How To Survive the Next Recession As a Local Service Business

It’s the nature of the economy to be cyclical – it’s a matter of WHEN and not IF that a recession will happen.

Given that the economy has been expanding for a while, many experts predict that there will be a contraction in the not-too-distant future.

In fact, nearly half of U.S. CFOs believe that the nation’s economy will head into recession by the end of 2019 and 82 percent believe that a recession will have begun by the end of 2020.

As a local service provider, the health of your business is largely dependent on the economy. For example, when consumers have less disposable income, they put home improvement projects or non-urgent repairs on hold (duct tape, anyone?).

In order to ride out the next recession, you need to plan to survive and prepare to grow. There are opportunities during recessions if you set your business up for success.

Here’s what you can do to recession-proof your local service business:

1. Focus On Cash Flow

Cash flow is king and also one of the biggest concerns that keep business owners up at night.

Don’t wait till money gets tight before you scramble to improve your cash flow. Start implementing strategies that’ll help you increase cash flow now and make them part of your operating procedures:

  • Sell or retire excess and obsolete equipment.
  • Require a deposit to be made on large projects that take longer to complete or require you to outlay more cash.
  • For some B2B customers that can’t enter into a contract with an initial deposit, negotiate payment terms so you get paid in installments as work is being completed.
  • Incentivize your customers to pay quickly by offering a discount or penalizing late payment.
  • Consider a subscription model if your services are recurring in nature (e.g., landscaping, housecleaning).
  • Review your loans to see if you can renegotiate interest rates.

2. Cut Expenses

Increasing revenue is important but so is managing your expenses – which are the two sides of the same coin when it comes to your profit margin.

Make it a habit to review your expenses regularly so you’re not spending money on products and services that you no longer need. The better you’re at managing expenses, the less pressure you’ll be under during lean times. Here are a few tips:

  • Evaluate your operating costs such as staffing, rent, and utilities to see where you can trim the fat.
  • Adjust vehicle expenses – e.g., by using vehicles that consume less fuel.
  • Monitor supply cost and renegotiate when necessary.
  • Keep an eye on the advertising expenses to make sure you’re spending your budget wisely and optimizing the ROI.
  • Keep an eye on your insurance rate and insurance requirements so you can shop around for the best deal.

3. Minimize Fixed Cost

Overhead cost can be a big burden when business is slow and every penny spent can impact your bottom line.

Look for opportunities to minimize your fixed costs while turning as much spending into variable costs as possible so if you aren’t generating revenue, you don’t have to pay for the expenses. For example:

  • Review all your recurring expenses to see if they’re necessary or priced reasonably.
  • Brainstorm with your employees – they can offer different perspectives that could help you cut unnecessary spending.
  • Consider a pay-per-lead marketing service so you don’t have to pay a fixed monthly fee if you aren’t getting as many leads, which is normal during a recession.
  • Consider cloud-services (e.g., for bookkeeping, invoicing, scheduling, etc.), which allow you to purchase as much capacity as you need without paying a big upfront investment.

4. Plan For Different Scenarios

While you shouldn’t be pessimistic about the future, you should also make plans for various scenarios that could impact the financial health of your business so you can put the necessary measures in place to mitigate the impact. For example:

  • Expect more customers to pay their bills much later or fail to pay them at all.
  • Have a process in place and be proactive about collecting for late payments, particularly from B2B customers. Squeaky wheels get oiled until the oil runs out – be the first in line to get paid!
  • Plan to readjust your expenses and staffing. For example, you may choose to move to a smaller space and let go of some employees. You should identify the best team members who are pulling their weight and make an effort to keep them.
  • Put away some money every month. Businesses should have at least 6 months of operating cash in the bank to help ride out any rough patch.
  • Consider putting your business up for sale while the market is strong if you’re thinking of retiring in the next five years.

5. Start Marketing Now

When the recession hits, lead volume will decrease and competition will increase. As more service providers will be competing on price, you need to stand out by offering something in addition to great pricing. Start differentiating your business now by carving out a unique positioning.

Online marketing, such as SEO and content marketing, often takes a few months to gain traction. Don’t wait until your leads dry up before scrambling to figure out how to market your business!

Start trying out different marketing methods. Get leads from multiple channels and learn how to generate the best results now while cash is less scarce.

Keep in mind that marketing helps you stay on your prospects’ radar and build trust with them. It’s an investment that’ll pay off in the long run, so take on this upfront cost while you have the cash.

Here are a few things you should be doing right away:

  • Establish an online presence and increase credibility with high-quality marketing materials, such as a lead-generating website and videos.
  • Optimize your website content and use online ads to help you get found by prospects, drive traffic to your website, and improve your SEO.
  • Get great customer reviews on third-party review sites and social media, such as Google, Facebook, Yelp, and the Better Business Bureau (BBB).
  • Grow your email list with high-quality prospects and existing customers so you can stay top of mind and cultivate trust.
  • Experiment with local email marketing and text message marketing. These strategies require low initial investment and can yield high ROI when done right. To increase their effectiveness, start building your list now to accumulate thousands of local contacts that’ll keep you busy over a year or two so you can ride out the recession.


“The darkest hour is just before dawn.” During a recession, competitors that don’t make the cut go out of business. When the economy emerges from a recession, service providers that survive can expect faster growth and more profits thanks to an increase in demand and less competition.

If you set yourself up to ride out the recession, you can bank on making the most of the recovery!

This means you need to be marketing and stay top on mind during a recession. Keep in mind that the number of leads will decline in a recession and you can eliminate high fixed cost SEO by using a pay-per-lead, performance-based marketing service to keep your spending in check.

Start now and set yourself up for success. Once things slow down, it could be too late to pick up the momentum. Check out 99 Calls see how our exclusive lead generation can help your local service area business grow.

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