Mike Andes (Business Bootcamp podcast) explains three priority considerations for starting or making a business recession-resistant during the 2020 COVID-19 economic contraction. He draws on his experience with Augusta Lawn Care (nearly 20 North American locations) and recommends: (1) target affluent baby boomers who are less able to do physical work and relatively insulated financially; (2) avoid businesses dependent on discretionary/disposable income; and (3) prioritize recurring-revenue services to stabilize cash flow. The episode includes a sponsor read for Gusto and closes with listener engagement prompts.
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Hey, everyone, it's Mike Andes, and you're listening to the Business Bootcamp podcast. Today, we're going to be talking about three different things you need to be thinking about if you're going to start a business in a recession. Now, if you're watching this in 2020, you know that we've just gone through COVID 19 or are in it now, and you might be asking yourself, well, what kind of business should I be starting now? And how can I capitalize and grow a business that can actually thrive during these times? Before we get into today's show, a big thank you to today's sponsor, which is Gusto. If you haven't already, go to gusto.combootcamp now. Gusto wrote directly to me and asked me to read this to all of you and let you know that while COVID 19 is having an unprecedented impact on the economy, companies like Gusto are still building tools to support your business and your people through the ups and the downs. I highly recommend Gusto for all of your payroll needs, as well as allowing you to direct deposit keeping track of everything. Right now, when money is being given out from the government for payment protection, this is when you need to have a program like Gusto. Check it out today. Go to gusto.combootcamp now, today we're going to talk about three different things you need to be thinking about if you're wanting to start a business. And where I get this information is really from my own company, Augusta Lawn Care. So. So if you don't know, I'm in the lawn care and landscaping industry. And so what I'm sharing with you today is going to be based upon that information, as well as the information that I've collected from multiple industries as we've been going through this crisis. Now, Augusta Lawn care has almost 20 locations now around North America. And these are the things that we're focused on and have proven to be essential and absolutely imperative as we're in an economic contraction. Number one, you want to service the affluent baby boomers. Now, if you looked at the United States and the demographics, you can see this massive conglomeration of wealth and demographic numbers that are in this baby boomer generation. They're getting over 50, 60 years old and becoming where the wealth of our country sits. The relevance of this is that if you can service this demographic that physically cannot do the work, for example, in the lawn care and landscaping industry, they physically cannot get on a ladder and trim a tree, or they physically should not be handling a 300, 400 pound machine to be mowing their grass. These are examples of services that they physically cannot do and are limited by their age and their physicality and therefore is recession proof when it comes to a time of economic contraction. Also, another thing about the baby boomers is, especially if they're affluent, is many times they are economically insulated from a lot of the events that are going on. Yes, their 401ks and their retirements might be affected, but a lot of times they have a lot of different investment accounts, whether real estate businesses, money set aside and these type of economic contractions are less impacting on their income and their buying decisions. Now the second thing you need to keep in mind if you're wanting to start a business during a recession or have a business that is successful for throughout an economic downturn is make sure you avoid disposable income. Industries that exemplify disposable income might be eating out or going to the movies or buying new clothes, especially luxury items. These are things that really if someone needs to cut down on their budget, those are the first things they're going to cut out. These are the low hanging fruit. And you do not want to be the first thing that gets cut off of a budget. Make sure you're absolutely essential and you are not something that can be disposed of and is only spent out of their disposable income. It's an actual need. And you've got to figure out regardless of what industry in now, how do you make sure you offer a service or offer product that is absolutely vital to these affluent baby boomers to continually living and making sure that they continue to thrive. You want to make sure that your business is needed and your product and service is needed, not wanted. 1 When the budget gets tight, one thing people will not cut out of their budget is the things that protect or service their biggest assets. So for example, in the lawn care and landscaping world, people are not going to allow their house, you know, five, six hundred thousand dollars, the one they've lived in for 20 years, the one they want to retire, their single most valuable asset. They are not going to let that deteriorate, they are not going to let that go to waste and so they are going to want to maintain it. Therefore, that is considered not non disposable income things that have to be done and are very important to their long term success. Number three, you want to look for an industry that produces recurring revenue. Large one time purchases can many times be pushed off, delayed or even canceled. And if they can do it and it's not an essential thing that they must do. When the budget gets tight, they're going to cut those things first. If they have a $5,000 landscaping project, they can delay that, they can cancel that. It's probably discretionary, it's not absolutely necessary. But they aren't going to put aside that $30 per week MO that maintains the asset, their house, their real estate that they so need for their portfolio. Also, recurring services is one of the best thing for your business because it really helps your cash flow. In other words, instead of having one time services that are really big ticket items and you have big good months and then bad months, big sales, then no sales at all. Instead of having that, you can have a lot of volume in terms of smaller ticket items that are recurring revenue and then take out those big mountains and the really low valleys. I hope something today was said that would help you if you're going to start a business or if you're wanting to make your business more recession proof. If you like this content comment below. Tell me what business you and industry you're in and how what you're doing to make sure that it's not going to get wiped out in the next recession. And don't forget to make sure you hit that like button below. You've been listening to Mike Andes on the Business Bootcamp podcast. Until next time. Be great because nothing else pays.
