At the start of the 2019-20 season, no one could have predicted we would face a global pandemic and the uncertainty it has brought to our businesses and futures. Financial uncertainty for any business can be very difficult to navigate successfully. Uncertainty creates many causes and effects that get the business moving in directions and at speeds it never has before. Following are some fundamentals for you and your management team to stay focused on until our business cycles return to a more ordinary condition.
Verify services before delivery
Verify the existing snow and ice management contracts you have in place. The pandemic will likely cause property managers to reassess budgets – now is the time for you to tout the importance of the service you provide. If budget cuts will impact your contracts, work with your clients to adjust the level of service expectations and corresponding scope of work.
The only thing worse than not having the sales you expected is delivering services to someone that either doesn’t intend, or have the means, to pay you. Otherwise, you will continue to spend money on something that will not generate income for your business.
Keep a close eye on job costs
While this should be a fundamental operating value at all times, in times like this – when margins and sales are likely going to be less than originally forecasted – it’s critical that you know you’re not spending more than your business can handle to deliver a product or service.
You can always do more for a customer, but overdoing isn’t a standard I’d have in place right now, no matter how healthy your business or your clients’ businesses appear. Take the time now to explore all areas of your company to uncover potential cost savings and efficiencies.
Protect cash flow
Again, these are fundamentals that you should pay attention to all the time but it is paramount that this remains one of your top priorities during this cycle of uncertainty. Letting receivables go beyond a very conservative level without communication with the customer is foolish. You don’t know what’s changing on their end without having these conversations.
As far as cash flow goes, keeping your receivables tight and asking for whatever terms you can on your payables is simply good practice. If a vendor is willing to give you extended terms, take them whether you think you need them or not. You will still have the cash on hand when you believe you’re over the hump, and you can pay something sooner than expected. Many manufacturers are providing zero-interest loans on equipment with no payments from three to six months from delivery. If opportunities like this are presented to you, take the favorable terms – even if you have the cash.
Continue sales and marketing
Sales and marketing budgets are usually the first place we look to cut expenses in times of uncertainty, but reducing your spend in these areas is not in your best interest. It is important to keep up with your normal sales and marketing practices, even if it may seem difficult. Many providers will not sustain in this business environment. Keep your company prepared to fulfill new customers’ needs, as this is a time of opportunity.
In addition to the typical sales and marketing methods you use to grow your business, keep your ears open for smaller competitors who are in trouble. Acquisition in a time of financial unrest is quite common and is going on in large segments of America’s economy. Overleveraged, undercapitalized businesses will likely fail in this cycle. If your balance sheet can withstand capitalization, there will likely be good opportunities for those positioned to acquire great people and new customers.
Focus on the short term for now
Delay any long-term plans that require capital outlays. Let the fog clear as the likelihood of something having to be done sooner rather than later is slim. But with that said, 2021 isn’t far away and this crisis is going to pass. Stay prepared and focused so when the coast is clearer, you’re ready to surge ahead with the demand that will ultimately return. I wish everyone in our industry, those that support it, and their families continued good health, and a speedy return to success.
Mike Rorie has been a participant in the snow and ice industry for nearly four decades. He owns GroundSystems, and is CEO of GIS Dynamics, parent company to Go iLawn and Go iPave. Contact him at Sales@gisdynamics.com.