When Business Is Slow
Here are a few essential elements I would include in any plan to maintain a profitable service and repair business:
- Find additional ways to generate new business.
- Seek business from past/current customers.
- Keep technicians busy with revenue-producing work.
- Reduce costs to keep acceptable net profits.
Let’s look at these goals one at a time and select actions that would assist your business before slow times actually arrive.
Advertising For New Business: Generating new business takes some initiative and, occasionally, a financial investment. The good times are the best times to advertise. Waiting until you need business right now means arbitrarily advertising in anything from newspapers to billboards — exactly at a time when you need to conserve your finances.
By planning ahead, you can determine what will work for you. Talk to other business people in your trade association and find out what they have used successfully. Naturally, some local business owners may be reluctant to reveal what they consider to be their marketing secrets. I’d suggest the following: Avoid spot trials of different advertising, hoping to score big on a single ad or short run of advertisements.
People listening to the radio, for example, tend to act quickly on what they hear because products and services offered require an immediate or “impulse” decision. But unless the listener needs the service and repair work right then, they are not likely to call your business.
On the other hand, we have used radio successfully by using a long-run attempt to build our name recognition and reputation. This type of advertising represents a sizeable investment and focuses on future business instead of immediate business.
We know that advertising works because we track the cost of each ad and measure its effectiveness. Tracking Yellow Pages ads can determine which books produce revenue for us and which don’t. You cannot afford to pay for advertising that costs you more than it produces. So if we don’t receive a rate that allows us to make money on the ad, we drop it.
Generally, your advertising should be part of an organized plan, not something thrown together in an attempt to quickly produce business. And you must plan those advertising efforts now if you want to increase business during slow times. When competition gets fierce, it’s too late.
It can be helpful to get some professional assistance in constructing an advertising campaign — someone other than an inexperienced media or Yellow Pages salesperson. However, if your company’s resources are limited, forget it. Try one of the other methods I mention.
Business From Past Customers: Contacting former customers is usually money well spent. We send letters and postcards to customers who have done business with us within the past two years. Some describe seasonal services we recommend; some announce new services we now offer; some tell customers about unique benefits of doing business with us; and we may include a special from time to time. These mailings are cost effective because they are directed at customers who know about our company, have been satisfied with our service and are likely to call us again.
Direct mail campaigns to the right audience can be very effective, but be careful. You can spend an inordinate amount of money contacting people by mail, and most of that mail is discarded as “junk mail.” For that reason we rarely use direct mail to contact the general public, only our customers.
Another twist on contacting past customers is to solicit referrals. In response, your satisfied customer can refer others to your business. We usually give the referring customer a coupon for a pizza, reduced price on future work or even send flowers. The result: They don’t think they are getting paid for recommending us, and they appreciate our thoughtfulness.
Keep Technicians Busy: During slow times, technicians become disgruntled. Some of your best technicians may even leave. This is why you need to have something for them to do during slow times. You need something that will make a valuable contribution to your business. I’ve got two words — service agreements.
Slow times are the best times to schedule “free” annual inspections. It’s one of the benefits a customer receives for having a service agreement. Here’s an overview of how they work:
The service agreement customer pays a fee ($49-$79), and receives a discount on service and repair work — plus the annual inspection. These inspections invariably produce business. Few homes are in such good condition that there are no leaky faucets, running toilets or other items in need of repair. Our technicians even find leaking gas or other hazards. A rough estimate of between half and three-quarters of the service agreement inspection calls produce genuine, honest, needed service and repair work.
Conducting these inspections during slow times is a perfect way to increase sales. The technicians are not busy so the inspections won’t take away from other work. And because the technician is already there, the work performed is lower-priced. If you don’t have a service agreement program, you are not preparing for slow times.
Cut Costs: When I speak to most business owners, they believe their costs are reduced as much as they can be in order to save money. However, this isn’t the case. Here are some cost-saving tips I’d suggest:
Inventory control seems to be a weak spot for many businesses. Materials and tools vanish without a trace. Some businesses use their valuable space for parts so out of date, they are never going to be sold. Throw them out. Just like we track our advertising expenditures, we track our inventory. All parts must be assigned to a technician’s truck or sold as part of a job, as indicated on the invoice. If the parts aren’t there, the technician is responsible for them. As a result, we don’t lose inventory.
We also keep track of invoices with control numbers. Hold technicians accountable for every one. Wait until the first time you find out a technician did some “moonlighting,” using your invoice and keeping the money. Why take a chance?
Truck expenses can mount rapidly if no one assumes responsibility for routine maintenance. Waiting until the truck quits is an expensive way to address maintenance — especially if it quits on the way to a service call. Our technicians are responsible for monitoring the condition of their trucks and scheduling routine maintenance.
By combining these elements, you will be in good shape to get through any slow times. But the plan must be formed and implemented during good times in order to work. Just like the squirrels store food in the fall for the lean winter months, you have to be prepared. Taking some last-minute actions when hard times hit may not carry you through.
And if you never have slow times, look at all the additional profits you’ll enjoy. Either way, you win.