Whether it’s the rising inflation, gas prices, or “market corrections,” there’s a lot of uncertainty about the future of the American economy. Home improvement and services are often hit hard during negative economic downturns. However, there are best practices you can put in place right now to help soften the blow of any recession or economic snapback.
Takeaways
How to get your finances in order
Becoming more efficient
Leveraging your expertise into new fields
Improving your marketing and branding to meet the need
Get your finances in order
The balance of money moving in and out of your business is what keeps your company moving forward. However, with the hustle and bustle of day-to-day operations, you can lose sight of how things are going from a cash flow perspective. Here are some things to keep in mind when trying to get your cash flow right.
Make sure you’ve gotten paid. Do a little digging and find out if all of your customers’ invoices are paid. If they are not, you’ll need to start recouping any lost cash due to overdue invoices. Use a tool like Hearth Invoices, which you can use to send digital invoices from anywhere. Hearth also sends automated reminders to your customers to pay their invoices so you don’t have to.* Check it out here.
Review all of your existing bills and trim the fat where necessary. No one likes to pay for services or products they’re no longer using. Maybe you forgot to cancel a subscription or service? It’s time to cut it off to save your bank account. The most effective way to slim down your expenses is to renegotiate any contracts you have with distributors or vendors. As a business, no matter the size, you have the ability to negotiate a better deal for your business by offering exclusivity or marketing opportunities.
Lower your debts. Debt is a major contributing factor to business bankruptcies during economic downturns. If your debts become too much, every month you’ll run out of money before you make payroll, pay for basic business expenses, and pay yourself. You might have to keep borrowing and digging a bigger hole for yourself. Avoid this by making sure you quickly clear as many debts as possible.
Build your cash reserves aka save your money. Once you’ve paid your debts it’s time to start saving. Save as much money as you can to give yourself some runway in case your revenue takes any kind of hit,
Get business financing in advance. Although clearing your debts is a big part of success, finding ways to open business lines of credit or securing forms of financing ahead of time can help you keep the lights on during an economic downturn. Or, if a new opportunity opens up for your business, and you don’t have the cash to secure an acquisition or merger, business financing can help you bridge the gap.
Get more efficient
Optimize your inventory. Often, your trade will determine how much product you have to keep on hand to complete your jobs. If you have to rent or buy storage space to keep all of your inventory safe, each square foot of that space that goes misused is money that’s not being used towards your business effectively. Take the time to identify where you may be overpaying for storage or whether you need to hold onto all of your inventory. You can liquidate your inventory by creating special offers for your customers or finding another business that may need the materials.
Automate your processes. The gas price crisis has shown us that the old ways of getting in your truck and driving around appointment to appointment is not sustainable. Even if prices were lower and stable, you’re wasting time driving and not taking care of your business. With tools like online scheduling, automated messenger services, phone services, digital estimates, contracts, and invoices, there are plenty of ways to start streamlining parts of your business today. Hearth offers a suite of digital tools that can help you save time and money.
Leverage your expertise
Diversify your revenue streams. You’re more than likely have other skills you don’t advertise or have employees that have extra skills that you could leverage. Being a specialist is great, but in times of economic uncertainty, finding new ways to generate revenue could help strengthen your position. You likely have the tools to pull off other types of jobs or a small investment in the right tools could unlock other types of business.
Ask your employees. When employees care about the business they work for they feel invested in its growth and potential. Ask some of your top performers places they think the company could become more efficient or benefit from better tools or practices. Compensate them if they bring up any issues that save a considerable amount of money or create significant efficiency.
Improve your marketing and messaging
Don’t stop investing in marketing. The knee-jerk reaction to a recession may be to cut down on your marketing spend. However, finding ways to maintain or even increase your marketing spend could help your business survive a recession. When companies start pulling back their ad spend, your advertising begins to cut through the noise more. As fewer businesses continue to market and spend, your profile will increase.
Lead with community. During hard economic times, members of your community may be more inclined to help a local company with their business rather than a larger brand. Leverage your community connection in your marketing and branding efforts. Statements like “Proudly serving ___ since ___” on your flyers, brochures, or mailers can make a small but effective difference.
Rehash old leads. Calling and setting appointments with older leads can generate thousands of dollars in revenue without having to invest in new leads you’ve already spent on generating. During an economic downturn, homeowners may not have the cash on-hand to get their job started. That’s where offering monthly payment options through Hearth comes in. If you’re not offering financing yet or are paying per-job fees that are eating into your profits, check out Hearth today.
No matter what happens with the economy, Hearth will be there to help businesses protect their profits and build stronger companies with the right tools to win more jobs and simplify your business. To learn more about how Hearth can help your business succeed, click the link below.
* Pro and Elite members get automated reminders for invoices
