*time sensitive* make your business RECESSION PROOF!

Hey everyone, it's Mike Andes here. Yesterday I made a video about why we are already in the beginning stages of a recession and what you need to do in your business to prepare for it. I'm gonna go deeper into that day, exactly what type of service you should be focusing on and what steps you need to take now to make sure that when recession happens, you're actually able to take advantage of it and expand your business during that time. I just pulled in the command center here, but I want to make this really quickly for all of you. Now for everyone that commented yesterday that says I'm just fear mongering and I'm doing it for clicks, let me remind you that In October of 2021, I said the same thing about the ST and I said I'm selling over half of my position and just see what happened in November of 2021 to the stock market. Okay. And then literally two weeks ago, I said, I'm going back in relatively heavily and see what the stock market has done in the past two weeks. We're up over $200,000 and I'm selling that now in order to take those gains. Like, you've got to follow economic trends. I've said this time and time again, I don't care if you're doing lawn care, landscaping, if you're building fences, you're a contractor. You need to learn about economics because these are the tides that move labor. These are the tides that move the cost of materials. So if you're saying, well, I' a landscaper, I don't care, I'm not going to focus on what's happening in the labor economy. I'm not going to focus on unemployment or stimulus checks or what's happening with the Fed rates being raised and mortgage rates. Right now you're going to be fighting the trends and the tides of the economy that are much larger than your business. The GDP of the United States is trillions of dollars. Why would I fight that with my couple million dollar business? Like it's not worth it or even if you're smaller, like you've got to focus on these things and at least pay attention, educate yourself on them. So as we head into recession, we are going to be heading in the next 12 to 18 months. Now again, like I said yesterday, if the war in Ukraine ends tomorrow, if all of a sudden supply chains ease up, if the Fed immediately hikes rates and then cuts it quickly, that could all kind of solve these problems. I don't think any of those things are happening immediately. And that's why I believe very confidently there's going to be a recession in 12 to 18 months. I do not feel it's going to be as bad as 2008, nor is it going to be as prolonged simply because the debt that people have out now is more secured, they have higher credit scores, they're much more qualified. However, how would I prepare my business for it? Now, number one, like I said yester pay off debt. Now when I say that, I'm saying pay off loans that have a variable interest rate, they go up. As the Fed is going to increase the rates at the Federal Reserve, your rate increase will go with it. So credit card debt, you know, right now you might be at 9, 10, 12%. That will easily get up to 20, 21, 22% over the next 12 months. Guarantee it. Your if you have a HELOC and you are paying down a HELOC, if it's a variable rate interest and it's a 3 and 4% right now, that is very easily going to go to 6, 7, 8% over the next 12 months. Paying off that type of debt is important. Now if you have fixed long term low interest rate debt, do not pay that off because you're not going to see those interest rates again. If you were to refinance or you were able to get a home equity line of credit or something locked in for the next 30 years at 2,3% interest over the past couple of years, do not pay that off. That's very, very high quality debt. You're not going to be able to get loans for 2 and 3 and 4% anymore. As interest rates go up, you're going to be able to get that. But you should absolutely be paying off things that are variable rates, things like your business line of credit. Make sure you're paying that off and then when you pay that off, go ask for more line of credit. So that way when if things really go hit the fan and things go really cheap, you have something to tap into and you can utilize that cash reserve in the form of a line of credit. So pay off lines of credit, pay off debt, anything with a variable rate of interest, make sure you pay those things off. Second thing, like we talked about yesterday, you're going to want to focus on what type of customer you are marketing to. Going after the customer, that's going to be insulin from this. They're going to be affluent, they're going to be retirees, they're not going to be able to physically do the work. Doing the work themselves is not an option. They don't have a job that they're going to be laid off from because they're retired or they have investments or they have multiple businesses, they have multiple homes and properties. Focus on those customers. Everyone wants those customers. They're not easy to get. They're going to be harder to find, higher customer acquisition costs. They're not going to be the person that goes on to HomeAdvisor and ask for 20 estimates from different landscapers. That's not going to happen for that high, that high price ticket, that premium customer. So focus on those. That was number two. We talked about that yesterday. The third thing I want to talk about today is recurring revenue. All right, since 2008, 2009, hardscaping and projects has done very well. I believe it's going to for the next six to 12 months. But when we hit recession, and I think this recession will be abbreviated, it might be only 6 or 12 months long where the Fed has to raise rates to the point where we get inflation under control. But that's gonna be a very painful period of time and people are not gonna be spending money discretionary income. So when it comes to a paver patio, a fireplace, an arbor, a row of trees in their backyard, these are most of the time discretionary income. Now, of course we want to go after customers that are going to be insulated from a recession. However, even someone who has investments is going to spend less money if they have the ability to save that money during a recession because they're smart. They're probably going to invest that money when everything is really cheap in the form of equities and real estate and buying things for pennies on the dollar. They're not going to be doing it on things like a paver patio or retaining wall or a pond in their backyard or koi fish pond and all the other cool trinkets that they want to put around their property. When their value of that property, that real estate is going down, they're less likely to invest back into it because they're less likely to be able to refinance and get home equity lines of credit to fund the deck, the fence, those home improvements. So the past 12, 13 years in landscaping has been killer. Awesome. For anyone that has excavation, tree work, any sort of project based work and really focusing on that. There's a reason why from day one of the GU to lawn care, we track with our franchisees on our coaching calls, we track what percentage of your revenue is coming from recurring revenue versus one time jobs and projects. And so Right now, if you look at Your revenue and 80, 90% of it's coming from one time jobs and projects, I highly recommend you try to focus on some sort of recurring revenue. And some people are like, well, I'm never going to mow lawns. Forget that. I'm not going to. That's fine. If you're doing landscaping and hardscaping, can you sell an annual package where you come back and you reseal the concrete? Can you come back and sell a package where every month you come back and maintain the bushes that you install the landscaping that you installed the fish in the pond? Like, can you clean out the pond? Like sell it? A recurring revenue type package. So that way you can predictably know how much income you're going to have. Because once someone's installed that pond, they're going to want to make sure it's clean. They're going to need to maintain the thing they've already invested in, but they're not going to install a new one. So I highly recommend you focus on recurring services and maintenance of project based work. It doesn't matter what type of work you're in, when it comes to home improvement, you can always find a way to take the projects you install and then upsell the customer on our package to maintain that project. And you can sell a warranty if you're putting in hot water furnaces, if you're putting in any sort of maintenance or mechanical device, AC units inside of the home, yes, you can do the installation, but why not sell a warranty? Why not sell a maintenance program when you come back annually and check up on it? Building that recurring base of revenue is the thing that's going to be the most sustainable. During a recession when discretionary income dives, people will not spend as much money on projects, but they will maintain the assets and the things around their house to make sure that they're at least working. This is why during a time of recession, used car prices get elevated, because no one buys new cars. They go take their used cars and they try to fix them up, they try to repair them. And automotive and mechanics do really well in recession because people are trying to extend the lifespan of their vehicle. The same thing is true with home improvement. So I highly recommend right now focus on how can you increase the recurring revenue percentage of your revenue every single month. When you're first getting started, you're growing your business. Recurring revenue grows like a trickle, it trickles in. So don't expect to switch everything over tomorrow. But what you can do is start working on that trickle and know that hey, if you just got started, if your business is growing, growing really fast, probably 60, 70% of your revenue is coming from project based work. But as time goes on, you want to really focus your marketing, focus all of your efforts on recurring revenue and the projects will just be on the side. They're gravy, they're extra money in the bank. That's awesome. But don't be allured by that because that switch can turn off very quickly. Focus on building a recurring revenue stream and I highly recommend to do all those things. Pay off the debt, focus on the customers, they're going to pay well. And focus on building out recurring revenue in addition to any project based work that you're doing. I don't think that gravy train is over. I think there's gonna be still a lot of money on the table because real estate is still very, very expensive. But just know that can change. Like we saw in March 2020, it can change in a heartbeat. So I encourage you to build that safety net out the same way. In stocks, they hedge against their position. They short certain stocks in the case that it drops. They're okay. If you're doing a bunch of project based work and a bunch of big paver installations and hardscaping, just hedge your position. Maybe 20% of your revenue, try to make it recurring, go back and reseal the pavers, pressure wash the pavers, try to come back and do a weeding of services and fix the irrigation and sell a recurring set of services that gets recurring revenue in the door every single month. That's my recommendation for you. If you want more information, check the links in the description. Lots of more resources for you. And check out mikandys.com we'll see ya.