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Planning in Uncertain Economic Times by Linda Case

Planning in Uncertain Economic Times by Linda Case

In September of 1930, at the start of the Great Depression, business people and politicians gathered in Cape Charles, Va. to perform a mock burial. Caskets containing “Old Man Business Depression,” his wife “Mrs. Pessimism” and his daughter “Miss Misfortune” were unceremoniously dumped in a watery grave in the Chesapeake Bay. Unfortunately, while temporarily lifting the spirits of the onlookers, this act did nothing to end those troubled times.

Here we are in the Great Recession. We can do all the burying we want, but none of us – including our government – has an economic crystal ball. So how can we plan 2010 effectively?

I’ve got some ideas – but remember that all consultants have their biases. I tend to be conservative and value safety and security over big risks that lead to big wins or watery graves. My guts tell me that we’ll have a very slow, somewhat rocky recovery and that in the 5 year time frame we won’t see a rebound to anywhere near our 2006 levels. Maybe by 10 years out, we will see a significant loosening of the consumer’s purse and credit availability. So I would plan very carefully, with multiple scenarios and would be predicting a 2010 much like 2009 with a 5-10% loosening of leads and sales. Because of the uncertainty, I would focus on short term planning and make monitoring and updating those plans my best weapon in such uncertainty.

I’ve just come from a meeting of 30 of our clients, who tend to be top remodelers, and while this won’t be a scientific survey it may help you in planning. They come from all over North America.

  • 5-8% are doing well, have enough work, have some backlog of unstarted work. A number of those are in Canada where the recession has been milder. Most are working harder than ever with fewer leads, a poorer closing ratio (1 out of 8 vs. 1 out of 5), and smaller job sizes.
  • All of the remodelers now recognize that marketing must be a critical component of running their businesses. While it used to be a matter of pride to say “all my leads come from referrals,” that referral base today cannot support the company. While marketing expenditures of 1-2% were common, it now takes 5-6% of your projected volume to deliver a marketing plan that will support your downsized company.
  • Marketing that works includes making clients deliriously happy with your work and substantiating that with third party surveying – that’s your base. It also includes marketing back to your referral base six times a year with a variety pack of communications, events and programs. Climbing high on the marketing hit parade is belly-to-belly marketing where you and your staff work in key organizations in your community, where you create your own networking group that agrees to exchange leads between top quality companies, and having your “elevator” speech ready about your company and being out-front but not obnoxious about letting everyone (yes, everyone) know what you do. Meantime you’ve got to be upgrading your website and optimizing how high it appears on search engines. Online newsletters still appear to be effective but you need to have gathered e-mail addresses for your database.
  • Marketing outreaches that are much much weaker now include newsletters, postcards, virtually any mass mailing. I’m still not a fan of yellow pages except for phone listings (though more and more folks are using their phones and online to get listings). Yellow pages do work for trade contractors and specialty companies. Magazine ads usually do not work and newspaper ads are expensive and usually a bust. The jury is still out for pay-per-click on search engines and usually that would be a tactic only for a multi-million dollar remodeler.

So get planning and involve your staff – the bigger the brain trust, the better. It should be an exciting ride. Next month, I’ll give you some strategic planning tips so you can start with a bang. Maybe a quiet bang, but a bang.

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