9 Ways to Recession Proof Your Contracting Business

When times are good, it seems it's all you can do to keep up with demand, but when the economy teeters on the dreaded "R" word people start to panic. Smart business owners will be one step ahead of the pack when recession hits. And no, you don't need a Harvard MBA to recession proof your contracting business. You just need to evaluate, plan, and execute.

What Is a Recession?
In macroeconomic terms, a recession occurs when GDP (Gross Domestic Product) growth is negative for 2 consecutive quarters. Since 1980 there have been a total of 4 recessions in the United States. And while recessions are usually fairly short lived (lasting an average of 17 months), some sectors are hit harder than others. Typically, the housing and construction industries are the first to feel the effects and are often a main forecaster of a recession.

When the economy starts to constrict consumers curtail their spending, leaving businesses with less revenue coming in the door. This leads to layoffs and spending cuts by companies, which can lead to more uneasiness and belt tightening across the board. This vicious cycle can make even the most confident business owner a little jittery. So what can a contractor do?

Form Your Recession Business Plan
First, you need a new game plan. With spending down you may not be able to bring in the amount of new customers that you usually do, but that doesn't mean you have no other revenue generating opportunities. Use these 9 ideas to jumpstart your contracting business:

1. Up Sell Existing Customers: Offer package deals to your current customers or pitch them on sexy new add-ons to their project. Doing a kitchen remodel? Up sell them a new breakfast nook or half bath to go with it.

2. Reduce Costs: Go over your budgets to see where you can save some pennies here and there. Try renegotiating contracts or haggling with suppliers to get some better deals. If they are hurting too, they may do it just to keep your business.

3. Hit Up Old Customers: Now is the perfect time to go to your customer list and call them to see if they need any new work or have some referrals for you. Just ask! You'll be surprised how often it works. And don't be afraid to offer incentives - imagine how much more motivated Mrs. Jones will be to recommend you if there's a $100 gift certificate to that great new restaurant in it for her.

4. Increase Productivity: There is money sitting right there in your office - you just need to squeeze in the right spots. Upgrade your computer system, get better software, and train your employees on new tasks. Getting the most out of your existing operation means more money in your pocket.

5. Look for New Partners: Work your network of colleagues. Subs, realtors, insurance adjusters, inspectors, developers all have a rolodex of people they can call for you. Make it worth their while.

6. Utilize Technology: How much harder was life before email? Keeping in touch with customers and co-workers is now a breeze, and we get so much more accomplished because of it. That is technology at work - lowering costs and increasing productivity. Look for ways new technologies can improve your business - mobile devices in the field, automated bidding and billing, mass marketing. Technology puts all these tools at your fingertips. Use them.

7. Re-evaluate Your Market: Are you targeting high end customers that pay for premium craftsmanship and service, or are your clients more enticed by substantial savings? Make sure you know what your customers want and give it to them. Or maybe it's time to expand and start going after customers you wouldn't normally target.

8. Diversify: If your niche is drying up, it's time to expand your services. Not a lot of roofing work? Branch out into tiling. Home building not paying the bills anymore? Start a remodeling division. Learn new skills. Offer more services. The end result is more clients.

9. Remember Customer Service: I once had a dentist that actually called me at home the night I had work done just to check in to see if I was alright. He already had my money, but here he was at 8:00 at night calling his patients to follow up. Now that is service you don't see anymore! I was so impressed I stayed with him for years even though there were things I didn't like about his practice/location/prices. The lesson - great service equals loyal customers.

Work Your Plan
Now that you have the tools, it's time to get down to work. A good plan is worthless if you don't work it every day. Set aside a certain time to follow up with old customers, and stick to it (8:00 at night sound familiar?). Pick a day every week to focus on new leads. Start an email campaign. Take a class on new software. Learn a new skill. Create a fun referral program. If you work your plan correctly you might not even notice there is a recession out there.