Planning for a Recession as a Home Service Entrepreneur in 2022
It isn’t a secret that we are entering into a recession. According to this article from NPR the economy shrank by 1.4% in the first quarter of 2022. As a home service business owner there are things that you can do to hedge against the recession instead of sitting back and allowing the recession to take you by “surprise”.
In this article we are going to discuss the impact that the recession will have on your small business and what you can do about it.
The impact of a recession on your home service business
First let us take a look at the impact that a recession has on your business.
When times are good, leads are plentiful because consumers have excess cash to spend on what we call “want” services. According to this article from Chron, when there is a downturn in the economy, consumers stop spending their money on those “want” services in order to reserve cash.
Think about yourself in the last recession for a minute. The windows can wait to be cleaned, we will build that new patio next year, and you definitely waited to have the garage floor coated.
During good economic times you also have more competition popping up to service the plentiful amount of consumers. When a recession takes place those competitors still exist and now you are all competing for a dwindling amount of leads.
How to prepare for a recession
So what can you do as a home service company to prepare for a recession? Let’s start with talking about finances.
Cash is king during a recession so SAVE, SAVE, SAVE when times are good.
Companies that are buried in debt payments will find it difficult to survive a recession when they have to lay off staff and those trucks you’re paying on are sitting idle not producing income.
And remember all of those new competitors? They are going to begin dwindling away as time goes by. The companies that have cash reserves will have no problem covering their overhead during the recession.
You will also have a knee jerk reaction to begin cutting expenses, that is okay as long as they are the right expenses.
Business owners tend to lean toward cutting their marketing and advertising budgets as well as laying off employees right away.
It is imperative to continue marketing during a recession. If you need help creating a marketing calendar check out this video.
There are still customers looking for services during the recession and you need their money!
Find other ways to trim the fat like not buying the expensive drinks for the office, waiting to get new uniforms, and washing the company trucks yourself.
Can any good come to a home service business from a recession?
Recessions are not all bad though.
Let’s take a look at the positives that can come from hard times. Companies that were not prepared will have to close their doors leaving room for you to scoop up their clientele and buy their equipment at a great price.
When the economy recovers you, because you were prepared, will find yourself flush with business and stacking cash again.
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