of a sudden your marketing budget goes from 10,000 a year to 2,000, you better know where to put that $2,000. And you'll only know that if you've tracked your customer acquisition cost on all the marketing methods available to you. All right? During bad economic times or recession, to play defense, you should focus on repairs and maintenance type work.
Because no one wants new stuff during a recession. All of a sudden, big installations dry up, but people will pay more to get stuff fixed. What I mean by that, I mentioned this on the podcast. During a recession, the auto industry is slammed. New car sales are absolutely put to a halt. GM almost went down because of it in the last recession. No one's buying new cars, but what happens during a recession is the auto manufacturer, sorry, the auto dealers need to pivot to becoming the repair experts because no longer are people buying new cars, but that means that their old cars are breaking down and they need to be repaired. So either A, they need to pivot to becoming a used car lot where people can still sell their vehicles, still get a new vehicle, but it's a little bit cheaper, or they need to pivot to repairs and maintenance as in our industry. What that means is you're not going to get a $40,000 install for that new paver patio, but you might be able to get it resealed and pressure washed. Those recurring, those repairing maintenance type services is what you should be doing.
For defense during bad economic times. In terms of offense during bad economic times, you should spend your cash reserves on talent acquisition because all of your competition is laying people off. They're all downsizing and all of a sudden the guy that cost $25 an hour and has 20 years of experience in our industry now only costs 15 bucks per hour. But, but your competition is laying him off because they over leveraged, had not had enough cash in the bank and had too many loans. And now with those installs gone, they can no longer pay payroll. So they are letting go these great experienced guys that would usually have built those walls because that work does not exist. They're not going to pay them $25 no longer to mow lawns. You can pick up those people for pennies on the dollar. Great talent acquisition so that when the next wave of economic good times come, you got all the talent in your market at a fraction of the price.
