Tips on Recession Proofing Your Pool Business
I have some real concerns about where we are heading with the shelter in place or stay at home orders. I’m not talking about whether they should be lifted or not, I don’t want to be going there. What I’m worried about is the economy and where we are going to end up when this is all said and done. I’m afraid this may go beyond a recession. Still, recession planning is what may save your ass.
Bloomberg is reporting a current unemployment rate of 17% with James Bullard predicting that it may reach 30% in the second quarter. So, sometime before the end of June? How the f**k do you come back from something like that? I mean, it is without a doubt directly related to the coronavirus shutdowns. Again, I don’t want to get into whether or not “quarantine” is warranted. Just where this is likely to head. But, truth be told, the longer these ordinances are in place, the worse the outcome of the U.S. economy.
The highest U.S. unemployment rate was 24.9% in 1933 during the Great Depression – Thebalance.com
Will the Spike in Residential Pool Service Last?
A lot of pool pros have been telling me about considerable boosts in business and April sales alone topping the first quarter. I also hear from others about significant losses in clientele. The difference here is residential versus commercial, and it kind of makes sense if you think about it. The businesses have closed, and all of their employees are restricted to their homes. Naturally, that’s going to cause a boost in backyard pool use. Sadly, with the commercial pool closed, those pros that have a business focussed in that direction have taken some pretty hefty hits.
What sucks is that it is coming. Unemployment does not pay that much. We are going to reach a point where the homeowners start to run out of money. When that happens, swimming pool service will be one of the things at the top of the list to cut.
’08 Really Effing Sucked!
2008 all over again? I think unfortunately that this time it’s going to be worse than that. I don’t know how businesses are going to recover. I’m guessing y’all will see a bunch that just don’t make it. Like I said before, I know things are going good for residential. The longer these folks are out of work, the less disposable income they will have. If it comes down to making a decision between television or pool service, they are going to clean their own pools. We need to be prepared.
A bunch of us were doing service in the ’08 recession. Even though I am anticipating this being worse, a lot of the things we did back then to keep rolling will be helpful now. So, if you’re an old f**k like me, please leave a tip or two on recession survival in the comments below.
Here are some of my suggestions:
Develop relationships with realtors and banks, specifically the ones in your area that handle REO properties. REO stands for Real Estate Owned. Real Estate Owned homes are foreclosed properties. It is easy to identify the real estate offices in your area that handle these. They are easy to find. Go to Zillow or realtor.com and find a foreclosed property. See who is listing it.
You’ll start to notice that only a handful of real estate offices in your area are listing these. So determining who they are is not that difficult. As the economy suffers, the number of foreclosed homes in an area will increase exponentially. Many of these homes will have swimming pools.
Here Come the Flippers
Investors that are interested in potential flip properties and folks looking to purchase more home for less money will start to appear. Remember, not everyone is going to be flat broke, and they will be looking for opportunities. The banks and the realtors want these pools to be clear, operational, and algae free. Homes with emerald green pools don’t sell well.
This means Green to Cleans and possible equipment repair/replacement. They need these swimming pools to remain in tip-top shape. This means once the pool is clear, they are going to need you to maintain that pool until the home sells. If we are in a recession, this could mean months to years.
Growing Your Route During an Economic Face-Plant
You’ve just added a new pool to your route with a customer that pays well at a vacant property. But wait, there’s more. This house is eventually going to sell, and when it does, the realtor will introduce you to the new homeowner as the expert that knows there pool. Still, you will not get the opportunity to bid if they don’t know who you are. I do feel bad for the people who lost their homes, but this is about your survival. Besides, you didn’t throw them out of their house, right?
There is usually not a lot of competition in this niche. Keep in mind this type of work hardly exists when the economy is good. If you start building these relationships now, you will be just as well known as the next guy/gal if not better.
Why Should I Hire You?
What about that. The next guy. The next gal. This is just the same as operating during a good economy. If you want to land more accounts then your competition does, you’ll need a marketable point of difference. Something in your service that differentiates you from others in your area. For me, for Green to Cleans, I would use Alum versus draining and refilling. I know it’s not a lot, but everyone seemed to love the fact that they didn’t have to pay for water on top of my fee. Alum is a topic for a whole other article. But, develop your own protocol, you’ll want to go with what works best for you.
Realtors also seem to prefer to put their eggs all in one basket if they can. It’s a swampy mucky job, and they need reliability and consistency. This means once you are on board, you’ll likely get the opportunity to bid on every pool at every property they have. As long as your price isn’t stupid high and they like you, you will probably get every job. For you, these are recession-proof pools on your route that could carry you through what might otherwise be years of hardship.
I’m sorry, this is going to be a long one, but I have a lot to say.
While you are taking care of these REO pools, take a page from the Realtor notebook. Place a stack of business cards on the counter in the kitchen. Many realtors will be walking customers through these homes. These realtors from different companies have projects as well, like vacation homes, rentals, etc. The people they are walking through are probably going to buy a house somewhere. Even if it’s not that one, they may grab your business card for future reference.
A dip in the economy means there will be less fish in the pond. Fewer and fewer homeowners will be looking for people to service their pools. Competition among service companies could get tough. I spoke above about establishing a marketable point of difference. Definitely do that. Help people choose you. Give them a reason to say “these are the folks I want to hire”.
DO NOT UNDERCUT THE MARKET! If everyone decides to compete on price, they are going to diminish the value of pool service in that area. When this occurs as the economy gets better, y’all will be stuck with those low prices, and that’s what customers in that area will have come to expect. Just see how they react when you try to raise them again. Not good. Trust me, everyone knows who the low-ballers are.
Don’t Cut the Advertising Budget!
Increase your advertising budget. What??? That’s right, you heard me. Pump more dollars into advertising. A huge mistake most businesses make is that they cut advertising dollars first as a means of remaining profitable when faced with a recession or lull in sales. Out of sight, out of mind.
They are leaving the door wide open for you to own this town. If you have to cut back on something, I get it but reduce what you spend on something else. I’m not suggesting you get all buck nutty and devote all your funds to a super bowl commercial, that would be irresponsible (also cool af). Be the name that people know. No matter how long we live with forced frugality, the situation will one day improve. Make sure everyone knows your name.
Take a look at the commercial business. I know, I know. I started out by telling you they are sucking right now. This is true. However, if you follow the trend of the past, these should be your first customers that begin to recover. So, if you are currently maintaining commercial pools, that’s awesome. I know it’s rough right now, but things will get better. In your downtime, get out there and knock on some doors, say hello, and hand out a card.
If you are not currently taking care of commercial properties, hit me up for an Online CPO class, get your certification and visit a few, say hello, and make sure they know who you are. A few months down the road, you may be living off of the dollars you are taking in from those new Hotels or apartment complex accounts you pick up. Nearly every health department in the country lists the public pool inspection results on their website. Start with visiting the ones that failed – they might need your help.
Similar Article: Aquatics Director Positions at Risk⁉
Check Craig’s list periodically. You may see that some of your peers are struggling in hard times and may need some cash. This may be the time to pick up a used hammerhead or riptide if someone has thrown in the towel. Help a pool pro out; if you were in the market, buy it from them. If they are selling it, they need the money. The only way you come off as a dick is if you do not offer them a fair price, or try to whittle them down. If you think their asking price is too low, pay them an additional $50 or $100.
Unfortunately, some pool companies might not make it. Trust me when I say I hope everyone does. I hope that everyone spends some time recession planning, but what I am really hoping for is that I wasted my time writing this.
If you were in the swimming pool business in 2008, what advice can you share?
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