How to prep your business for a potential economic slowdown
Amid continued inflation, concerns about a possible recession have many worried about the future of the economy. As a business owner, you’re likely wondering how your enterprise can weather the potential storm.
It’s easy to get caught up in the doom and gloom of speculation about the possibilities of an economic downturn, but don’t let hearsay distract you from the realities of the market. To help keep your business on track, take a moment to prioritize and focus on what you can control.
Get a reality check
Regardless of what changes are on the horizon, the home improvement market is still in pretty good shape. Year-over-year expenditures for homeowner improvements and maintenance are only expected to decline by a modest 2.8% through the first quarter of 2024.
Keep in mind, spending is still expected to reach $458 billion in the coming year. What’s more, the increase in homes that have received permits for remodeling projects and federal incentives for energy-efficient upgrades may bolster spending as well. All of this points to a potentially positive near-term future for home improvement professionals, possibly making it a good time to bolster your business against a potential downturn.
Don't assume your customers will disappear
A recession affects everyone differently. Just because the economy may slow, doesn’t mean some homeowners won’t forge ahead with necessary and desired projects. In 2022, just 1% of homeowners canceled their remodeling plans, even as home sales dropped and interest rates rose.
Critical updates and repairs like electrical work, plumbing and HVAC work still need to get done — even when money is tight. In fact, as homeowners hold off on selling and upgrading in light of climbing mortgage rates, replacement projects like roofing systems and equipment could become more pressing. The median age of a home in the U.S. is 39 years old. An aging home is one that could be ripe for upgrades and repairs.
Consider focusing on cost-effective renovations, such as energy-efficient upgrades, that may help customers save in the long run. It could also be a good time to sell projects that maximize resale value.
The sooner you start getting ready for a possible recession, the better you may be able to equip yourself if business slows. To start, you could closely analyze your expenses so you know what costs you can cut if needed.
Consider a competitor analysis. This closer look at what other businesses are offering may be a helpful tool when looking for ways to improve your own business. Find out how your rates stack up against your competitors and consider how your business can add extra services to your work. That might mean diving into new energy efficiency updates or getting smart about more sustainable home improvement solutions. Look for holes in the market where you and your business can fill the gap.
Many homeowners opt for the DIY route for home improvement when they’re trying to save. As a home professional, you know that despite their best intentions, DIYers could make costly mistakes that might quickly derail a project. Show your value by reminding them of the three Ts: time, tools and talent. These three essential elements could make your services more desirable and indispensable.
When customers tighten their belts, price and value become more important than ever. By offering flexible financing options, you could help customers get a professional job done within their budget.
Keep calm and build on
An economic downturn doesn’t have to derail your home improvement business. Protect your company against whatever challenges lie ahead by doubling down on your priorities now. These simple strategies, could help you take on financial challenges with confidence.
As of January 1, 2023, the U.S. moved from the seasonal energy efficiency ratio (aka SEER) to SEER2, a new standard for measuring energy efficiency for new HVAC systems. That means all new products now require SEER2 testing in order to be manufactured and sold.
From small weekend projects to complete makeovers, extra time at home has inspired countless renovations and continues to boost the home improvement market. Although comfort, functionality and style may be driving this surge, adding value to their homes is always top of mind for homeowners.
It’s been a tumultuous couple of years for business owners, particularly those in home improvement. In addition to labor and supply shortages and ongoing inflation, concerns about a looming recession continue to swirl.