What worked before the Great Recession doesn't work now
A Grand Punch in the Mouth
I’d like to begin with a big shout-out to that noted philosopher, Mr. Michael Tyson, who once said, “Everyone has a plan, ‘til they get punched in the mouth.”
Which made me think about what life was like before the Great Recession. I think about so many of my friends in the business that depended solely on word-of-mouth advertising to get work. They’re talented and were never worried about where that next job would come from. They’d just finish one and then go home and wait for the phone to ring. And it always did!
Until it didn’t.
Many of those friends lost their businesses and turned bitter. They blamed a lot of things for their hard luck – the banks, the government, and cheapskates – but few turned inward and examined their habit of assuming that the good times would always roll. They all had wonderful plans that had always worked out. And then came that grand punch in the mouth.
The Great Recession is slowly working the kinks out of its old bones. It’s getting up and moving on and I’d like to give it a good kick in the gluteus maximus as it departs. It did leave us with some good lessons, though. I’ll give it that.
For us here in the East, The Great Recession packed a carry-on bag and jumped onto Super Storm Sandy last fall. It got out of town in a rush. Today, if you have a truck, tools, and an ounce of sense, you’re working, and you’ll be working for years to come.
Sandy removed nearly 100,000 buildings from Long Island alone, and then there’s New Jersey and Connecticut and all the other places within reach of the ocean that suddenly became a new economic engine. That horrible storm struck deep into the heart of Hydronic Country and most of those buildings that went down had boilers. Replacements are going in so quickly these days that I’ll bet they provide even more work in the years to come as new contractors follow those other contractors who were forced to rush to get the heat on last winter. And that’s especially true of all those steam jobs, where the details matter more so than on hot-water jobs. Lots of steam heat around here. I wonder how many went in correctly.
I asked friends to tell me what business lessons they learned from all of this and their answers tell a story we should both remember for a good long time. You and I never know when this might happen again, so take a moment and listen with me as they speak their minds.
One friend said, “The perception of value changed for the consumer during all of this. Less work means more competitive contractors and lower prices. The customer sees the lowest price as being the best deal. Any higher-bid costs, or add-on alternates, are somehow perceived as having little value and simply cost more. And service work for poorly installed hydronic systems is rising dramatically.”
That came from a contractor who is superb with the tools and even better at marketing. He was less effective as he faced this feeling that the HVAC trade would do just about anything to get the work these days. And since he knows that folks get what they pay for, my friend is looking down the road toward the service business those screwed-up jobs will generate. So much depends on how you see the world, doesn’t it?”
Another wrote, “The goal of your hard work has got to be to get yourself to a position where you could retire at any time. All the material gains you've made can be taken away with the stroke of a pen. I'm not saying you have to retire, just that you be financially able to retire. Work for the sake of work is not a life. Set a goal and work towards that goal.”
And who can find fault with that? A dear Jewish friend once said to me, “I don’t think like most people because I know that everything I have can be taken away from me in an instant. I know this is true because history teaches me that it’s happened before.” That conviction has made him very successful. He takes absolutely nothing for granted. We shouldn’t either.
Another friend mentioned we should, “Find a niche. If you do the same thing as everybody else, you're just a commodity.”
That’s true, so what’s your niche? What do you do that the others don’t do? Can you think of anything? And if you can think of something, are you telling your story well? When customers are supposedly looking only at price, what do you have to say? What’s your niche?
Another contractor wrote, “Don't take jobs you know may have great potential to go bad just because it's all you've got. Jobs for impossible clients, or those that may otherwise only be resolved with great difficulty, will do nothing but take from you.
“Don't give employees more than they're entitled or have bargained for when times are good because you'll wish you had those resources when they're gone. So will they.
“Maintaining your company's productivity is your most-important goal.”
A few other hard-won lessons: “Customers merely want us, but we need them, and that is never truer than when the work slows down. So make sure to be topnotch and on your game at every job. Next, get slim. Your overhead, your bills to your wholesalers, your waistline – no matter what it is, stay slim and out of unnecessary debt because that can make or break a weak budget.
“Finally, remember that there is no such thing as a free lunch. That’s always been true, but during the Great Recession, every transaction reinforced it, which affected everyone. We’re all looking out for Number One.”
The Lovely Marianne and I started our business in 1989, right at the start of a big recession, but who knew. We learned that nagging fear (and occasional terror) can be quite inspirational. I thought of that as I read this note from another friend:
“I started my own company right in the middle of all of this recession stuff, so I don't know anything other than what the business world is right now. Short of having ‘learned’ anything, I do know a few things for certain. First, I love my line of work. It is a hobby that I get paid for. I do so many things for customers without charging them. But when it comes time for that big expensive repair or replacement, my price is never argued. It is not even discussed. You must establish value before you ever talk about price. They are not the same thing. Not even close.
“Next, always be honest, sympathetic and empathetic. I never offer any service that I would not personally choose for my own home. Of course, I want to double my sales figures, but never by taking advantage of a customer. I treat every job like it’s my own. People understand long-term investments, but only if their returns are quick enough to justify the cost. Not every house needs the same system. We provide custom systems, not cookie-cutter sales.
“Finally surround yourself with good people – even competitors. Just as it is with music, art, literature, and sports, being around the best makes you better. Put yourself in an environment that will allow you to succeed, both mentally and physically. Enjoy your loved ones, and stay safe. Be proactive, and prevent mistakes.”
All great advice, especially the part about enjoying your loved ones. Never miss the chance to hug your kids. Like milk, they come with expiration dates.
Finally, there was this wisdom from yet another buddy:
“Quality still sells to those who know it when they see it. And you still need to turn a profit, even when the whole world is urging you to lowball the prices. Oftentimes, those who are pushing the hardest for you to cut your prices are the people who least need the discount.
“Make sure you have a nut squirreled away somewhere. Slow times prove that having savings is far more important than a flashy new truck. Your customers are not impressed by those leather seats and that cruise control; they’re impressed when a hundred-year-old system gets fixed once and for all and they can be comfortable.”
Are you sensing a theme in all of this? Yeah, so am I and it goes well with this other inspirational quote from Mr. Michael Tyson. He said, “As long as we persevere and endure, we can get anything we want.”
Isn’t that comforting?
Well, it’s more comforting than that other quote of his about wanting to rip out your stomach and eat your children.