With recession looming here are two successful business strategies for tradespeople
At the end of last week, the Office for National Statistics released figures showing that construction output fell 1.4% in June, halting seven months of continuous growth.?
The decline was largely attributed to a drop in new private housing projects and commercial work. Government stats also raised concerns for the mid-term health of the industry, as fresh orders dropped by 10% between April and June.
The ONS figures were the latest in a series of worrying reports released in the last few weeks. The Federation of Master Builders’ Q2 state of the industry survey illustrated a dramatic 30% fall in new business inquiries - particularly in the repair, maintenance and improvement (RMI) sector.?
With a recession looming, Clive Holland caught up with Craig Wilkinson, founder of Trades Freedom Club to ask what steps tradespeople need to take to prepare their business for volatile times ahead.
?Clive Holland: How do we protect our businesses and make them recession-proof?
Craig Wilkinson: There are two fundamental things that everybody listening to your show needs to implement to safeguard themselves, their families and their assets and the business moving forward.
The first one is protecting your assets.?
Being a sole trader heading into a recession is a dangerous position.
The thing with being a sole trader coming into a potential recession is if somebody further up the chain doesn’t pay, and you don’t get paid, then you are leaving yourself open to your suppliers, and HMRC to come and strip your assets – which is your home.
My advice to sole trader[s] is look at [becoming] a limited company because as a limited company there are certain liabilities that will protect you personally, protect your assets such as your vans and even your home.
Holland: How important is it to engage with clients about rising costs??
Wilkinson: It is important that we are transparent and open with our clients. Most people know that everything is going up price wise.
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But moving forward, with the media whipping up a frenzy about a recession there is no surprise that people, mainly residential customers, are keeping hold of their money.
It is important in your marketing, your terms and conditions and your agreements that you have with our clients [that you] are up front and transparent with our clients and say ‘look, we can only honour quotes for 30 days because things are constantly rising.’
[On] the flip side of that, I believe there are some very savvy customers that are thinking, ‘hang on, if I give the nod on the extension today it is going to cost me ‘x’ amount. But if we go into recession then prices will drop.
And prices from suppliers will reduce because they want the work.
So, I think there are savvy customers out there thinking ‘we’re going to have it done, but we’re going to wait until the recession.’
Holland: Many tradespeople have work booked in 2022 and 2023, how can they protect that pipeline of work?
Wilkinson: The recession will have a negative effect on the amount of work people are getting booked in.?
But I go back to what I did in 2008 – we went limited to protect the asset[s] but the second thing… is to absolutely hammer the hell out of your marketing.?
I can either do what my competitors are doing, which is batter down the hatches, reduce overheads, lay people off, and hope this lot is going to blow over and I can survive. Or adopt another plan, which I see as an opportunity for many, and that is get your marketing absolutely nailed on. Because there are people out there that are still doing to spend during a recession.
In today’s day and age, we’re not just [relying] on word of mouth, SEO and LinkedIn, we’ve got all the social media platforms, such as Facebook, Twitter, LinkedIn, Instagram, TikTok, we’ve got paid ads like Facebook Ads and Google Ads… these are lead magnets.
For me there is no excuse for any tradesperson, not to see this as an opportunity and strike while the iron is hot.
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