The Winter of ‘08

This coming winter looks like it will be a rough time for painting contractors. Economic turmoil and the uncertainty of a new President have clients holding tightly to their money. Painting work will likely be tough to come by for many contractors.

I have regularly written, on this blog and elsewhere, of several crucial components to success in the contracting business. Those ideas remain true even in an economic slow down. Those ideas are:

1. Market constantly
2. Develop systems (including marketing systems)
3. Manage cash flow
4. Sell at the right price

In a recession contractors are going to be very tempted to cut prices. This temptation will be even greater if leads are not regular and consistent. Thus the need for constant marketing. If you are not getting sufficient leads and cut prices as a result, you will suffer other consequences. Cash flow will diminish—lower prices means less cash. You will have difficulty raising prices later—you will have a reputation as a cheap painter. Insufficient leads is a symptom. Do not treat it by cutting prices. Treat it by dealing with the disease—lack of marketing.

Systems are crucial to efficient operations and consistent results. Efficiency and consistently have side benefits, such as fewer crises, more free time, and reduced stress. Reducing stress will be important during a recession. Reduced leads and tighter budgets are going to potentially stress even the most successful contractors. Anything you can do to reduce stress—and developing systems is one of the most effective ways—will be beneficial.

Cash flow management is always important. It is more so during tight economic times. Eliminating debt frees up money, reduces expenses, and allows you to build a cushion. Cutting prices will not improve cash flow.

Selling at the right price is never more important than during tough times. During good times jobs can fall into our laps. Often, if we simply show up and offer a fair price the job is ours. But things change during tight times. Customers hold onto their money and spend more time shopping for value. Don’t think that tough times will turn all customers into price shoppers—it won’t. But they will be more cognizant of value, and it is your job to offer and communicate the value you offer.

Tough economic times are a challenge and an opportunity. It is up to each of us whether we allow the challenge to beat us down, or we rise to the occasion and take advantage of the situation.