Why tread water in a slow economy when you could increase profits today?
During these tough economic times, many electrical contractors in the residential service business — much like professionals in other industries — are simply hanging on until things turn around. But what if you could actually grow your business now, instead of only treading water?
On the residential services side of the business, my firm maintained double-digit profitability in 2008 with more than 70% growth in sales. In fact, we’ve already exceeded last year’s sales through February by 20%. Our minimum goal for this year is to increase sales by 9%; however, our target is to gain 10% on top of that. I believe we can achieve this goal in spite of the gloomy market forecast for several reasons: 1) We practice the fundamentals; 2) we are marketing harder now than ever before to build our brand; and 3) we track our numbers daily.
Here are five tips you can use to help grow your business in this dismal economy. This isn’t crystal ball stuff — it’s what we do every day.
1. Track your numbers.
Once we started departmentalizing our business between commercial and residential, we started really tracking the numbers. There is a lot of risk with new construction you can’t actually manage, such as delays in client decisions or dependence on other trades for completion. It’s difficult to get in and out on a timely basis so you can make money.
If you don’t departmentalize your business, you don’t really know what’s making you money and what’s costing you money. Our top three performance indicators are: 1) Number of calls coming in; 2) closing percentage on those calls; and 3) average ticket values. Amazingly, from January 2008 through January 2009, we were within five calls a month to the budget we designed.
2. Market more than ever.
One reason for our consistent sales performance is that we plan our marketing efforts to achieve the number of calls we need. We are much more proactive now than we have ever been — and we haven’t cut back on our marketing. In fact, times like these provide an opportunity because most competitors are cutting back. This is a chance to really build the brand. Then, when the economy turns around, our brand will have won greater market awareness.
We don’t just throw our money at marketing, and hope it sticks. We track our leads monthly and adjust our budget accordingly. It can be tough to know if marketing tools are working in this economy, so it does take some perseverance. Nevertheless, we tweak proven tools that aren’t working as well, and we’re always looking for new ideas.
3. Think like a customer.
Our customers are constantly being pounded with negative media messages about the economy. Of course, they are tightening their purse strings. However, what’s important to realize is that sometimes a small repair now can head off a major expensive problem later. The last thing we want is a customer calling us back to repair something that we walked right past when we were there. It’s our job to evaluate their systems to prevent serious breakdowns and advise on cost-effective prevention.
Life safety devices, such as smoke detectors, arc fault breakers, and ground fault receptacles, weren’t available when the majority of houses were built years ago. We are the electrical experts; therefore, we should educate our customers on what’s available and how these products could save a life. The customer doesn’t have to rewire the whole house and spend a fortune, but if life safety devices are required on new homes these days, it’s even more important to retrofit an older structure.
4. Find your strength, and train on it.
Our business model succeeds partly because our highly knowledgeable technical staff is also trained to provide impeccable customer service and professional consultation. That is our strength, but it is a whole new way of thinking for an electrician. Electricians are generally trained to think in terms of production on a job — how much line was pulled, how many boxes installed, etc.
Changing that mindset in my business was a challenge; however, we kept at it through constant training and paying attention to customer feedback. We train several times a week on technical as well as communication skills. We practice our systems and even use online courses provided by the franchise system, which allows our employees to repeat essential training without the cost of travel or tuition.
5. Stay in tune with your industry.
Talk with other owners nationwide about the issues and opportunities they face every day. Trade associations and business development organizations can offer similar benefits. There’s nothing like being able to hash out an issue with someone who has been there or is dealing with the same situation. We can learn quite a bit from listening to our peers.
It’s reassuring to know that even in tough economic times, there are proactive steps, such as those outlined above, you can take to build a stronger business. When the economy turns around — and it will — you’ll be one of the few left standing, ready to capitalize on pent-up demand.
Murdy owns the Mister Sparky franchise serving Nassau County on Long Island, N.Y. He can be reached at email@example.com.