Maximizing Profit in a Slowing Economy
Maximizing Profit in a Slowing Economy
As a home service business owner, the ultimate goal is to grow your business and drive profitability. But when conversations about a slowing economy start circulating, it’s easy to let that negativity affect your mindset and, ultimately, your business. You might even talk yourself into believing things are slowing down, which can lead to lowered motivation and a decrease in effort.
But what if you could shift that mindset? Instead of getting caught up in the doom and gloom, what if you stayed positive, focused, and committed to pushing through no matter what’s happening around you?
Here are three key strategies you can use to maximize your profit,
even if the economy is slowing down.
1. Focus on Your Most Profitable Services
The first step in driving profitability is to focus on the services that are already making you the most money. Ask yourself: what services are bringing in the highest margins? Are some jobs just breaking even or, worse, losing money? It’s time to evaluate what’s working.
Consider this: is your crew properly trained to deliver these high-margin services efficiently? Could additional training make them even more profitable? It might be time to assess whether your team has the tools, skills, and confidence to execute those jobs in a way that maximizes profits.
If you have loss leaders—services that don’t bring in much revenue upfront but lead to more lucrative jobs—that’s fine, as long as they’re actually serving that purpose. But if they’re not driving further revenue, it’s time to rethink your strategy. In tough economic times, focus on what works best for your business.
2. Cut the Fat
“Cut the fat” sounds harsh, but it’s a reality in business. You need to run a lean, efficient operation. Every dollar you waste is a dollar of profit lost.
Review your expenses regularly—quarterly, if possible. You might be surprised by what’s sneaking in. Are you paying for subscriptions or services you don’t really use? Those small costs add up quickly. Can you downgrade or eliminate them altogether?
It’s also worth talking to your suppliers. A little negotiation could lead to discounts or better payment terms, which can add up to significant savings. And if you’ve already cut as much as you can, consider whether it’s time for a price increase. If your services are in demand and provide value, the market might be able to handle a price bump, which could help offset rising costs.
One more thing: don’t cut your bookkeeping services. This is a common mistake when business owners start slashing expenses, but your bookkeeper is the one keeping your financials in order. Without up-to-date numbers, you’re flying blind. Now, more than ever, you need accurate financial data to make smart decisions.
3. Implement the Profit First Method
You’ve heard me talk about this before, but if you’re not already using the Profit First method, now is the time to start. This cash management system ensures that you’re setting aside profit from every job and paying yourself—no matter how tight things might get. It’s easy to fall into the trap of cutting your salary when times are tough, but this can leave you financially vulnerable.
You didn’t start your business to sacrifice your personal financial security. You need to make sure that you’re still paying yourself, setting aside money for taxes, and keeping your business running efficiently. If your profit margins aren’t adding up, you need to either increase revenue or cut costs—there’s no way around it.
Stay Focused and Push Forward
The key to surviving—and even thriving—in a slowing economy is to stay focused. Don’t get caught up in negative headlines or what other businesses are doing. Focus on what you can control: your services, your costs, and your mindset.
Encourage your team to keep pushing, to upsell where appropriate, and to maintain high standards. Keep your marketing efforts strong and make sure every client interaction is one that delivers value.
If you’re feeling overwhelmed by these strategies or want to explore more ways to boost your profitability, I’m here to help. Let’s talk. You can visit constructionprofitfirst.com/
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