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What business lessons did you learn from the Great Recession? (27 Posts)
What business lessons did you learn from the Great Recession?Top three things. What did you learn?This post was edited by an admin on February 14, 2013 12:55 PM.
I Thinkthat it still going on-any recovery is just an illusion-
Sowhat have you learned?
3 Things1. The perception of value changes for the consumer. Less work means more competitive contractors and lower prices.
2. The customer sees the "lowest price" as the best deal. Any higher bid costs or add-on alternates are somehow perceived as having little value and simply cost more.
3. Service work for poorly installed hydronic systems rises dramatically.
Perhaps, thatwe are never as secure financially as we think
I think this appliesThe goal of your hard work ,has got to be, to get yourself to a position where you could retire at any time. All the material gains you've made can be taken away with the stroke of a pen.I'm not saying you have to retire, just that you are financially able to. Work, for the sake of work, is not a life. Set a goal, and work towards that goal.
RecessionFind a niche,if you do the same thing as everybody else,you're a commodity.
Value still sellsand don't trust bankers to run a country.
Good Question1st - Customers only want us, we need them. That is never a truer statement than when the work slows down. So make sure to be topnotch and on your game at every job.
2nd - Get slim. Overhead, bills to wholesalers, waistline, etc... No matter what stay slim in unnecessary debt, it can make or break a weak budget
3rd - There is no such thing as a free lunch. Always true but during recession it is reinforced in every transaction. Everyone is affected so keep in mind most people are looking out for #1
You must be doing "RESEARCH" for a future article.
I am.I know what I learned (a lot!) and thought I'd see what you guys and gals learned as well. It's great food for thought. Thanks.
What a customer wants you to knowI'll answer this as a customer who had a new heating system installed last year. Here are the top three things I was looking for when I needed a new heating system:
1. Try to make it easy for a customer to find you.
A new customer starts from zero and needs to find someone to do their job. They start by asking friends for recommendations, then use the phone book - but the phone book doesn't really exist anymore so now they have to use the internet instead. I searched on this site and would have been happy to find someone close to me to do the job (but everyone was too far away to make it practical). And don't sneer at the idea of keeping an ad on craigslist - that is how I eventually found my installer. In my opinion there may be hacks on craigslist, but being on craigslist doesn't make you a hack.
2. When you find a customer who DOES want to upgrade, LISTEN to him and this may mean being FLEXIBLE.
Customers have lots of choices - and some of these choices aren't right or wrong - they are just different. It is harder to dictate to a customer "do it this way" if they have done their own research since they can eventually find someone to do it the way they want. I knew when I started that I wanted to keep my 100 year old radiators, and I wanted a natural gas upgrade using a gas-company-supplied Burnam boiler, and I wanted a mod-con. But when I started getting estimates, most of the estimates I got didn't meet all those requirements. For example, I was given an estimate for replacement hot air (since that was "the best"); I got three installers who refused to install a mod-con (saying it would never work in my application with old radiators and big steel pipes - really!); and I got several estimates for non-Burnham boilers because they were "much better".
3. Work hard to keep sticker shock down.
This required (in my example) the installer to be flexible about the boiler manufacturer to use and they had to be willing to have me involved in the process. I did as much site prep and removal as I could, plus system planning, ordering of boiler and other parts, and I did my own wiring and electrical. I know I was much more involved in my system installation than most homeowners and I'm sure the guys who did my install thought me a pain in the ass at times. But it allowed me to keep the price way down and after spending the last 20 years maintaining my old oil boiler I knew what I wanted.
Number one lessonby a longshot ....... Diversity is your best ally to survive the recession . If you weren't installing gas equipment along with oil , doing AC work , solar , generators , plumbing work ............. you were in for a rough few years .
Another .......... most people were not looking to upgrade their equipment while it was still functional . Who had the extra money ? And when they did , most of them wanted the cheapest price and lower end stuff . Coil boilers were our 2nd biggest ally !
What did I learn?Nothing.
Except that history repeats itself. The lack of regulation in the financial sector was the culprit.
I'll just leave it there.
Oh I forgot,don't forget it's Valentines Day. Oh for crying out loud it's 9:21 on the east coast !This post was edited by an admin on February 14, 2013 9:22 PM.
LessonsI started my own company right in the middle of all of this recession stuff, so I don't know anything other than what the business world is right now. Short of having "learned" anything, I do know a few things for certain...
1. I love my line of work. It is a hobby that I get paid for. I do so many things for customers without charging them. But when it comes time for that big expense repair or replacement, my price is never argued. It is not even discussed. You MUST establish value before you ever talk about price. They are not the same thing. Not even close.
2. Be honest. Be sympathetic/empathetic. I never offer any service that I would not personally choose for my own home. Of course I want to double my sales figures, but never by taking advantage of a customer. Treat every job like it was your own. People appreciate the ability to understand long term investments, but only if their returns are quick enough to justify the cost. Not every house needs the same system. We provide custom systems, not cookie-cutter sales.
3. Surround yourself with good people. Even competitors. Just like music, art, literature, and sports, the BEST make you BETTER. Put yourself in an environment that will allow you to succeed. Mentally and physically. Drink plenty of water, eat your vitamins, enjoy your loved ones, and stay safe. A flat tire could be devastating right now. Be proactive, and prevent mistakes.- Joe Starosielec
Metuchen, NJThis post was edited by an admin on February 14, 2013 9:37 PM.
What I am learning1. Quality still sells to those who know it when they see it.
2. You still need to turn a profit even when the world is saying to lowball the prices, those who are pushing hardest for you to cut your price usually are the ones who least need the discount.
3. You need to have a nut squirreled away, slow times show a savings is far more important then a new flashy truck. Your customers are not impressed by the leather seats and cruise control your truck has, they are impressed when a 100 year old system is fixed and they are warm.
4. The Wall Rocks!Cost is what you spend , value is what you get.
business 101a class that I teach, I will tell contractors to beware of their p&l. SALES WILL MASK overhead and this will bite in in the behind every time.
Peace Be With You
Still learning...Small business owner selling mostly safety gear into the municipal customer base.
1) Don't rob Peter to pay Paul. Peter will come back around with a bunch of angry creditors carrying clubs. If you can't pay Peter up front you probably have a short number of days left as a business with your current model.
2) Treat your best customers with great respect. If they spend even a dollar with you, let them know that they help feed your family and you appreciate it. Say those words.
3) Treat your very best supplier with great respect. When things are slow with you, they probably are going poorly with them as well. You support their family as well. Do not become adversarial or short with them.
3a) As Dan says, hug your kids. Having buried my own due to a drug overdose, I wish I could hug him again.
WowThere was so much to learn in the last 4 years its hard to know where to start.
I learned that in a fractional system the money supply can only be grown through debt.
I learned a new word " Rehypothecation".
I learned that by working in concert,Central banks all over the world can manipulate Precious metals, food and fuel through various schemes.
I learned that by federal reserve banks loaning money to banks at near zero percent forces would be savers into riskier stocks where wall street will be able to steal it with ease.
As far as business goes...as always, keep your overhead low and keep to a 1 or 2 man shop. Do impeccable work and never let time allotted interfere with the quality of your work. Take more time off and spend it with your family because no matter what they want you to believe...perpetual economic growth is not possible in a finite world and the next meteor may not miss.
Three things..1. History does repeat itself. The stuff my grandparents learned in the Great Depression fits nicely now.
2. Trust your community. This is a community. If you don't have much of a local one, think about how to make it happen, because there is more security there than in any gubermit program.
3. Live below your means. It's an interesting challenge to see how low you can go.
That's my three!
Yours, LarryThis post was edited by an admin on February 16, 2013 2:12 AM.
Ditto, LarryI remember sitting on a rest stop lawn with my dad, just north of Redding, This was in 1988. He was a major banker in CA. He said "The Feds brought this all upon themselves".This post was edited by an admin on February 16, 2013 3:18 AM.
My advice........................................For what its worth after 12 years in business...................
1) Finances: Don't carry ANY debt at all (or atleast VERY little). At a BARE minimum, have a basic business plan in place and adhere to it closely.. If you are a small shop as I was, Get atleast part time office help...a gal friday. I used Pam Humbert and she kept me out of all kinds of trouble...fiscal, taxes, scheduling, et cetera. It allows you to do what you do best!
2) Employees:....don't give away the store! When things slow up, don't be afraid to "trim the herd." I know...."...but he's my best guy, I don't wanna lose him." That's one of the things that got me in hot water, i.e., Having the employees work in your house or shovel snow, paint, paying their health insurance on credit card just to keep them et cetera...just to "keep them busy" while its slow. Gets slow, CUT EM LOOSE. Also, don't go overboard
with them. Start them out with a fair package and let raises and that be based upon MERIT, NOT time schedules or yearly reviews per se. I gave it all away in the beginning to attract employees, but you have to have room to go from there. They come to expect it. Also, don't hire friends or become too friendly with them. They get to know too much about your business and then "assume" they are some sort of partners. Treat them well and fair, but always keep a few "carrots" out of view.
3) Customers: As Robert O'Brien said, "find your niche." Mine was The Steam. But be careful, some people assume thats ALL you do. I did ALOT of Radiant and some snowmelt, even a little solar, but people would still ask.." do you do such and such?" You need to let them know your full range of talents. Thats where a good website comes in. If you do the right thing, you will develop a loyal following, cherish these folks, nurture them, be there on Christmas eve for a No-hEAT, give them some breaks a freebie once in awhile....they'll love it and they EXPECT it! Also, here, don't give away the store. For the first 8 years, I gave EVERYONE the best, USA ONLY, Apollo ball valves et cetera, painted pipes, polished copper, extra supports, (kindorf) commercial-quality work, twin l.w.c.os, extra valves, 2 year warrantys, on a few occasions, I replaced Boilers that were 4 and 5 years old that had manufacturers defects....FREE labor because I "felt bad" for the people...DON'T do this!!!!!! It will send you to the poor house. I even went back 10 years later on a leak - no charge! Don't do THIS! Treat em like Gold, but don't be a fool either.
Good luck, Mad Dog
1. Don't take jobs you know may have great potential to go bad just because it's all you've got.
Jobs for impossible clients or that may otherwise only be resolved with great difficulty will do nothing but take from you.
2. Don't give employees more than they're entitled or have bargained for when times are good because you'll wish you had those resources when they're gone. So will they. But they'll be gone
3. In extraordinarily difficult times, it's ok to dumb down your work just a bit. When people don't have money, they look at nothing but the bottom line. Your picture perfect work costing 50% more than the other guy's is not an option to an unemployed family man. Maintaing your company's productivity is your single goal.
Lessons NOT learned from the recession.
See numbers 1, 2 and 3 above as I seem to forget these points at every opportunity.This post was edited by an admin on February 16, 2013 2:17 PM.
Savor- Savor the service work. No matter how busy you get with large, contract work, make time for service and repair. It's a good fall-back when times are tough. And you learn a lot about bad equipment and systems.
- Spend less on advertising and more effort on getting good reviews on Internet bulletin boards and neighborhood websites.
- Be good to your customers and treat them like family. If you do, they will put you in their will.
- And smile. A smile goes a long way.
We need a "like" button.Lots of very good responses here.
As someone coming from adifferent side of this business as a trainer and consultant.
1. I got somewhat spoiled when I first started out. Classes were full and more work than I could handle went to months without any one coming for training.
2. I added night classes to provide income so I could stay in business. The state licenses classes also helped pay the rent on my building. Looking back I should have bought a building instead of rent.
3. Adding manuals for sale also helped to cover the lack of people signing up for training.
4. You have to find ways to reinvent yourself and not loose hope,
5. Many of the folks I have made friends with in the industry were there for me to encourage me when times were tough. It is important to make friends in what you do not enemies.
6. Having a wife who never lost faith and told me every day "it will be okay we will make it through we always have".
7. Keeping my faith in God is the real answer to all these things. I have to realize that since being downsized from a major utility in 1994, loosing money in the investment world and other financial catastrophes God has always provided. I jokingly say "I have not received a pay check from anyone since 1994".
My three........1 - It doesn't hurt to work at or near break - even cost. I don't do it often, but it does give me the opportunity to show off my knowledge and skills for new clients, and it usually results in repeat business at my price.
2 - The importance of keeping up and staying connected with technology, on all fronts. I fell behind, but I'm catching up; my new tablet is my favorite and most valuable tool.
3 - The value of good communication skills. I've made changes in the way I speak and write, and interact with customers, associates, and employees. I've worked hard to become a better listener, and improve the way I process information.