There’s a good chance you’re feeling the effects of the downturn in our economy. Some have decided not to participate and are taking measures to minimize the effects on their companies. Here are some things you can do to help you stay on top.
1. Invest in Guerilla Marketing — Reduce your traditional marketing expenditures like Yellow Pages, newspaper, TV, radio, etc. by 30- 50%, and learn how to deploy guerilla marketing tactics that require little or no money, but can produce outstanding results.
Jay Conrad Levinson, the grandaddy of guerilla marketing has written a number of books on the topic. Go to www.gmarketing.com for hundreds of marketing tips, articles and more.
2. Raise Your Prices — While it may seem counter-intuitive to raise prices during a down economy, research has shown that customers rarely balk at small increases in service and replacement pricing. Contractors who increase prices by 5 to 10% have less attrition than they expect. The overall net effect is higher profits with less work. Be sure to add some extra value that costs you little but makes a big impact.
3. Increase Your Average Ticket Price — Your overall net profit will increase because you don’t have incremental sales costs. You also have little or no added costs for fuel, travel time, setting up the work, etc.
Your service techs can sell safety and/or efficiency testing, low level CO monitors, and other add-on products that increase system efficiency, performance, and life expectancy. On replacement work, sell add-ons like duct renovations, accessories, IAQ products, etc.
4. Differentiate Your Product Offering — Consumers are more careful than ever with their disposable income. Energy efficiency is on everyone’s minds. Why not differentiate yourself from your competition (who are selling SEER and AFUE ratings) by offering delivered efficiency of the installed system? This takes a little more effort, but the returns can be huge – and it puts you in a different market with less competition, and higher gross profit margins.
5. Re-evaluate Your Training Budget — One common mistake during tough times is to cut or freeze training. The smarter move is to evaluate the kind of training you’re investing in and the return on that training investment. Will it bring you more business or significantly reduce costs? Will the training give you a competitive edge? Be sure to look at real costs. Cheap training may seem better than no training, but is it? The reality is training fees are the smallest part of your real training costs. Payroll and nonbillable hours are the real costs of training.
So choose carefully.
6. Cut Unnecessary Perks — Take a hard look at nice-to-have benefits that aren’t tied directly to making the company money or saving the company money. This might include club memberships, employee perks, etc.
7. Re-evaluate Fixed Overhead — Are your fixed overhead expenses higher than they should be? Are there services you’re paying for that you’re not using? Included in this evaluation should be insurance, phone systems, leases, monthly rental fees, etc.
8. Take Advantage of Discounts and Get More Down — Many vendors give early pay discounts. Consider getting more down so you can pay vendors early. If you’re not getting at least down from your customers, now is the time to ask for it. Most customers will just comply if it’s done in a matter of fact way. Also be sure to get paid on completion.
The same goes for service work. If you’re not already doing so, make sure your techs are collecting upon completion. Avoid taking credit cards whenever possible — that extra 2.5 to 3.5% adds up. If a customer wants to use a credit card, offer 1% discount for cash.
9. Keep a Positive Attitude — It’s easy to get negative during tough times. If you’ve taken steps to tighten things up, don’t continue to beat yourself up. Look for the silver lining. These steps will make your company leaner and meaner, and some of these habits will carry forward even when times are better.
Be sure to emanate a positive feeling when dealing with employees and customers. A positive mental attitude will help you personally get through and reduce your stress. So take a deep breath and take action. If you implement even a few of these tips, you’ll begin to reap the benefits right away.
Dominick Guarino is chairman & CEO of National Comfort Institute, (www.nationalcomfortinstitute.com) a national training and certification organization teaching air diagnostics and balancing, carbon monoxide safety, combustion analysis and tuning, performancebased selling, and more. Email him at email@example.com or call NCI at 800/633-7058.