How to navigate a recession

A recession is officially here and that’s unsettling for business owners. However, business coach Graeme Owen says it’s possible not only to survive, but to thrive, in a recession. Read on for his top tips on how to do that!

So, it’s officially here – recession! And you, like most business owners, are a bit worried, wondering what you need to do to get enough work to survive. Am I right? 

Well, don’t panic – take action! In a recession, construction businesses face a changing set of circumstances as clients’ buying habits change. There is less available money, jobs get cancelled, and some builders go bust. Does that mean you should close up shop? No, not at all! But there will be changes.   

Most likely you are similar to the builders I know – resourceful and able to handle unexpected circumstances. Things happen in a build that no one can predict, but you handle them with ease! So, why not simply think of a recession as just another unplanned-for event? Unleash your problem-solving abilities and find your way through. You may even discover ways to thrive. 

One crucial thing is to master a new set of sales skills that are specifically tailored to the demands of a downturn. In this article, we will explore some of the essential skills you can implement to not only survive, but to thrive. By honing these skills, you will be better positioned to meet the changing market dynamics and secure a steady stream of sales. 

1. Be strategic in targeting your marketing

Effective prospecting is vital during a recession. You need to identify and prioritise those target markets that have a higher likelihood of generating sales. You need to find people who are less affected by recession and focus on directing your marketing to these potential clients. 

Develop a good understanding of your target market’s pain points. Remember, they may not be the same as your own pain points, or even of the people with whom you socialise, so you will need to research their needs and budgets. Then, tailor your marketing and sales process to present customised solutions that resonate with these specific audiences. 

2. Value base your selling

In a recession, if you are still generating leads from the same sector of the population as you were in previous years, then you are likely to notice an increase in price sensitivity. 

Unfortunately, many builders don’t know how to accommodate price-sensitive people. Sometimes they drive them away by emphasising how much costs are rising, or they go too far the other way, and risk their own business’ security by getting into a discounting war with another builder, where everyone loses! 

What you need to do is shift your sales approach from price-driven to value-driven. Emphasise the long-term benefits of your service and the return on investment that quality construction and craftsmanship can provide. And tell them about your guarantee. 

If possible, clearly outline your unique value propositions. It might be the energy efficiency of your plans, your sustainable building practices, or the durability of the materials you use. It may be your superior customer experience during the build and your follow-up service afterwards. 

The thing is, when you demonstrate the value of what you offer, you help your potential client to see beyond the short-term costs and appreciate the long-term advantages of your solutions.

3. Build trusting relationships

Trust is paramount during challenging economic times, so focus on building strong relationships with potential clients. Be polite, reliable and transparent. Demonstrate your expertise by providing testimonials. Or, better still, show them your previous work and present some case studies that highlight how you have achieved satisfied clients. 

Actively listen to your clients’ concerns and address those concerns proactively, especially during your early encounters. 

For example, in the early stages of meeting with your prospective client, you might say: “Some of our clients have been concerned that their building costs will blow their budget. While it’s true that building a home does take a long time and some input costs cannot be fully guaranteed, be assured that we go through the plans and price everything listed in the specifications. We take great care in including everything. 

“Also, if you wish, we will give you the opportunity to pre-purchase many of your building materials, so that you can lock in the current prices. 

“However, if something completely unexpected does arise, we will inform you immediately and work with you to find the best way forward. 

“At no time will you incur any additional cost without your full agreement.”  

By nurturing trust and fostering open communication, you can develop long-lasting relationships that lead to referrals and, possibly, repeat business.

4. Adapt your negotiation skills

During a recession, negotiation skills become vital in securing favourable deals. You may need to be flexible and willing to explore alternative options to accommodate your clients’ budgets. You may need to reduce the scope of a build or renovation, but do so without compromising profitability. 

Focus on win-win outcomes and creative solutions that satisfy both parties. Understand the value of any ’sweeteners’ you are offering and be prepared to justify your pricing, while at the same time being open to reasonable compromises. By mastering your negotiation skills, you will better navigate the tougher economic conditions, while still gaining mutually beneficial agreements.

Conclusion

In a recessionary environment, sales skills play a crucial role to the success of most building companies. By strategically prospecting and targeting specific markets, shifting to value-based selling, building trust and relationships, effectively handling objections, and adapting your negotiation techniques, you can better position yourself for success. 

Furthermore, by making changes early and continuously honing your sales abilities, (and allowing time to learn), you will more confidently navigate the challenges that recession brings. 

You may even not simply survive – but thrive.   

 

Graeme Owen is a builders’ business coach at thesuccessfulbuilder.com. Since 2006, he has helped builders throughout New Zealand get off the tools, make decent money, and get more time in their lives. Grab a copy of his free book: The 15 Minute Sales Call Guaranteed To Increase Your Conversion Rate or join Trademates and connect with builders who are scaling too.