How Do Businesses Stay Afloat During Economic Downturns?

The worst economic downturn so far for me was Covid.  What I learned is that my business was cut in half and even if I had to get back on the broom it was ok.  I did go back on the broom, laid off my office admin as I can do the office admin position in my sleep and kept my brand new supervisor whom I just hired in Feb 2020. I did not change my prices, in fact as Covid was winding down I raised my prices.  I knew I had the tools to rebuild my business, it is like muscle memory.  And we did.  

When times are good, you got to keep a level head and spend like you don't have it! I found myself making a massive switch in mindset when I started my own company. When I worked for someone else, I knew every two weeks a paycheque was coming in, now I pretend like every dollar I made was the last dollar I will make. Stock pile that bank account and forget about it. Look at it like "how many months will this keep me going if work stopped today?"

Protect cash before you need it. Review every recurring expense, pause what is not producing results, and build a small reserve during stronger months. A downturn is easier to manage when every dollar already has a purpose.

Tried lowering prices absolutely did not work... I remember a story about 1800 got junk, they were slowly going out of business so the new COO doubled their prices. Everyone was freaking out. But it didn't matter they were going out of business anyways. Guess what it worked... people didn't care about the higher prices. 

Something else came to mind, when things get slow this is a great time to have a look at your sales process and MAKE IT BETTER, add in touch points, increase your communication with your clients, re market to old clients / people that didn't approve a quote / people that came into your system but didn't receive a quote. There are always all kinds of little things you can do to increase business but we don't focus on that stuff when we are busy of course. 

We've chatted about this quite a bit in Breakthrough Academy (business coaching for trades) lately. Most of the conversation has been about figuring out that one sales tactic that really drives your business forward. For a lot of us that's business development. Getting out of the office and shaking some hands.

It felt like we all got used to taking orders from our computers and then things got slow and we were caught hanging and then trying to fix the issue from our computers instead of getting out there and getting our hands dirty. 

We’ve survived COVID, inflation, labor shortages, and slower seasons. The biggest lesson I’ve learned is that resilience isn’t built during the downturn, it’s built long before it.

A few things that have made the biggest difference for us:

• Know your numbers. You can’t make good decisions if you’re flying blind. We review KPIs and cash flow constantly, not just when things get tight.
• Build recurring revenue. Predictable income gives you breathing room. For us, recurring cleaning clients have been the foundation that keeps the business stable.
• Don’t race to the bottom on price. It’s tempting to discount when business slows, but I’d rather communicate value than compete on being the cheapest.
• Invest in client retention. It’s almost always less expensive to keep a great client than to replace one. Exceptional service and consistent communication go a long way.
• Keep marketing. One of the biggest mistakes I see is businesses disappearing when things get slow. The companies that stay visible are often the ones that recover the fastest.

Most importantly, downturns force you to become a better operator. They expose weak systems, unnecessary expenses, and inefficient processes. If you use that time to strengthen your business instead of just trying to survive it, you’ll come out much stronger on the other side.

Economic uncertainty is when the businesses that survive are the ones that focus on the dirt-level basics.

​Here are three real-world strategies that keep a service business resilient when things get tight:

• ​Audit Your Existing Customer Base: It is 5x cheaper to upsell an existing client than to buy a new lead. When new leads slow down, go back to your database. Reach out to past clients with a "preferred customer" offer, or bundle services (like adding a gutter clean to a house wash) to bump up your average ticket size without spending a dime on marketing.
• ​Focus on High-Margin Services: Not all jobs are created equal. When times are tough, look at your numbers and identify which of your services have the absolute highest profit margins and the lowest material costs. Put 80% of your marketing energy into selling just those high-margin services to keep your cash flow healthy.
• ​Plug Every Single Lead Leak: During a slowdown, you cannot afford to waste a single lead. If you aren't using a missed-call auto-text back system, turn one on. If you aren't following up on open quotes within 24 hours, start. Tighten your "speed to lead" so that every single person who shows interest in your business gets a fast, professional response.

​The biggest lesson: Don’t panic and slash your prices. That just devalues your work and kills your margins when you need them most. Instead, focus on over-delivering on service so your customers wouldn't dream of cutting you out of their budget.  YOU ARE WORTH IT!!!